Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)

In Quanta Computer, Inc. v. LG Electronics, Inc., the underlying dispute arose from LG Electronics, Inc. (LGE) asserting its patent rights against Quanta Computer, Inc. (Quanta) regarding three specific patents related to computer technology. LGE had acquired these patents in 1999, which included U.S. Patent Nos. 4,939,641, 5,379,379, and 5,077,733. The patents involved methods and systems for managing data in computer systems, particularly concerning the interaction between microprocessors and memory components. Quanta, a manufacturer of computer systems, was accused of infringing these patents by selling products that incorporated components covered by LGE's patents without proper authorization. The procedural history began when LGE filed a lawsuit against Quanta, claiming patent infringement. The case was initially heard in the United States District Court, which ruled in favor of Quanta, applying the doctrine of patent exhaustion. LGE appealed this decision to the United States Court of Appeals for the Federal Circuit, which reversed the district court's ruling. The Federal Circuit held that the doctrine of patent exhaustion did not apply to method patents and further determined that the sales made by Quanta were not authorized under the licensing agreement. Quanta subsequently sought review from the Supreme Court, which granted certiorari to resolve the conflicting interpretations of patent exhaustion. The relevant background context includes the long-standing legal principle of patent exhaustion, which limits the rights of patent holders following the authorized sale of a patented item. This case was significant as it tested the application of this doctrine to method patents and the sale of components that are part of a patented system. The Supreme Court's decision aimed to clarify whether patent exhaustion applies in situations where the sold components must be combined with additional parts to practice the patented methods, ultimately ruling in favor of Quanta and reinforcing the applicability of patent exhaustion to method patents.

Whether the doctrine of patent exhaustion applies to the sale of components of a patented system that must be combined with additional components in order to practice the patented methods.

The judgment is reversed.