Jan
17
Patent exhaustion at the Supreme Court
Posted by Dirk Avery at 5:14 pm under Patent, Supreme Court.
Maureen Mahoney, Quanta’s lawyer, [contends] under the legal doctine of “patent exhaustion,” once Intel made a sale of the chips to Quanta pursuant to its license with LG, LG could no longer seek royalties from companies downstream in the manufacturing process.Several justices, including Stephen Breyer, seemed to agree.
http://www.siliconvalley.com/news/ci_7987537
Patent exhaustion background: “[T]he patent exhaustion doctrine, commonly referred to as the first sale doctrine, is triggered by an unconditional sale. See Mitchell v. Hawley, 16 Wall. 544, 83 U.S. 544, 547, 21 L.Ed. 322 (1873). ‘[A]n unconditional sale of a patented device exhausts the patentee’s right to control the purchaser’s use of the device thereafter. The theory behind this rule is that in such a transaction, the patentee has bargained for, and received, an amount equal to the full value of the goods. This exhaustion doctrine, however, does not apply to an expressly conditional sale or license. In such a transaction, it is more reasonable to infer that the parties negotiated a price that reflects only the value of the “use” rights conferred by the patentee.’ B. Braun Med. Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed.Cir.1997) (discussing Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 708 (Fed.Cir.1992))” LG Electronics, Inc. v. Bizcom Electronics, Inc., 453 F.3d 1364 (Fed. Cir. 2006).
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