Jun. 17, 2008
Unfortunately, the Supreme Court has not addressed all of the issues concerning the patent exhaustion doctrine.
First, the Court did not address the Federal Circuit's precedent that the sale of patented components outside the U.S. by a patentee or its licensee does not exhaust a U.S. patent. See Fuji Photo, 394 F.3d 1368; Jazz Photo, 264 F.3d 1094.
Second, in Footnote 7 of Quanta, the Court raised a new issue for consideration, viz., whether a patentee has any available remedies under contract law if patent exhaustion precludes damages under patent law. This issue may lead to a host of new theories of contract law. Whether the patent exhaustion doctrine is an issue of patent law or contract law was heavily discussed during oral argument.
Third, the Court's discussion as to what constitutes a "reasonable use" of a patented product and what the "essential features" of a patent claim are is helpful. However, it is likely that these standards will need to be further developed and refined by the lower courts in the future.
Finally, the Court's analysis in Quanta has left open the possibility that, under a different contractual scheme, such as where a conditional license is granted and the condition is not fulfilled; the exhaustion doctrine may not come into play.
Conclusion
The Supreme Court in Quanta reestablished traditional principles of patent exhaustion. While two of the more significant departures in the law of patent exhaustion by the Federal Circuit have been addressed, other issues remain.
For a more complete discussion of the Court's Opinion, please see our IP Law 360 Guest Column, "Quanta Computers, Inc. v. LG Electronics, Inc.: The Supreme Court Sets the Law on Patent Exhaustion Back On Track," which is available at our firm's website (www.arelaw.com/articles) along with our firm's prior writings on this case.
Charles R. Macedo and Joseph M. Casino are Partners and Marion P. Metelski is Senior Counsel at Amster, Rothstein & Ebenstein LLP. Their practices specialize in intellectual property issues, including litigating patent, trademark, and other intellectual property disputes; prosecuting patents before the U.S. Patent and Trademark Office and other patent offices throughout the world; registering trademarks and service marks with U.S. Patent and Trademark Office, and other trademark offices throughout the world; and drafting and negotiating intellectual property agreements. They may be reached at cmacedo@arelaw.com, jcasino@arelaw.com, and mmetelski@arelaw.com. The authors wish to express their thanks to Michael J. Kasdan for his thoughtful insight into what the law of exhaustion should be. This article is not intended to express the views of the firm or its clients.
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