Patent exhaustion is an affirmative defense to a claim of patent infringement, ExcelStor Technology, Inc. v. Papst Licensing GMBH & Co. KG, 541 F.3d 1373, 1376 (Fed.Cir.2008), and like other issues in which there are no disputed factual questions, may be properly decided by summary judgment. See TransCore v. Elec. Transaction Consultants, 563 F.3d 1271, 1274 (Fed.Cir.2009). Keurig, Inc. v. Sturm Foods, Inc., 732 F. 3d 1370 (Fed. Cir. 2013).
"The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item." Quanta, 553 U.S. at 625, 128 S.Ct. 2109. The rationale underlying the doctrine rests upon the theory that an unconditional sale of a patented device exhausts the patentee's right to control the purchaser's use of that item thereafter because the patentee has bargained for and received full value for the goods. See Princo Corp. v. ITC, 616 F.3d 1318, 1328 (Fed.Cir.2010) (en banc). Keurig, Inc. v. Sturm Foods, Inc, ibid.
Method claims can also be deemed exhausted.
The leading cases in which the patent exhaustion doctrine has been applied to method claims are Quanta and United States v. Univis Lens Co., 316 U.S. 241, 62 S.Ct. 1088, 86 L.Ed. 1408 (1942). In Univis, the Supreme Court determined that claims to methods for manufacturing eyeglass lenses, and to the finished lenses themselves, were exhausted when the patent holder sold unpatented lens blanks (unpolished blocks of glass) to a manufacturer and distributor that polished and shaped the blanks into finished lenses by practicing the patented methods. See 316 U.S. at 250-51, 62 S.Ct. 1088. The Court held that the method claims were exhausted because the patent holder sold an unpatented, "uncompleted article" that embodied essential features of the patented method. Id.Keurig, Inc. v. Sturm Foods, Inc, ibid.
In Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), the Supreme Court held that method claims for managing and synchronizing data transfers between computer components were exhausted when the patent holder licensed a manufacturer to produce and sell unpatented microprocessors and chipsets that performed the patented methods when incorporated with memory and buses in a computer system. Quanta, 553 U.S. at 621, 128 S.Ct. 2109. The Court compared the subject items to the lens blanks in Univis. Id. at 630, 128 S.Ct. 2109. As in Univis, the Court concluded that exhaustion was triggered by sale of the components because their only reasonable and intended use was to practice the patent and because they embodied essential features of the patented invention. Id. at 631, 128 S.Ct. 2109. Keurig, Inc. v. Sturm Foods, Inc., ibid.
The Court thus established that method claims are exhausted by an authorized sale of an item that substantially embodies the method if the item (1) has no reasonable noninfringing use and (2) includes all inventive aspects of the claimed method. Id. at 638, 128 S.Ct. 2109. Both of the Univis and Quanta opinions emphasized the unpatented nature of the products sold. Thus, the substantial embodiment test provided a framework for determining whether the sale of an unpatented component (e.g., lens blanks that are further ground and polished or microprocessors and chipsets that are further attached to memory and buses in a computer system), which by itself does not practice the patented method, is still sufficient for exhaustion. The Court held that it is. Keurig, Inc. v. Sturm Foods, Inc., ibid.
THIS CASEBOOK contains a selection of 22 U. S. Court of Appeals decisions that analyze and interpret the doctrine of patent exhaustion. The selection of decisions spans from 2003 to the date of publication.