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

from the more-judicial-patent-reform dept

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.

Filed Under: patent reform, supply chain, supreme court


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  1. identicon
    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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