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ARTICLE · 07 JULY 2008

Exhaustion And Implied License Are Very Different Things

McDermott Will & Emery
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Continuing a string of reversals for the U.S. Court of Appeals for the Federal Circuit (as well as a trend toward limiting the rights of patent holders), Supreme Court of the United States issued its unanimous opinion that the doctrine of patent exhaustion applies to method patents (as well as apparatus patents) and that exhaustion occurs when there is a sale of a component that “substantially embodies” or “essentially embodies” the patent(s) in question and that is made under license.

United StatesIntellectual Property
Paul Devinsky
Paul Devinsky
Michael Hurley
Michael Hurley
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Continuing a string of reversals for the U.S. Court of Appeals for the Federal Circuit (as well as a trend toward limiting the rights of patent holders), Supreme Court of the United States issued its unanimous opinion that the doctrine of patent exhaustion applies to method patents (as well as apparatus patents) and that exhaustion occurs when there is a sale of a component that "substantially embodies" or "essentially embodies" the patent(s) in question and that is made under license. Quanta Computer, Inc. v. LG Electronics, Inc., Case No. 06-937 (Supr. Ct., June 9, 2008) (Thomas, J.) (9-0 decision)

Quanta was one of several defendants in the courts below. The case arose after these defendants had purchased microprocessors and chipsets from Intel for installation in their computers. Intel held a license from the plaintiff LG Electronics (LGE) covering LGE's portfolio of patents on computer systems

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