Quanta Brief: In support of Federal Circuit Ruling (eguilbea)

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Brief of Amicus Curiae Yahoo! Inc. in Support of Affirmance of the Federal Circuit

  • Preserve the distinction between sales and licensing.
    • Sales implicate patent exhaustion, licenses do not.
  • Rule of patent exhaustion traps unwary sellers, making it more difficult for them to negotiate desirable terms.
  • Exhaustion is the default rule, but it should not be an immutable rule
  • Market should be allowed to self-regulate and negotiate around patent exhaustion by agreement.
  • Petitioner argues that F.C. ruling violates antitrust laws. However, the whole point of patents are to provide a monopoly
  • F.C. ruling has following desirable effects:
    • It allows parties to bargain around patent exhaustion, respecting their preferences
    • Allows parties to negotiate prices for intellectual property rights
    • It allows parties to negotiate prices that reflect value of the specific application of the product
  • F.C. ruling is consistent with past Supreme Court rulings that held a patentee can grant limited licenses
  • The court’s opinion in Univis is not directly applicable because Univis involved an attempt to control prices unrelated to the patentee’s reward, while Quanta involves a company granting less than full rights in a license.
  • The court has also changed its view on resale price maintenance since Univis. This is to encourage non-price competition.
  • Petitioner argues that Congress reenacted the patent laws but did not modify the court’s patent exhaustion doctrine.
    • All parties agree that patentees can get around strict patent exhaustion by skillful drafting of licenses. Since there’s no explicit prohibition of it, it should be understood that the rule can be drafted around.