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San Jose Mercury News screws up discussion of Supreme Court case, Quanta v. LG

By Lawrence B. Ebert, Esq.

The San Jose Mercury News (picking up an AP story by Pete Yost) wrote:

The U.S. Supreme Court on Monday limited the ability of companies to collect multiple royalties on their patents, the latest step by the justices to scale back the power of patent holders.

The unanimous decision, which was helpful to customers of Intel, involved a longtime Supreme Court doctrine that in recent years had been eroded by the U.S. Court of Appeals for the District of Columbia Circuit in Washington, D.C., which handles patent cases nationally.

LBE comment submitted on June 10:

Of the text --The unanimous decision, which was helpful to customers of Intel, involved a longtime Supreme Court doctrine that in recent years had been eroded by the U.S. Court of Appeals for the District of Columbia Circuit in Washington, D.C., which handles patent cases nationally.-- please note that Yost has confused the Court of Appeals for the DC Circuit with the Court of Appeals for the Federal Circuit, which does handle patent cases (among other things). They are two DIFFERENT courts.

See also IPBiz post,
Supreme Court whacks CAFC over doctrine of exhaustion

See also CNET:

The primary argument against exhaustion was that the Intel products themselves did not practice LG's patents. The patents related to specific processes for managing memory that did not take place until the Intel chipsets were combined with the non-Intel memory and buses.
The Supreme Court rejected that argument holding first that method claims were not immune from the doctrine of patent exhaustion. According to the Supreme Court, a method can be "embodied" in a product that is designed to practice that method. Thus, the authorized sale of the product embodying the method can exhaust patent rights covering the method.

The decision itself. The conclusion:

The authorized sale of an article that substantially
embodies a patent exhausts the patent holder?s rights and
prevents the patent holder from invoking patent law to
control postsale use of the article. Here, LGE licensed
Intel to practice any of its patents and to sell products
practicing those patents. Intel?s microprocessors and
chipsets substantially embodied the LGE Patents because
they had no reasonable noninfringing use and included all
the inventive aspects of the patented methods. Nothing in
the License Agreement limited Intel?s ability to sell its
products practicing the LGE Patents. Intel?s authorized
sale to Quanta thus took its products outside the scope of
the patent monopoly, and as a result, LGE can no longer
assert its patent rights against Quanta. Accordingly, the
judgment of the Court of Appeals is reversed.

***But see footnote 7 of the Supreme Court opinion-->

We note that the authorized nature of the sale to Quanta does not
necessarily limit LGE?s other contract rights. LGE?s complaint does not
include a breach-of-contract claim, and we express no opinion on
whether contract damages might be available even though exhaustion
operates to eliminate patent damages. See Keeler v. Standard Folding
Bed Co., 157 U. S. 659, 666 (1895)

Full post as published by IPBiz on June 10, 2008 (boomark / email).