Quanta Brief Summary 901471466

Brief of Computer & Communications Industry Association (“CCIA”) as Amicus Curiae in Support of Reversal

• CCIA members participate in many sectors of the computer, information, and communications technology industry and use the patent system regularly
• While CCIA does not have a direct financial interest in the outcome of the litigation, allowing the Federal Circuit’s decision to stand would threaten the future economic prospects of CCIA’s industry sector
• Under the Federal Circuit’s ruling, making sales “conditional” circumvents the exhaustion doctrine and allows patentees to retain the option of asserting the full arsenal of patent rights at any point that the component changes hands
  • threatens the vitality and efficiency of the IT product markets
  • allows patent holders to engineer “conditional sales” to evade exhaustion for an infinite variety of purposes
• Transparency and shared information are key attributes of property whether the markets are thin (real estate and patents) or thick (IT components)
  • “conditional sales” severs the crucial connection between property and markets
  • invites clever lawyers to create regulatory regimes sanctioned by public law to extract new revenues for patent holders at every transaction point in the supply chain
  • ruling promises to turn a robust, high-volume market into a lawyer’s playground – a shadow of economy of permissions that contributes no technology or economic value but is able to exploit whatever dependencies exist in the present distribution chain
• The exhaustion doctrine provides a clear, bright line segregating the familiar laws of personal property and sales from the unique power of federal patent laws
  • companies typically need to run clearances searches in order to avoid infringing the vast number of patents, especially in the technology market
  • the cost now imposed by the Federal Circuit is not merely the cost of a clearance search, but the cost of searching the upstream portion of the distribution chain of an IT good for hidden servitudes, for which no government registry exists
  • strict liability and high search costs show the need for a bright-line first sale doctrine
• Any and all of the patent holders that are presently neutralized by cross-licensing have effectively been given a hunting license in the open season by the Federal Circuit
  • companies are defenseless against LGE