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US Supreme Court hears LG-Quanta patent case

  Patent Law  -   POSTED: 2008/01/17 14:07

The Supreme Court on Wednesday appeared ready to make it harder for patent owners to demand licensing fees from companies throughout the manufacturing supply chain.

The case before the court, which began when a South Korean consumer electronics maker sought to enforce three patents against a Taiwanese maker of laptop computers, has implications for many industries.

LG Electronics Inc. entered into a broad patent licensing agreement in 2000 with Intel Corp., which then sold chips with LG's technology to Quanta Computer Inc. and other computer manufacturers. LG's lawyer, Carter Phillips, argued that Intel's license didn't extend to the computer makers and once Quanta installed the chips into computers, it infringed LG's patents.

Maureen Mahoney, Quanta's lawyer, countered that under the legal doctine of "patent exhaustion," once Intel made a sale of the chips to Quanta pursuant to its license with LG, LG could no longer seek royalties from companies downstream in the manufacturing process.

Several justices, including Stephen Breyer, seemed to agree.

"All that we would do by finding in your favor is destroy the patent exhaustion doctrine," he told Phillips.

The case has attracted a significant amount of attention from the high tech, automotive and biotechnology sectors, with over 25 parties filing friend of the court briefs in the case.


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