Reply Brief of Petitioners (Quanta) - Adam Mahood

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Petitioner Brief (Quanta) • Starts out by saying that LG said Quanta conceded that licenses could have conditions and that this is all that this case deals with ➢ Manufacturing licenses can have conditions on what sales are authorized but the sale still ends the patentee’s rights • Contract law issues not dealt with here ➢ LG claims that their ability to put make and sell restricitions on Intel is the same thing as limiting our right to use the product – Once it’s understood that these aren’t the same thing, the respondent’s arguments fail • Arguments ➢ The Federal Circuit has revived the precedent from A. B. Dick decision that a purchaser’s rights are essentially an implied unlimited use rather than patent exhaustion and these rights can be limited if the patentee puts conditions • Should not be the rule because SCOTUS has expressly overruled this in prior decisions ➢ Quanta wants to point out the distinction between licensee sales and patentee sales ➢ Now deals with the authorized sale issue • Respondent points to Western Electric as precedent that if the licensee does not have position to pass on all the rights, then the purchaser can be sued • Quanta claims that this principle does not apply here because Intel was authorized to make these sales • Licenses can have conditions and Intel obliged by these, however SALES can not have conditions – A sale exhausts the patent! ➢ Really thinks that LG is overstepping its bounds to get around exhaustion that would normally be thought of as taking place • “When the patentee…sells a machine or instrument whose sole value is in its use, he receives consideration for its use and parts with the right to restrict its use.” ➢ Overall, there is a difference between sales and licenses but not between patentee sales and licensee sales – Exhaustion still applies ➢ The precedent needs to be established that no clever claim drafting can avoid exhaustion – Really trying to get at that methods are not exempt from exhaustion ➢ What LG could have done was signed a contract or included a license saying that Intel is not authorized to sell the chips unless the purchaser signs a contract saying they won’t use them in a way other than that intended ➢ Respondent’s seem to be missing the obvious in that A. B. Dick was expressly overruled and it was held that any notice restrictions on the use of sold goods are unenforceable because or patent exhaustion • Main Points ➢ The sales of Intel to Quanta were authorized and thus didn’t breach the license AND ➢ The sales because they were authorized triggered the exhaustion principle AND ➢ Just because the sale included only a piece of the method, there was no other use for it, so it also still triggers the exhaustion