EB: Friday, April 29: Quanta v. LGE Brief Summary
Brief of Amicus Curiae Motorola, Inc. in Support of Petitioners
Motorola, a telecommunications and electronics company, has rights to hundreds of third-party patents subject to various licensing agreements, "covenants not to sell," and releases. In addition, Motorola also purchases components from licensed suppliers which are then used in combination with other electronic components to create Motorola product. Like Quanta, Motorola is often accused of infringement based on their use of these purchased supplies. Thus, a ruling in Quanta's favor in this case will benefit Motorola in any similar cases with which it may be involved.
- The court's reliance on the decision in United States v. Univis Lens Co., 316 U.S. 241 (1942) is correct; if a product "embodies essential features" of a patent, and has no other "substantial noninfringing use" then as a part of a combination which infringes the patent, than the doctrine of exhaustion can be applied.
- In cases such as Mitchell v. Hawley, 83 U.S. (16 Wall.) 544 (1872) the issue is not whether a sale triggers the doctrine of exhaustion, but rather that the seller did not have the authority to sell in the first place. Thus, a ruling against exhaustion is related to the sellers unauthorized action, not any inherent issue of the sale itself.
- The basis for the doctrine of exhaustion is that the patentee receives ample reward in the original sale of his invention, and any undue extension of patent rights after the sale only inhibits "use and enjoyment" of the thing sold. When a patentee sells his invention he forfeits his right to the buyer, and the buyer should not be subject to any further licence. LGE's attempt to limit the right of Intel's customers (via the notice of warning) was an "impermissible" attempt to "double-dip" and extract additional payment.
- It is unclear whether pre-licence sales made by Intel were unauthorized, and whether those sales would trigger the doctrine of exhaustion. This matter of pre-license sales is beyond the scope of the current appeal and would require more analysis of facts.
- Finally, the decision made in this case should only apply to licenses because other forms of agreements (such as covenants not to sue) are very different.
- Licenses are used when assertion of infringement exists; covenants not to sue are used when parts of a business or product line are sold.