901349446 Quanta Brief

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Brief of Dell Inc., Hewlett-Packard, Co., Cisco Systems, Inc., and Ebay Inc. as Amici Curiae in Support of Petitioners

Supreme Court of the United States. QUANTA COMPUTER, INC., et al., Petitioners, v. LG ELECTRONICS, INC. Respondent. No. 06-937. November 13, 2007. On Writ of Certiorari to the United States Court of Appeals for the Federal Circuit

List of Arguments:

• The Amici Curiae argue in this case that is common practice for companies in this area to purchase chips and memory from an outside firm and use them as a single unit or on the other hand to purchase them and assemble the components separately as well

• They argue that allowing the interested party, LGE, the ability to receive royalties at any manufacturing chain that in any way implicates its patents, gives LGE an unjust ability to receive royalties which add to manufacturing costs of other companies and do nothing to serve the patent law system

• If the doctrine of exhaustion excludes method claims then every apparatus claim could avoid exhaustion by simply adding a method claim to his apparatus claim which stated how to use the apparatus

• The lower courts decision would create considerable confusion about the downstream participants in the manufacturing process as well as open new door for substantial and abusive patent infringement suits

• “The declared purpose of the patent law is to promote the progress of science and the useful arts by granting to the inventor a limited monopoly, the *6 exercise of which will enable him to secure the financial rewards for his invention.” United States v. Univis Lens, 316 U.S. 241, 250 (1942). This decision shows the purpose of the patent law system, wherein, once the purpose has been realized (i.e. benefits have been gained by selling the product) then there no longer exists any basis for restraining the product/patent being sold

• It is argued that at the point of initial sale the patent owner has the opportunity to demand the sum reflecting the full value of its invention over the full life cycle of the product. This is not a value to be determined after the sale.

• These legal rules allow the patent law function, that is, encouraging progress in the useful arts by rewarding innovation with minimal intrustion into the operation of the free market and minimal disturbance to the normal conception of ownership

• It is argued “the regime envisaged by the Federal Circuit, where patent owners can partition their rights in a patented article and sell those rights piecemeal, obtaining a portion of the total royalty from each entity that purchases or uses the article (presumably according to the proportional value derived from the *13 invention by each entity), is economically and practically unrealistic.”