Patent Exhaustion
4/3/2008 8:24:59 AM

Quanta Computers, Inc. v. LG Electronics, Inc. No. 06-937 .

Issue:
“[w]hether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that [LG]’s patent rights were not exhausted by its license agreement with Intel Corporation, and Intel’s subsequent sale of product under the license to petitioners.”

Conflicting Prior Cases:

The first sale of the patented product exhausts the patent right. Once a patent owner has sold his patented product, the purchaser is free to use or sell that product free from any further claim by the patentee. Bloomer v. McQuewan 55 U.S. 539 (1852), Adams v. Burke 84 U.S. 453 (1873), and United States v. Univis Lens Co., 316 U.S. 241 (1942).

Patentee may condition sale of a patented product to an agreement that the product’s purchaser may resell that product with restrictions permitting the patentee to enforce the patent against a downstream purchaser. Mallinckrodt, Inc. v. Medipart, Inc. 976 F.2d 700 (Fed. Cir. 1992).

Other notes:
Historically, there is no international exhaustion under United States patent law. ‘Our patent system makes no claim to extraterritorial effect; ‘these acts of Congress do not, and were not intended to, operate beyond the limits of the United States,’ Brown v. Duchesne, 60 U.S. 183, 195 (1856).
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