EB: Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)

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Issue

Patent exhaustion - if a patentee makes an authorized sale, than he forfeits the right to dictate further use of the sold product. His ownership of the patent (right to make, use, sell) are exhausted. He has already reaped the rewards of his patent through the initial sale.

  • For most types of property it makes sense to give all rights in a sale - if you sell with restrictions it is very difficult to keep track of specific allowed usages when further downstream sales are made.

The Situation

  • LGE has patents ('641, '379, '733), all computer memory related - they sell to Intel who manufactures the inventions - Intel sells to Quanta
    • Contract between LGE and Intel required that Intel notify its customers that the products could not be combined with any non-Intel components