Mitros: Quanta Brief

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Brief of Amici Curiae Nokia Corporation and Nokia Inc. in Support of Petitioners

Nokia argued that the previous decisions of the courts should be reversed or vacated for the following reasons:

  • The patent laws were designed to generate a balance between the need to encourage innovation and the avoidance of monopolies which stifle competition and prevent the advancement of progress of science in the useful art.
  • A patent grants its owner “the right to exclude others from making, using, offering for sale, or selling” the patented invention in the United States. When a patent holder first sells patented goods or authorizes licenses to sell these goods, they surrender their right to exclude and its patent rights are said to be exhausted.
    • The Court’s precedents indicate that patent rights extinguished when a patent owner has received full value for parting with its right to exclude others from practicing the invention. At the same time they allow patent holders to contract freely with purchasers or licensees with respect to patent rights.
      • United States v. Univis Lens Co.: “where a patentee makes a patented article, and sells it, he can exercise no future control over what the purchaser may wish to do with the article after his purchase” because “it has passed beyond the scope of the patentee's rights.”
  • The patent exhaustion doctrine is important in the modern technology industry which relies on complex, global supply chains to assemble their products.
    • In modern electronic devices, numerous parties are relevant to the manufacturing process at different steps in the process. With such a complex system, it is important that supply chains be able to avoid patent “hold-ups” wherein a patent is directed at a single low value component or feature of a complex device may put the entire device at risk for patent infringement.
      • These hold-ups undermind the intended purpose of the patent system by providing protection to the patent owners far in excess of their actual innovation.
    • Patent exhaustion is an important doctrine to allow manufacturers the ability to purchase various components free of patent rights that put their entire project at risk.
  • Enforcement of the patent exhaustion doctrine will prevent patent holders from “double dipping” and extracting multiple royalties for the right to exclude the same invention.
    • The patent holder should be permitted to pick a point within its supply chain at which it extracts these royalties, but once they do, the patent holder should be bound to their choice.
  • In the present case, the previous rulings have allowed patent owners to extend patent rights past the point of first sale to downstream users of the patent.
    • The Supreme Court’s rulings have been to the contrary and should be enforced in this case to prevent the patent owner from “double dipping” on their patent rights.
  • However, the Court should allow flexibility in patent owner’s rights to have flexibility in contracting their property rights.
    • ie- patent owners should be free to restrict licensees in certain ways that fall within the legal rights of each party. These include limiting the geographic distribution of an invention or setting the price at which the licensee sells a manufactured product.
      • In General Electric Co. 272 U.S. 476 the Supreme Court held that GE’s contract with Westinghouse to make and sell modern light bulbs made with GE’s patented methods only at the prices set by GE was valid.
      • The anti-trust laws provide a check to prevent a patent holder from enforcing restrictions via contract that are beyond the reasonable scope of a patent grant.
  • A license provides “authority” for someone other than the patent owner to practice or manufacture the specific patent.
    • The importance of a sale being authorized is demonstrated in the Supreme Court’s previous rulings on a property owner’s right to repair a patented article he or she owns.
      • For example, it is permissible for automobile owners to have their car taken into a shop for repairs. It is fine for a shop to repair individual components of a patented item, however, they cannot completely construct a patented item to replace an old one.
  • In the case at hand, the court’s gave the patent owners restrictions that were unilaterally imposed on downstream purchasers which gave the patent holders windfalls and undue leverage because it permits royalties to be extracted multiple times for the same invention at various points within its supply chain.
    • For the reasons mentioned above, the decision of the courts should be reversed.