Supreme Court To Determine If Patent Holders Can Shake Down Entire Supply Chain

from the more-judicial-patent-reform dept

Wed, Sep 26th 2007 5:12am — Mike Masnick

While Congress continues to fight over patent reform (often missing the bigger issues for those that the lobbyists are most interested in), it's been the Supreme Court that's been doing its best to bring some sanity back to the patent system. After ignoring patent law as being a boring "commercial" dispute for years, the Supreme Court finally realized a few years ago that the Court of Appeals for the Federal Circuit (that handles patent cases) had basically redefined patent law over the last few years, creating much of the mess we're in today. Suddenly, the Court started taking a bunch of patent cases -- and almost every time it slapped down CAFC and brought some common sense back to the patent system. Of course, there's still a lot more to do on that front, and apparently the Supreme Court agrees. It's now taken yet another patent case that could have major ramifications.

This case, officially between LG and Quanta, really concerns the question of how many times patent holders can get a cut of any component found violating a patent. Currently, patent holders will often sue up and down the food chain. So, if you happen to have a patent on a component within a motor that is used in automobile wipers, you could sue the motor maker, the wiper maker and the auto manufacturer -- and get all three to pay, even though the same product is used throughout the supply chain. This case will look at whether or not it makes sense to allow for that type of double, triple or quadruple dipping. Patently O has a good summary of the case, pointing out that it's effectively asking if the concept of the "first sale doctrine," which applies to copyrights, also applies to patents. If the Supreme Court follows its recent trend in overturning CAFC, this could have a big impact on a lot of patent cases. For example, it would entirely derail NTP's latest patent suits. In that case, NTP forced RIM into licensing its (questionable and likely to be invalidated) patents, and is now suing all the service providers who offer RIM's Blackberry -- effectively double dipping. Once again, it's nice to see both the sudden interest in patent law -- and what often appears to be very clear thinking on the part of the Supreme Court on the issue.

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Filed Under: patent reform, supply chain, supreme court

13 Comments

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Aaron Martin-Colby (profile), 26 Sep 2007 @ 7:04am

Thank God.
Well,

Now we can only hope that the Supreme Court doesn't stumble along the way. I guess we should have at least a little faith. They are SUPREME, after all.
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Le Blue Dude, 26 Sep 2007 @ 7:18am

Here's to hope
Maybe, in a few years, things will be better.

Then again, in a few years, the high tide line will be somewhere in Iowa. Never mind.
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angry dude, 26 Sep 2007 @ 8:34am

morons
All this pussy waving, pussy talking lately, gradually dismantling the US Patent system.
Why not just say "We, people of the United States, do not want patent system anymore" and then change the US Constitution.
I will gladly give up my only patent if all patents are abolished.
But they just want to abolish patents for little guys and keep them in force for the big crooks.
This is called "patent fairness"
fairness my ass...
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- another angry dude, 26 Sep 2007 @ 9:43am
  
  Re: morons
  All of the important parts of the US government are corrupt, I mean lobbied :) One vote per person was supposed to put the power in the hands of the population, not to whomever makes the biggest campaign contribution. How do we allow this to continue??? Are we really OK with this in the "home of the free?"
  
  Are we all too busy worrying about paying our Mortgage/Car/Student Loan/Credit Card Payments? Is that the idea???
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  - Anonymous Coward, 26 Sep 2007 @ 1:34pm
    
    Re: Re: morons
    Have you ever read the Constitution?
    
    We, the people, get one vote per person to vote for the seats in the House of Representatives. That's it.
    
    Electors are appointed by state legislatures and take care of voting for the Senate seats and Executive branch.
    
    The Executive appoints the Judges of the Supreme Court.
    
    Also, the runner up in presidential elections should be the elected VP. I don't really know how or when the bundling of President and VP on a ticket truly started.
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    - angry dude, 26 Sep 2007 @ 1:57pm
      
      Re: Re: Re: morons
      "We, the people, get one vote per person to vote for the seats in the House of Representatives. That's it."
      
      Since the House of Representatives recently passed the draconian patent "reform" bill I assume that the general population no longer needs strong patent protection for american inventions, right ?
      O.K. with me, as long as the average Joe Smith is happy...
      But the thing is Joe won't be happy when the only thing left in this country - its inventive culture, is gone and US becomes a third-rate country...
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- john, 26 Sep 2007 @ 10:06am
  
  Re: morons
  This is a totally asinine comment. They are doing nothing of the sort. And if you're so fired up about this, then I'd go so far as to say there's a good chance you're a troll and part of the problem they're trying to clean up!
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  - angry dude, 26 Sep 2007 @ 10:18am
    
    I am a troll
    Yes, I am a little patent troll (a.k.a. small non-manufactoring inventor with just one issued and *valid* US Patent)
    Just like Dean Kamen or Thomas Edison etc., only smaller
    
    Evil evil patent trolls...
    They stole all the bread from your dinner table and drank all the water in your house...
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Joe Smith, 26 Sep 2007 @ 9:31am

Bad case
This may be a bad case to decide these issues on because LG licensed its patents to Intel but subject to a restriction as to what use customers of Intel could make of the resulting components manufactured by Intel. The alleged infringers did not comply with the restriction that Intel had agreed to. You have to wonder if those "infringers" ever knew or agreed to the restrictions between Intel and LG. It seems to me based on the little that I know about the case that the case is inevitably going to bog down on the evidence and not engage any broad principles.
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Something needs to change, 26 Sep 2007 @ 10:57am

I can understand the anger of the small non-producing inventor, there needs to be a way to protect the patents of the individual inventor against theft from a corporation. Having a patent will not protect the small inventor, the corporations have the money and legal resources to find a loophole that can enable them to "steal" a patent. If anyone finds this hard to believe, my uncle invented a great board game many many years ago he called it Catagories, he got it patented, then presented the game to a major company that produces board games. They said they weren't interested, yet shortly afterwards my uncle's game is being manufactuered by this company under a slightly different name. All they needed to do was make a very minor change to get around the patent, and my uncle was basically shit out of luck.....so I understand the anger, and agree that something needs to be done.
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troll killer, 26 Sep 2007 @ 1:47pm

you troll you suck.
You troll, you suck!
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Matt, 26 Sep 2007 @ 7:15pm

Supreme Court To Determine WHETHER Patent Holders
Supreme Court To Determine WHETHER Patent Holders Can Shake Down Entire Supply Chain
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Alex, 27 Sep 2007 @ 12:31pm

Tax
The state should take ownership of all patents and pay a purchase fee to inventors or for really special ones (like ones that cost millions to discover) pay a percent share of taxation from companies that license the technologies. The company still has the choice of keeping a trade secret or negotiating the sale with the state.

That moves the competition to who can make best use of the ideas in products that they bring to market and sell those products most competitively.
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