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Supreme Court to Reconsider Patent Exhaustion

By Paul A. Ragusa and Noera Ayaz

May a patent owner sue its own licensee's customers when those customers purchase essential components that have no reasonable non-infringing use from the licensee, and then combine those components with others to form a patented product? The answer may be decided by the Supreme Court in Quanta Computer, Inc. v. LG Electronics, Inc., U.S., No. 06-937, cert. granted Sept. 25, 2007.

Under the doctrine of Patent Exhaustion, an unconditional sale of a patented product by the patent owner exhausts the owner's patent rights to the product, and the purchaser may then use or resell the product free and clear of those rights. However, the applicability of the doctrine is unclear when a patent owner attempts to retain certain rights, e.g., by requiring its licensee to condition its sales. After requesting and obtaining an amicus curiae brief from the Solicitor General, the Supreme Court granted Quanta Computer, Inc.'s ('Quanta') petition for certiorari and will address the issue this term.

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