Quanta Brief Hockett

Brief of the Licensing Executives Society (U.S.A. & Canada), Inc. As Amicus Curiae in Support of Neither Party

• This case highlights the tension between the doctrine of patent exhaustion on one had, and the limitations of that doctrine on the other.
  • The Court previously held that a knowing purchaser of products from a latent licensee who is violating the terms of a restricted patent license could be found to be a patent infringer, notwithstanding the patent exhaustion doctrine.
  • The Court also held that the patent exhaustion doctrine applies to a purchaser who knowingly buys an article from a patent licensee under a restricted license which disclaimed downstream purchaser license rights.
  • Gives conflicting rulings on whether a patentee may limit the doctrine of patent exhaustion by imposing conditions on sales of patented products by licensees.

• Both patent licensees and licensors have an interest in knowing with certainty the consequences to downstream purchasers of products sold pursuant to a license agreement that authorizes the practice of something less than the full bundle of rights conferred by the patent.

• A patent holder can grant restrictions on the use of the licensee of that patent, but once the licensee sells an object the licensee cannot be held liable for the use of that object by the consumer.
  • This indicates that exhaustion restricts the patentee's power to control a patented article after a first sale.

• "The authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold."

• Confusion as to whether the patent exhaustion doctrine is a species of implied license or a limitation of the patent grant itself.
  • Holdings that indicate the sale of nonpatented equipment to practice patented inventions results in implied license.
  • Holdings that say an authorized sale of a patented product places the product beyond the reach of the patent.

• Boils down to whether the patent exhaustion doctrine is a limitation of the patent grant itself, or is a principle that can be overcome through policy considerations or simply notice to the buyer of patented goods.

• The Licensing Executives Society requests that the Court's ruling in this case provide the certainty desired by licensees and licensors in the area of patent exhaustion doctrine.