Quanta v. LG Electronics

1
Quanta v. LG Electronics

• Cert. Petition pending.
• Supreme Court has
• called for the views
• of the Solicitor General.
• Question Presented
• Scope of patent exhaustion doctrine.

2
Factual Background

• LGE holds patents covering certain computers that
  use Intel chips.
• Intel has a license
• from LGE.

3
Factual Background

• Intel sold chips to defendant computer
  manufacturers.
• Per LGE-Intel agreement,
• Intel informed defendants
• that they were not authorized
• to combine the chips with
• non-Intel products.
• LGE sued manufacturers.
• Manufacturers asserted patent exhaustion.

4
Federal Circuit Ruling

• An unconditional sale of a patented device
  exhausts the patentees right to control the
  purchasers use of the device thereafter.
• Here, the sale was not unconditional because the
  LGE-Intel license expressly disclaims granting a
  license allowing computer system manufacturers to
  combine Intels licensed parts with other
  non-Intel components.
• Moreover, this conditional agreement required
  Intel to notify its customers of the limited
  scope of the license, which it did.

5
Factors Affecting Certiorari

• Important policy issue.
• Can parties contract around exhaustion?
• CAFC ruling quite fact-specific.
• Relevant sale was of a component,
• not a patented article.
• Notice provision not universal. What if it said
  Intel may only sell chips to companies that
  obtain a license from LGE.
• SG views likely to be influential.