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Quanta Computer, Inc. v. LG Elecs., Inc.

Supreme Court of the United States

January 16, 2008, Argued; June 9, 2008, Decided

No. 06-937

Opinion

 [*621]  [**2113]   Justice Thomas delivered the opinion of the Court.

For over 150 years this Court has applied the doctrine of patent exhaustion to limit the patent rights that survive the initial authorized sale of a patented item. In this case, we decide whether patent exhaustion applies to the sale of components of a patented system that must be combined with additional components in order to practice the patented methods. The Court of Appeals for the Federal Circuit held that the doctrine does not apply to method patents at all and, in the alternative, that it does not apply here because the sales were not authorized by the license agreement. We disagree on both scores. Because the exhaustion doctrine applies to method patents, and because the license authorizes the sale of components  [1676]  that substantially embody the patents in suit, the sale exhausted the patents.

Respondent LG Electronics, Inc. (LGE), purchased a portfolio of computer technology patents in 1999, including the three patents at issue here: U.S. Patent Nos. 4,939,641 ('641); 5,379,379 ('379); and 5,077,733 ('733) (collectively LGE Patents).  [****8] The main functions of a computer system are carried out on a microprocessor, or central processing unit, which interprets program instructions, processes data, and controls other devices in the system. A set of wires, or bus, connects the microprocessor to a  [***1001] chipset, which transfers data between the microprocessor and other devices, including the keyboard, mouse, monitor, hard drive, memory, and disk drives.

The data processed by the computer are stored principally in random access memory, also called main memory. Webster's New World Dictionary of Computer Terms 334, 451  [*622]  (8th ed. 2000). Frequently accessed data are generally stored in cache memory, which permits faster access than main memory and is often located on the microprocessor itself.  Id., at 84. When copies of data are stored in both the cache and main memory, problems may arise when one copy is changed but the other still contains the original "stale" version of the data. J. Handy, Cache Memory Book 124 (2d ed. 1993).  The '641 patent addresses this problem.  It discloses a system for ensuring that the most current data are retrieved from main memory by monitoring data requests and updating main memory from the cache when stale  [****9] data are requested. LG Electronics, Inc. v. Bizcom Electronics, Inc., 453 F.3d 1364, 1377 (CA Fed. 2006).

The '379 patent relates to the coordination of requests to read from, and write to, main memory.  Id., at 1378.  Processing these requests in chronological order can slow down a system because read requests are faster to execute than write requests.  Processing all read requests first ensures speedy access, but may result in the retrieval of outdated data if a read request for a certain piece of data is processed before an outstanding write request for the same data. The '379 patent discloses an efficient method of organizing read and write requests while maintaining accuracy by allowing the computer to execute only read requests until it needs data for which there is an outstanding write request. LG Electronics, Inc. v. Asustek Computer, Inc., No. C 01-02187 CW etc., Order Construing Disputed Terms and Phrases, p. 42 (ND Cal., Aug. 20, 2002).  Upon receiving such a read request, the computer executes pending write requests first and only then returns to the read requests so that the most up-to-date data are retrieved. Ibid.

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553 U.S. 617 *; 128 S. Ct. 2109 **; 170 L. Ed. 2d 996 ***; 2008 U.S. LEXIS 4702 ****; 86 U.S.P.Q.2D (BNA) 1673; 76 U.S.L.W. 4375; 21 Fla. L. Weekly Fed. S 308

QUANTA COMPUTER, INC., et al., Petitioners v. LG ELECTRONICS, INC.

Prior History:  [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT.

LG Elecs., Inc. v. Bizcom Elecs., Inc., 453 F.3d 1364, 2006 U.S. App. LEXIS 16916 (Fed. Cir., 2006)

Disposition: 453 F.3d 1364, reversed.

CORE TERMS

patent, exhaustion, Products, embodied, license, blanks, finished, memory, practiced, microprocessor, lenses, inventive, license agreement, chipsets, requests, processes, purchaser, argues, buses, patent rights, manufacturer, combined, non-Intel, authority to sell, patent holder, monopoly, machine, notice, cache, patented invention

Patent Law, Infringement Actions, Defenses, General Overview, Anticipation & Novelty, Description in Prior Patents, Combinations