Quanta Computer, Inc. v. LG Electronics, Inc. (U.S. Supreme Court)
LGE licensed Intel to make certain chipsets that, when combined with memory, would practice LGE’s method patents. But LGE purported to limit Intel’s license so that it did not extend to downstream purchasers who combined Intel’s chipsets with memory. The Federal Circuit enforced LGE’s right to bring an infringement action against downstream computer manufacturers, holding that patent exhaustion does not apply to method patents and that LGE’s license to Intel did not extend to those manufacturers. We filed an amicus brief in the Supreme Court on behalf of several non-party manufacturers arguing that, under the traditional patent-exhaustion doctrine, the authorized sale of a component that substantially practices a method patent exhausts all of the patent-holder’s rights. The patent-holder must obtain its monopoly profit upon that first sale and cannot use the power of patent law to enforce limitations on downstream use of its intellectual property. The Supreme Court agreed.