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This quarterly publication is a peer-reviewed and archival journal that covers reconfigurable technology, systems, and applications on reconfigurable computers. Topics include all levels of reconfigurable system abstractions and all aspects of reconfigurable technology including platforms, programming environments and application successes.
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on its side. Indeed, the opening sentence of the Quanta decision states: “For over 150 years, this Court has applied the doctrine of patent exhaustion to limit the patent rights that survive the initial authorized sale of a patented item.” The Court reviewed several cases in which exhaustion defenses had succeeded, including the Univis case, which, like Quanta, involved method claims.
Univis owned patents pertaining to eyeglass lenses. It licensed certain firms to make blank lenses; it also licensed wholesalers to grind the blanks to make finished lenses and retailers to sell the finished lenses to consumers. U.S. antitrust authorities challenged Univis’ effort to control the downstream market as an unreasonable restraint on trade. In 1942, the Supreme Court ruled that Univis’ patent rights had been exhausted by its authorization of the manufacture and sale of blank lenses. Even though the blanks did not embody the whole of Univis’ invention, they embodied essential features of the invention and the intended use of the blanks was to practice the invention. This sufficed to exhaust Univis’ patent rights.
The Court in Quanta observed: “Just as the lens blanks in Univis did not fully practice the patents at issue because they had not been ground into finished lenses…the Intel products cannot practice the LGE patents—or indeed function at all—until they are combined with memory and buses in a computer system.” All that stood between the Intel components and completion of LGE’s patented processes was the addition of standard components, such as main memory.
The Court observed that the exhaustion doctrine would be a “dead letter unless it is triggered by the sale of components that essentially, even if not completely, embody an invention.” The “dead letter” danger was especially keen because of how simple it would be for “[p]atentees seeking to avoid the patent exhaustion doctrine [to] simply draft their patent claims to describe a method rather than an apparatus.”
The CAFC’s ruling would allow patentees to intrude deeply into the stream of commerce and upset settled expectations about the consequences of purchasing authorized products from licensed manufacturers. The Supreme
Court could not accept this “end run” around the exhaustion doctrine.
Quanta will certainly protect downstream customers from LGE-like attempts to enforce license restrictions as to goods embodying the whole or material parts of patented inventions. However, the Supreme Court in Quanta “express[ed] no opinion on whether contract damages might be available [to patent owners] even though exhaustion operates to eliminate patent damages.”
Left unresolved was an important set of questions as to whether (or to what extent) contractual restrictions on customer uses or distributions of products embodying the invention are consistent with patent law’s exhaustion doctrine.
Of particular significance is whether conditional sales of goods embodying patented inventions fall outside the exhaustion rule, as the CAFC opined in Mallinkrodt, Inc. v. Medipart, Inc. Mallinkrodt’s patents were for inventions embodied in medical devices. It sold these devices inscribed with a legend that they were “for single use only.” Ignoring this legend, certain customers (hospitals) contracted with Medipart to prepare the devices for reuse. When Mallinkrodt sued Medipart for patent infringement, Medipart asserted that the patent exhaustion doctrine shielded it from liability.
In Mallinkrodt, the CAFC treated exhaustion as a default rule that could be, and had been, overridden by sales made conditional on the purchaser’s acceptance of single-use-only terms. (The CAFC has also enforced restric-
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