Thursday, January 17, 2008 — GLOBAL IP STRATEGY, IP WARS

Exhausted patent rights, the US Supreme Court, Quanta v LG

by Duncan Bucknell

At some point along the value chain, a patentee's rights in a patented article or process come to an end - they are 'exhausted'.  This often comes up in the context of recycling of parts or the on-sale of components.

Patent exhaustion is big news at the moment in the US because argument was heard yesterday in the highly important Quanta Computer, Inc. v LG Electronics.  In essence, LG Electronics licensed patents to Intel for use in microprocessors, with the condition that Intel notify buyers that they did not receive a patent license for the use of the Intel microprocessors together with non-Intel components. LG Electronics sued Quanta for patent infringement and Quanta is arguing patent exhaustion (also known as the first sale doctrine).

Patentees would obviously like the court to hold that they are entitled to sell a patented product with certain conditions, and for it to be patent infringement if they are not met.  

Those who more commonly in-licence patents would prefer that the patentee's rights are 'exhausted' on the first sale and leaving to contract law any other restrictions that the patentee may seek to impose.

No one is predicting which way the Court will go (judgment due some time in March - May 2008), but whatever happens, it will be big news.

If you're keen - here's a link to the transcript from oral argument (thanks to Patently'O).

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