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IP News

By Compiled by Matthew Berkowitz and Natasha Sardesai
June 27, 2008

Supreme Court Limits Patentee Control of Downstream Uses

On June 9, 2008, the Supreme Court issued its ruling in Quanta Computer, Inc. v. LG Electronics, No. 06-937 (June 9, 2008). The unanimous opinion, delivered by Justice Clarence Thomas, set limits on a patent holder's right to claim royalties for downstream use of a licensed product. Significantly, the Court held that the doctrine of patent exhaustion may apply to method claims. Further, the Court found that since the components (microprocessors and chipsets) manufactured and sold by patent licensee Intel 'substantially embody the patents in suit,' the sale of those components exhausted respondent LG's patent rights along with any entitlement to royalties from petitioner Quanta.

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