Author(s)
Source
Communications of the ACM, Vol. 51, November 2008
Summary
This article looks at how much control patent owners have over how consumers use a product.
Policy Relevance
Supreme Court cases hold that the rights of a patent owner should not extend to control the way that the customers of a patent licensee use the product.
Main Points
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In 2008, the U.S. Supreme Court decided an important case called Quanta Computer, Inc. v. LG Electronics, Inc., involving the idea of “patent exhaustion.”
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Usually, when we buy a book or a machine, we can use it as we choose, even when its owner holds a copyright or a patent on the creation.
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In the Quanta case, a technology firm called LGE licensed its patent to Intel, under a license that allowed Intel to resell products using LGE’s technology to customers like Quanta.
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LGE’s patent license tried to restrict Intel’s customers from mixing Intel and non-Intel components.
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LGE sued Quanta for patent infringement when Quanta mixed components.
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The Supreme Court ruled that, as in earlier cases, a patent license could not restrict what customers who bought the product from the licensee did with the product, whether the product was an apparatus or a method. The patent owner’s rights were “exhausted” upon the sale of the product.
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Some Federal Circuit Court of Appeals cases allow the patent owner to extend his rights if the licensee’s customer agrees in a license or contract, rather than buying the product in an outright sale. These cases are probably wrongly decided.