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Case Details

Case: Quanta Computer, Inc., v. LG Electronics
Subject(s): patents, royalties, licensing fees
Appealed from: Federal Circuit Court of Appeals

Docket No: 06-937
Decision Rendered: No
Decision: None

Question(s) presented: Whether one who holds a patent can seek royalties from several companies as its product works its way through the manufacturing process.

Holding of appellate court: The district court held that Intel's license exhausted LG Electronics' downstream patent royalty rights. After one link in the supply chain has paid a royalty for a patented product the patent is exhausted and no other link in the chain must pay a royalty for the same patent. The U.S. Court of Appeals for the Federal Circuit reversed, primarily on the basis that although an unconditional sale does warrant patent exhaustion, in this case, the sale was expressly conditional. B. Braun Med. Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed. Cir. 1997) (discussing Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 708 (Fed. Cir. 1992)) (emphasis added and citations omitted). In other words, LG Electronics successfully reserved its right to seek subsequent royalties from downstream purchasers.

Date of Oral Arguments Your Prediction Your Prediction by Justice Update
Affirm Reverse Vacate Justice Affirm Reverse Vacate
Jan 16, 2008 Alito