In Quanta Computer Inc v LG Electronics Inc, the Supreme Court addressed the patent exhaustion doctrine after a 66-year hiatus. The decision will most certainly affect the viability of certain patent and perhaps other intellectual property licensing strategies such as copyright licensing strategies. Because of the importance of intellectual property licensing to the domestic and foreign economy, it is important for IP owners not only to fully understand the patent exhaustion doctrine as clarified by Quanta but also to consider relatively recent sales and licensing strategies. In particular, so-called field of use and single use licensing has been used in the printer cartridge business model as a way to avoid the patent exhaustion doctrine. This article concludes with some practical pointers when using standard form contracts to market products which "substantially embody" a patent as set out in Quanta.
Original Publication: Managing IP (December 2009/January 2010 issue) http://www.managingip.com