ILNews

SCOTUS rules on patent exhaustion case

Back to TopCommentsE-mailPrintBookmark and Share
The U.S. Supreme Court has limited the ability of companies to collect royalties after the first sale of a patented product. The case tackled an issue of patent exhaustion that hasn't been ruled on in 66 years.

In a unanimous opinion this morning in Quanta Computer, et al. v. LG Electronics, No. 06-937, the nation's highest court said that longstanding patent law precedent extends to method patents that are often part of high-technology components and products.

"For over 150 years this Court has applied the doctrine of patent exhaustion to limit the patent rights that survive the initial authorized sale of a patented item," Justice Clarence Thomas wrote in the 22-page opinion. "Because the exhaustion doctrine applies to method patents and because the license authorizes the sale of components that substantially embody the patents in suit, the sale exhausted all patents."

Justices reversed a decision by the Federal Circuit Court of Appeals, which came in a case focusing on whether South Korean company LG could sue to force the computer suppliers to pay royalties on components they legally purchased from Intel, even though Intel already paid royalties to LG in a technology licensing agreement.

One of those companies sued was Quanta, which argued that it didn't have to pay royalties to the original patent holder because of the patent exhaustion doctrine that only applied to the first sale.

In its ruling, the court rejected arguments that patents are never exhaustible. It relied on precedent that it described as supplying "solid footing" and focused heavily on the one last tackling this issue, U.S. v. Univis Lens Co., 316 U.S. 241 (1942) that involved patents for finished eyeglass lenses.

Indianapolis attorney Todd Vare with Barnes & Thornburg, who wasn't involved in this case but has watched it closely, urged other intellectual property lawyers to carefully review this opinion, whether they represent patent-holders, licensees or those offering patent indemnification.

"This could dramatically change patent licensing programs," he said, though he noted the ruling wasn't a surprise given the court's history in recent years of scaling back patent rights.
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. File under the Sociology of Hoosier Discipline ... “We will be answering the complaint in due course and defending against the commission’s allegations,” said Indianapolis attorney Don Lundberg, who’s representing Hudson in her disciplinary case. FOR THOSE WHO DO NOT KNOW ... Lundberg ran the statist attorney disciplinary machinery in Indy for decades, and is now the "go to guy" for those who can afford him .... the ultimate insider for the well-to-do and/or connected who find themselves in the crosshairs. It would appear that this former prosecutor knows how the game is played in Circle City ... and is sacrificing accordingly. See more on that here ... http://www.theindianalawyer.com/supreme-court-reprimands-attorney-for-falsifying-hours-worked/PARAMS/article/43757 Legal sociologists could have a field day here ... I wonder why such things are never studied? Is a sacrifice to the well connected former regulators a de facto bribe? Such questions, if probed, could bring about a more just world, a more equal playing field, less Stalinist governance. All of the things that our preambles tell us to value could be advanced if only sunshine reached into such dark worlds. As a great jurist once wrote: "Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman." Other People's Money—and How Bankers Use It (1914). Ah, but I am certifiable, according to the Indiana authorities, according to the ISC it can be read, for believing such trite things and for advancing such unwanted thoughts. As a great albeit fictional and broken resistance leaders once wrote: "I am the dead." Winston Smith Let us all be dead to the idea of maintaining a patently unjust legal order.

  2. The Department of Education still has over $100 million of ITT Education Services money in the form of $100+ million Letters of Credit. That money was supposed to be used by The DOE to help students. The DOE did nothing to help students. The DOE essentially stole the money from ITT Tech and still has the money. The trustee should be going after the DOE to get the money back for people who are owed that money, including shareholders.

  3. Do you know who the sponsor of the last-minute amendment was?

  4. Law firms of over 50 don't deliver good value, thats what this survey really tells you. Anybody that has seen what they bill for compared to what they deliver knows that already, however.

  5. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

ADVERTISEMENT