By Philip G. Semprevio II
Summary: For the past several years, the Supreme Court has been paying close attention to the patent laws and the effects those laws have on business relationships. There have been eight patent cases decided by the Supreme Court over the past five years; this trend shows no signs of stopping. The Court recently granted certiorari to Quanta Computer in a case that could potentially change the environment in which business is done. The case, LG Electronics v. Quanta Computer, was decided by the Court of Appeals for the Federal Circuit on July 7, 2006. The Court of Appeals ruled in favor of LG Electronics (LGE), overturning the ruling by the Northern District of California, which found that LGE’s patents at issue in the case were exhausted. Since the Supreme Court has decided to take this case, they will have the opportunity to differentiate between two separate branches of the patent exhaustion doctrine that have evolved over nearly a century of patent jurisprudence. That last time the Court addressed patent exhaustion explicitly was in 1942.
This article will address the history of the patent exhaustion doctrine and how this line of cases evolved into the Supreme Court issue it is today. After the background for the case has been described, a discussion of where the case history and an application of how the Supreme Court should apply the exhaustion doctrine in this case will follow.