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Motion for Summary Judgment on Patent Exhaustion & Implied License Granted in part

By Michael C. Smith

Laserdynamics, Inc. v. Quanta Storage America, Inc., 2009 WL 3763444(E.D.Tex. Jun 29, 2009) (NO. 2:06-CV-348-TJWCE)
Judge: T. John Ward
Holding: Motion for Summary Judgment on Patent Exhaustion & Implied License GRANTED in part
Apparently somebody needed this opinion from last June published.  In it, Judge Ward granted in part the defendants' motion for summary judgment on patent exhaustion and implied license issues.  Judge Ward noted that a detailed order would follow, but in the meantime, there were three things the parties needed to know to continue preparation for trial:

• First, the exhaustion doctrine does not apply to sales made overseas by the plaintiff's licensees. As such, the court denied the defendants' motion for summary judgment to the extent it relies on the exhaustion doctrine.
• Second, QCI has an implied license with respect to drives manufactured by non-Quanta entities licensed by the plaintiff under worldwide licenses and sold by those licensees to QCI for incorporation into QCI computers. In addition, QSI is not liable for manufacturing drives for Philips or Sony/NEC/Optiarc which are, in turn, resold into the United States to non-Quanta entities. (I know we were all wondering about this).
• Finally, the Quanta defendants do not have an implied license with respect to drives that are sold through two of the plaintiff's licensees. The effect of such transactions, the Court concluded, would be to grant an impermissible sublicense.

Full post as published by Eastern District of Texas Federal Court Practice on November 23, 2009 (boomark / email).