Supreme Court Sounds Skeptical About Suing Up And Down The Supply Chain For Patent Infringement
from the fingers-crossed dept
Last fall, we mentioned that the Supreme Court had agreed to hear yet another interesting patent case, looking at whether companies could sue up and down the supply chain for patent infringement. If you're familiar with the concept of the "first sale doctrine" in copyright law, this case looks at whether or not the same concept applies to patents as well. Basically, if Company A legitimately licenses a patent from Company B and then sells a product based on that product to Company C, who turns around and resells it (perhaps as a component of a larger product), can Company B sue Company C for patent infringement? Or, did Company B "exhaust" the right to control Company A's products once it licensed the patent? That's what happened in the case. LG licensed a patent to Intel, who used the patent to make some chips. Intel turned around and sold those chips to computer makers, such as Quanta, who put them in laptops, which they then sold. LG claims that all those laptop makers also need to license the patents, even though they bought the chips from someone who had already licensed them. Basically, it's LG trying to get paid multiple times for the same patent.On Wednesday, the Supreme Court actually heard the case, and most of the mainstream press coverage suggests that the Justices were extremely skeptical of LG's position, though others note that Supreme Court Justice tea leaves aren't so easy to read. It does sound like the Justices did focus in on the key issues, though, and were concerned about the absurdity of a situation where a company is still controlling the sale of a product after it's been sold. While we wait for a decision, expect to see a few more patent hoarders try to rush through infringement lawsuits where they sue up and down the supply chain. In the meantime, we're still curious to know why Yahoo sided with LG, while most tech firms sided with Quanta on the other side.
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Filed Under: patents, supply chain, supreme court
Companies: lg, quanta
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Microsoft
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Re: Microsoft
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Chasing Payments
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the MSFT connection...
MSFT are threatening to sue end-users of Linux for the '245 patents' that Linux and OSS apparently infringe upon. (Ignoring for a moment that Microsoft won't even tell us which 245 patents are infringed, let alone what part of the Linux codebase is infringing on them)
It would seem to be more fair if they only get to sue the person or company who actually introduced the patent-infringing code, and end-users who merely use the code don't have to worry about any of this
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Re: the MSFT connection...
In Microsoft's case, let's suppose that they actually do have valid patents that Linux is infringing (which is far from clear, especially since Microsoft refuses to provide a list). Microsoft could claim that the users are using unlicensed software, and ought to have to pay product licensing fees that should have gone to Microsoft. This is somewhat dubious, but maybe less so if Microsoft provides appropriate legal warning to those users. But I doubt that Joe McCarthy-style saber rattling in the press about unspecified patent violations constitutes legal warning.
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Re: the MSFT connection...
It seems to me then that M$ might not have a case due to not filing in a timely manner and the doctrine of laches. Google is currently defending itself in a patent case using that defense.
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Terms
My take: If company B actually sold the patent to company A, then company A do what ever it wants with it. But, if company B only licensed the patent to company A, then company A can only do what what their license permits. So it all comes down to the terms of the license, in my view. Now, are Intel and LG disagreeing about the terms of the license? I don't see why The Supreme Court would get involved in a contract dispute like that. But, if Intel is claiming a legal right to ignore the terms then that's a whole different question. I don't see how The Supreme Court would uphold that.
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Simplest possible example..
I have an mp3 player made by "Actions semiconductor", one of many asian companies thaty make very cheap mp3 players. At some point I presume Actions got the appropriate licenses from Fraunhofer to use the mp3 format.. and in buying the player, I 'sort of' inherit permission to use the mp3 format without having to go back to Fraunhofer for an independent license.
But if I ended up building an mp3 jukebox around my cheap Actions mp3 player, and sold it, would I still have the same permission? Would this still be true even if I was making many jukeboxes, buying one (licensed) mp3 player per jukebox sold?
I would hope so.. but you never know for sure.
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practical look
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Re: practical look
That would all depend upon the terms of the license, wouldn't it? Or are you suggesting that license terms shouldn't be legally enforceable?
any other way and we would all have to pay for each and every peice [sic] of technology we use. Could you imagine if the patent holder for CREATING CHIPS decided to go after every manufacturer that put a chip in a hard drive?
It is illegal to use patented technology if you don't have the proper license (whether you are a manufacturer or not). In the case of manufactured goods, it is up to the manufacturer to obtain the proper licenses. If they don't, then you can be sued for using patented technology without a license. Simple. Then to recover your damages you can turn around and sue the manufacturer (maybe even the store that sold it to you) for not obtaining the proper licenses. That's the way the legal system works: everybody sues everybody and it all comes out in the wash.
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Contract thoughts
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Re: Contract thoughts
But you think that LG does, huh? Why is that?
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This would make selling most used goods illegal
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Re: This would make selling most used goods illega
Imagine a situation where you can't sell or trade-in your used car or used computer without paying a bunch of patent-holders.
Sell it or trade it? You can't even legally drive or use it if the patents aren't licensed. You're still responsible just as you would be if you bought stolen property. That's the way patent law currently works. If you find yourself in that situation then you should probably sue whoever you got it from.
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