After the Supreme Court heard oral argument last week in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937), the media and blogosphere have begun to weigh in on the arguments. You can find our take on the arguments in this post, or click below for a sampling of the coverage from other sources. A decision is not expected until late spring.
On Wednesday, the Supreme Court heard oral argument in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937), a case regarding the scope of the concept of patent exhaustion, also known as the first sale doctrine. While the entirety of the arguments is worth a read (the transcript is available here), click below for our impressions of the arguments.
Tomorrow the Supreme Court will hear oral argument in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937). The case will determine whether patent owners who sell products embodying their patents conditionally are able to recover damages for patent infringement if the products are subsequently sold beyond the scope permitted by the original sale.
The question presented is:
Whether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that respondent's patent rights were not exhausted by its license agreement with Intel Corporation, and Intel's subsequent sale of the product under the license to petitioners.
The outcome of the case will determine whether patent holders can obtain damages for infringement when they conditionally sell products embodying their patent if the product is subsequently used beyond the scope of those conditions. Under the Federal Circuit's decision, such a conditional sale did not exhaust LG's patent rights, and therefore LG could pursue claims of patent infringement against those downstream purchasers and users of the product, even though the products were purchased from Intel, who was licensed by LG, the patent holder. If the court sides with the petitioners, it could result in some cases that are, in essence, patent cases being heard by the regional circuits or even state courts. This is because that outcome could essentially change the cause of action for the patent holder for these "downstream" sales from one of patent infringement (which carries with it exclusive federal jurisdiction and the Federal Circuit as the exclusive court of appeal), to one of breach of contract, which would not necessary even have to be heard in federal court, let alone by the Federal Circuit on appeal.
It will also have an effect on how license agreements are written and potentially the amount of royalties that patent holders may want to pursue in such license agreements. If the patentee is not able to obtain a royalty for downstream purchasers or use of their patented goods, the royalty that would otherwise have been spread over several levels of the distribution chain may have to be borne by the original purchaser. Patentees may also begin seeking liquidated damages clauses in agreements with licensees to ensure compliance with the conditions of the sale, as the patentee would arguably no longer have a cause of action against the downstream purchaser. The result is likely to be greater risk and investment costs incurred by the party making the original purchase from the patentee.
Our summary of the Federal Circuit decision being appealed may be found in this post, and our other coverage of the case may be found in these three posts.
The ABA has posted all the merits briefs in the case on its site here. SCOTUSBlog has also provided a preview of the case here.
Sometime in the afternoon, the transcript of the oral argument will be available here.
Update (1/16): Some media sources have also now published previews of the arguments:
Earlier this month, amicus briefs either supporting the Petitioner or neither party were filed with the Supreme Court in connection with Quanta Computer, Inc. v. LG Electronics, Inc (No. 06-937). Our previous coverage of the case can be found in these three posts. The Court also set oral argument for January 16, 2008.
Some discussion of the amicus filings and links to the briefs after the jump.
In its first conference of this Term, the Supreme Court today granted certiorari in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937). Our previous coverage of the case can be found in these two posts.
The question presented is:
Whether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that respondent's patent rights were not exhausted by its license agreement with Intel Corporation, and Intel's subsequent sale of the product under the license to petitioners.
The outcome of the case could have a substantial effect on how patent license agreements are both drafted and construed by courts. The case will likely be argued in early 2008.
Relevant links:
Update (1:00): The Associated Press provides this report on the case, and Reuters provides this report.
In a filing on August 24 (that got put on the back burner with the hubbub about the new continuation and claim limit rules), the government has recommended that the Supreme Court grant certiorari in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937). Detail about the Federal Circuit's decision may be found in this post. The question presented is:
Whether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that respondent's patent rights were not exhausted by its license agreement with Intel Corporation, and Intel's subsequent sale of the product under the license to petitioners.
If the Court hears the case, the outcome could have a dramatic impact on how patents are licensed, and the restrictions that patent holders are able to effectively place in patent license agreements. While the government supporting granting certiorari does not make a grant a foregone conclusion, it does increase the chances the Court will hear the case. The petition has been distributed to the Justices, and will be considered at the September 24 conference.
Relevant links:
A bit more is available from SCOTUSBlog and Patently-O.
In its order list released today, the Supreme Court has indicated that it may accept yet another appeal in a patent-related case, as it has invited the Office of the Solicitor General to file a brief stating the position of the United States on the case. The case is Quanta Computer, Inc. v. LG Electronics, Inc., and deals with the first sale doctrine in patent law. Specifically, the question presented in the petition for writ of certiorari is:
Whether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that respondent's patent rights were not exhausted by its license agreement with Intel Corporation, and Intel's subsequent sale of the product under the license to petitioners.
Typically if the Solicitor General believes a case should be heard by the Court, the Court, in turn, agrees to hear the case, so it will be interesting to see what the Solicitor General's views are on the subject. There is no specific deadline for the Solicitor General's office to provide its views, but it is reasonable to expect them with sufficient time for the Court to review the SG's filing and to take appropriate action before the end of the Court's current term in June.
Update (5/8): According to SCOTUS Blog, because the request for the SG's views was not made until April, the SG's brief may not be filed until the Court's next term this fall.
More details about the case and the Federal Circuit's decision after the jump.
William Patry, author of a treatise on copyright law, has an interesting post on his copyright law blog about a decision yesterday in the Fourth Circuit. The facts of the case are relatively simple the plaintiff owned a copyright on some architectural plans that the defendant obtained an unauthorized copy of. The defendant used the plans to have his house built. The plaintiff sued, seeking damages both for the cost of the plans as well as the profits on the house, as well as an order either preventing the defendant from selling the house or requiring its demolition. The court eventually held that damages for the infringement were sufficient to compensate the plaintiff, and did not enter an injunction.
So what went wrong? Details of the errors Mr. Patry noted after the jump.
Today the Sixth Circuit considered an issue that has not yet been addressed by any other United States Court of Appeal: whether the record rental exception to copyright law's first sale doctrine codified in 17 U.S.C. § 109(b)(1)(A) applies to all sound recordings or only to recordings of musical works. A divided panel held that the exception only applies to musical recordings, not audiobooks, potentially clearing the way for more widespread rental of audiobooks.
More details of the case after the jump.
