The Limits of Licensing: Quanta v. LGE and the New Doctrine of Simultaneous Exhaustion

James W. Beard

The Supreme Court’s decision in Quanta Computer, Inc. v. LG Electronics, Inc. clarifies the reach of the established doctrine of exhaustion and creates an ancillary expansion of that doctrine that I would call simultaneous exhaustion. In comparison to classic exhaustion, which generally establishes that patent rights are “exhausted” with respect to an individual item when the item is subject to an unconditional sale by the patentee, the doctrine of simultaneous exhaustion establishes that the same mechanism applies to related patents under certain specific and discrete conditions. While the doctrine thus takes the form of a clarification and expansion of existing and established patent law, it is noticeably distinct in its reach and its consequent implications to the computer technology and biotechnology industries. Thus, discussion of Quanta as a mere explanation of the doctrine of exhaustion falls short of according the holding its due import.

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December 31, 2008 PDF Articles, Volume 12

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