The U. Court of Appeals for the Federal Circuit overturned a lower court decision which had said that because the mobile phone makers had licensed the patents there was no need for content providers to do so. Helferich said the companies infringed patents for handling content on smartphones.
In , the U. District Court for the Northern District of Illinois granted the New York Times and other content providers victory in a summary judgment saying that they were also covered by licenses to handset makers.
In that famil- iar context, the court held that exhaustion covered the method claim because it appeared in a patent that also contained an apparatus claim reading on the acquired brewer.
The Court in Morgan, address- ing exhaustion, indicated the doctrine would not apply in circumstances where the alleged infringement involved distinct, though related, validly patented inventions. In Morgan, the plaintiff, Morgan Envelope Co. In reaching its conclusion, the Court carefully distin- guished a circumstance in which the patent owner sold to purchasers two distinct, separately patentable inventions, even when they are designed to be used together.
Manchester Print Works, 1 F. See Morgan, U. In Aiken, Walter Aiken owned patents on—and sold as a pair—both a knitting machine and needles specifical- ly designed for use in the machine. Aiken, 1 F. The needles wore out after about four weeks of use, Aiken, 1 F.
LifeScan, F. That principle was announced in Morgan. The patentee had separate valid claims on a a machine for plucking chicken feathers and b components fingers for use in the machine. The Seventh Circuit rejected the defense because of the distinctness of the claimed ma- chine and component inventions. Research Corp. Write, Inc. I think such license cannot be inferred from a mere sale.
See Bloomer v. See also 35 U. But we do not think that Congress has granted the courts a license to erase those boundaries and expand the doctrine into difficult new territory unmapped by lines drawn, or even sketched, by Congress.
The authorities we have described do not support that position in holdings and run counter to it in pronounce- ments. Moreover, even outside this setting, there is a familiar, common-sense distinction between legal re- strictions applicable to one person and indirect positive or negative effects on that person of legal constraints imposed on another person.
It is reflected, for example, in traditional non-constitutional third-party standing doc- trine, whose very existence presupposes that one person may be adversely affected by suffer injury in fact from legal constraints on another and yet not have a legal right to seek elimination of those constraints. See, e. Tesmer, U. Wright, U. In Kirtsaeng v. As defend- ants acknowledged at oral argument, that rationale would sometimes apply to allow invocation of exhaustion to bar the patentee from enforcing a patent claim against the making, selling, and using of new, patentee-unauthorized copies of an article covered by the claim.
The New York Times Co. The economic implication would be dramatic. In the walkie-talkie example, the patentee would have to demand an exorbitant, likely unachievable, price for the first item if selling it terminated patent rights as to other potential users. Subjecting patentees to such impractica- ble limits could be expected to have a depressing effect on investments in innovation in many areas.
Telephones, software, and social- networking platforms are just a few of the many products whose value to each individual purchaser increases as more people buy or use the product. Corporation and Amici, Exh.
Arrow , United States v. See Arrow Decl. Such phenomena are ubiquitous. And it would do so, as far as we have been shown, with no reliable basis for judicial fashioning of standards that would guarantee an appropriate balance of innovation and efficiency results and set stable, predictable bounda- ries on what amounts to a rule defining property rights. Indeed, an expansion of exhaustion doctrine could do harm to existing patterns of licensing.
Within the bound- aries of the current doctrine of exhaustion, a patentee owning multiple patents covering complementary goods produced by different producers has the freedom to nego- tiate different licenses, subject to all the complexities and variations of market forces and existing institutional structures. We have no reason to conclude that inefficien- 7 See, e. FCC, F. THE NEW YORK TIMES 29 cies result from this freedom—or, more precisely, that this freedom yields greater inefficiencies than would result from an expansion of exhaustion doctrine, or that disrupt- ing arrangements negotiated through this freedom would produce net benefits.
In the recognition of what we do not know we find a strong reason to avoid expanding the judicial doctrine as defendants suggest. Thomas W. Caution about expanding the reach of exhaustion is of a piece with the broader judicial practice of generally maintaining the contours of property rights in the absence of legislative prescriptions.
Most generally, Congress has not provided perti- nent guidance on exhaustion in the patent setting. See 17 U. Titleserv, Inc. Inter- net Tech. But that principle has never served as an independent test for determining whether exhaustion applies.
It is hard to see how it could do so unless courts first established the dollar value of the proper reward to determine when the patentee had received it and there- fore had to stop seeking additional recoveries.
Exhaus- tion doctrine has never required such an inquiry, which would present difficulties akin to those recognized in other areas where the judicial determination of a proper price has been avoided. Law Offices of Curtis V. Trinko, LLP, U. Boston Edison Co. Quanta, U. Here, if the inquiry compares handset claims and content claims, we cannot find that either set wholly contains the invention found in the other. Each has its own inventiveness, as the cases come to us.
Conversely, assert- ed content claims claim operations performed or systems run by content providers, such as updating content, making it inaccessible after a time, and sending provider- crafted content identifications. Handsets, and in particu- lar handsets meeting the limitations of handset claims, do not perform those functions.
Excerpts and links may be used, provided that full and clear credit is given to Patrick J. Federal Circuit summaries. Skip to content. Home About. Fenner Investments, Ltd. The New York Times Company, et al. Posted on February 13, by Patrick J. Like this: Like Loading This entry was posted in Licensing , Patent Exhaustion. Bookmark the permalink. Leave a Reply Cancel reply Enter your comment here Fill in your details below or click an icon to log in:.
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