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The blogs are full of commentary about yesterday’s Supreme Court patent exhaustion argument. But no one is declaring a winner. Instead, like my earlier post, people are focusing on trends in the Justices questions. Here are some of the best commentaries:
Amster, Rothstein & Ebenstein has a guest post all over the blogs — read it at Patently-O, 271 Patent Blog, and Philip Brooks’ Patent Infringement Updates.
Anticipate This!
I/P Updates — quoting Chief Judge Roberts: “We’ve had experience with the Patent Office where it tends to grant patents a lot more liberally than we would enforce under the patent law.” Ouch.
ScotusWiki — This is a companion to the well-known SCOTUSblog (which does not have any commentary about the argument posted yet). ScotusWiki does not provide any commentary, but it is a great resource for information about this case, and any other Supreme Court case.
Troll Tracker — predicting a 5-4 or 6-3 reversal of the Federal Circuit (although only “leaning” that way and only predicting a “slight” reversal) and, similar to my post, picking up on Justice Breyer’s cycling theme, but without professing a love for the sport.
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Continue Reading Quanta v. LG: Commentary Roundup

Tomorrow, the Supreme Court hears arguments in Quanta Computer Inc. v. LG Electronics Inc., 06-937 — click here for a collection of the many briefs filed in the case at Patently-O. The Court will be deciding whether parties can contract around patent exhaustion. The patent exhaustion doctrine, also known as the first sale doctrine, holds that a royalty can only be charged once per product. Once one link in the supply chain has paid a royalty for a patented product, or a key component, the patent is exhausted and no other link in the chain must pay a royalty for the same patent. LG Electronics attempted to contract around patent exhaustion.
LG Electronics owned a group of patents claiming microprocessors used in personal computers. They licensed the patents to Intel, but expressly excluded from the license any Intel customer that combined a licensed Intel microprocessor with non-Intel components. As part of the license, Intel sent letters to its customers warning of this license exclusion. LG Electronics sued Intel’s post-license customers that were allegedly combining the licensed Intel chips with non-Intel products.
The district court held that Intel’s license exhausted LG Electronics’ downstream patent royalty rights. But the Federal Circuit reversed, holding that when parties expressly restrict a license a court should infer that the parties also negotiated a more limited royalty to reflect the limited rights given in the license. As a result, patent exhaustion should not apply to restricted licenses. Quanta argues that the Federal Circuit’s decision contradicts a long history of both Federal Circuit and Supreme Court precedent requiring that patent licenses cannot be restricted to one link in the supply chain.
This is another case that has major implications for the business of patent law. If the Supreme Court overturns the Federal Circuit it could dramatically change the model of many patent licensing programs. I will keep you posted both on what occurs during the argument and the Court’s ultimate decision.
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Continue Reading Supreme Court Hears Patent Exhaustion Case Tomorrow

There is a debate brewing in the patent litigation community over the correct scope of a state institution’s waiver of 11th Amendment immunity when that institution asserts its patents. In Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U.S. 627 (1999), the Supreme Court held that state institutions were immune from patent infringement suits. Of course, if a state institution asserts a patent claim against a party, immunity is generally waived as to that party for counterclaims. But the Federal Circuit recently held in BPMC v. California Dept. of Health (Fed. Cir. 2007), that when the California Department of Health (“Cal. DoH”) intervened as a plaintiff in a patent suit (which is considered a waiver of immunity), it is only a waiver as to that suit. So, when the original suit was dismissed because of improper venue, the waiver was rescinded. As a result, the defendant in the first case, BPMC, could not bring a declaratory judgment suit that mirrored the original suit because of the Cal. DoH’s 11th Amendment immunity.
The Federal Circuit’s decision has ignited substantial controversy (click here for the WSJ Law Blog’s article on the subject and click here for IP Biz’s responsive blog post) and some are predicting that this will be the next patent case that the Supreme Court takes on cert. It is an interesting issue, but not one that we see often in the Northern District, which caused me to investigate whether Chicago-area colleges are prolific patentees. None makes the top ten, like my alma mater the University of Michigan – Go Blue! But there is some substantial patenting going on at Chicago-area universities. The following chart show the number of patents assigned to the identified universities or their related entities between 1969 and 2005:
Chicago-Area University Utility Patents 1969-2005 School Patents
U of Chicago 309
IIT 59
ISU 4
Loyola, Chicago 33
Northwestern 370
U of Illinois 552
As you can see from the chart, this issue has significant consequences for Chicago-area schools. I will keep you posted as the case develops.
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Continue Reading State Immunity’s Impact on Northern District Patent Suits

Many — myself included — thought the Supreme Court may have had its fill of patent law. But yesterday, the Supreme Court granted cert in Quanta Computer Inc. v. LG Electronics Inc., 06-937, to consider whether parties can contract around patent exhaustion. The patent exhaustion doctrine, also known as the first sale doctrine, holds that a royalty can only be charged once per product. Once one link in the supply chain has paid a royalty for a patented product, or a key component, the patent is exhausted and no other link in the chain must pay a royalty for the same patent. LG Electronics attempted to contract around patent exhaustion.
LG Electronics owned a group of patents claiming microprocessors used in personal computers. They licensed the patents to Intel, but expressly excluded from the license any Intel customer that combined a licensed Intel microprocessor with non-Intel components. As part of the license, Intel sent letters to its customers warning of this license exclusion. LG Electronics sued Intel’s post-license customers that were allegedly combining the licensed Intel chips with non-Intel products.
The district court held that Intel’s license exhausted LG Electronics’ downstream patent royalty rights. But the Federal Circuit reversed, holding that when parties expressly restrict a license a court should infer that the parties also negotiated a more limited royalty to reflect the limited rights given in the license. As a result, patent exhaustion should not apply to restricted licenses. Quanta argues that the Federal Circuit’s decision contradicts a long history of both Federal Circuit and Supreme Court precedent requiring that patent licenses cannot be restricted to one link in the supply chain.
This is another case that has major implications for the business of patent law. If the Supreme Court overturns the Federal Circuit it could dramatically change the model of many patent licensing programs.
For more about the Supreme Court’s decision to grant cert, check out:
Patently-O
271 Patent Blog
Patent Troll Tracker
FileWrapper
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Continue Reading Supreme Court to Tackle Patent Exhaustion

Arminak & Assocs., Inc. v. Saint-Gobain Calmar, Inc., No. 06-1561, Slip Op. (Fed. Cir. Sept. 12, 2007) (Holderman, C.J., sitting by designation.).*
On behalf of Chief Judge Michel and Judge Gajarsa, the Northern District’s Chief Judge Holderman affirmed C.D. California’s holding that declaratory judgment plaintiffs’ (“Arminak”) “AA Trigger” shroud design for a spray bottle did not infringe declaratory judgment defendant’s (“Calmar”) design patents covering certain design elements of shrouds. The main issue, and one of first impression, was whether the “ordinary observer” for purposes of design patent infringement should be the end-user/purchaser of spray bottles or the industrial purchaser that buys triggers or shrouds for assembly into a finished spray bottle product. The district court held that the ordinary observer was the industrial purchaser and the evidence clearly established that industrial purchasers would not be confused by similarities between Arminak’s and Calmar’s patented shrouds. Calmar argued, however, that the Supreme Court in Gorham Mfg. Co. v. White, 81 U.S. 511 (1871), expressly excluded experts from being ordinary observers and that, therefore, retail purchasers had to be the ordinary observer. But the Federal Circuit noted that did not sell shrouds or fully assembled spray bottles including their respective shrouds to retail purchasers. The parties sell shrouds to industrial purchasers. Industrial purchasers, therefore, are the appropriate population of ordinary observers. The ordinary observer is:
A person who is either a purchaser or, or sufficiently interested in, the item that displays the patented designs and who has the capability of making a reasonably discerning decision when observing the accused item’s design whether the accused item is substantially the same as the item claimed in the design patent.
* This is not an appeal from the Northern District, but I am covering it because Chief Judge Holderman authored the Opinion. Thanks to Dennis Crouch at Patently-O for bringing the case to my attention.
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Continue Reading Federal Circuit Further Defines Ordinary Observer Test

Black & Decker, Inc. v. Robert Bosch Tool Corp., No. 06 C 4440, Min. Order (N.D. Ill. Jul. 13, 2007) (Manning, J.).
In the first Northern District opinion to address the Supreme Court’s MedImmune declaratory judgment standard, Judge Manning denied plaintiff Black & Decker’s (“B&D”) motion to dismiss defendant Robert Bosch Tool Corp.’s (“Bosch”) declaratory judgment counterclaims for lack of subject matter jurisdiction. In a prior case between the parties before Judge St. Eve (numerous prior opinions are discussed in the Blog’s archives), B&D asserted that two models of Bosch’s Power Box radio (the “Old Power Box”) infringed B&D’s two patents (the “Old Patents”). Shortly before Judge St. Eve held trial in the previous case, B&D brought this suit against Bosch asserting that Bosch’s new model of its Power Box radio (the “New Power Box”) infringed a third patent (the “New Patent”). At about the same time, B&D sought leave to present evidence at trial before Judge St. Eve that the New Power Box infringed the Old Patents. Judge St. Eve, however, held that B&D had not disclosed the New Power Box as an accused product and that Bosch would be prejudiced by adding it immediately before trial. After the trial before Judge St. Eve, the jury returned a verdict that the Old Power Boxes willfully infringed certain claims of the Old Patents.
Shortly after Judge St. Eve excluded the New Power Box from her trial, B&D amended the complaint in this case to allege infringement of the Old Patents. In response, Bosch added declaratory judgment counterclaims regarding a third set of B&D patents (the “Smith patents”) which B&D had never asserted against Bosch. Bosch argued that an actual controversy existed because of the history of litigation between the parties and B&D’s prior testimony that it placed a high value on the exclusivity its patents provided in the workplace radio marketspace. B&D countered that, despite filing two suits against Bosch, B&D had never asserted the Smith patents against Bosch, or any other party. B&D also argued that St. Eve had already dismissed similar counterclaims in the last case for lack of actual controversy. But St. Eve’s decision was based upon the Federal Circuit’s old reasonable apprehension test, which the Supreme Court’s MedImmune decision overruled. Looking at “all of the circumstances,” as required by MedImmune, the Court held that an actual controversy existed. Among other reasons, the Court noted that the wide-ranging dispute between the parties regarding the workplace radios, suggested that it was in the parties’ best interests to resolve any dispute regarding the Smith patents.
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Continue Reading Northern District’s First Post-MedImmune DJ Decision

Leapfrog Enterprises, Inc. v. Fisher-Price, Inc., No. 06-1402, Slip Op. (Fed. Cir. May 9, 2007).
The Federal Circuit issued its first opinion analyzing an obviousness determination based upon the Supreme Court decision in KSR v. Teleflex, 550 U.S. __, 2007 WL 1237837 (2007). The Court affirmed the district court’s holding that the claim was invalid based upon obviousness and explained that obviousness is not determined by “a rigid formula disassociated from the consideration of the facts of a case.” You can download a copy of the Federal Circuit’s decision here.
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Continue Reading First Post-KSR Fed. Cir. Obviousness Analysis

Chamberlain Group, Inc. v. Lear Corp., No. 05 C 3449, 2007 WL 1017751 (N.D. Ill. Mar. 30, 2007) (Moran, J.).

Judge Moran granted plaintiffs’ motion for a preliminary injunction, preventing defendant from marketing and selling its garage door opener transmitters.  Relying upon its two prior claim construction decisions (which can be found in the Blog’s archives), the Court first determined that plaintiffs had proven a likelihood of success on its infringement claims.  Then the Court considered plaintiffs’ irreparable harm claims.  The Court denied plaintiffs’ argument that its showing of a strong likelihood of success creates a presumption of irreparable harm.  Citing eBay, Inc.  v. Merc Exchange, L.L.C., 126 S. Ct. 1837 (2006), the Court held that the Supreme Court limited the automatic presumption of irreparable harm based upon infringement.  Instead, the Court determined that plaintiffs’ had shown that they were irreparably harmed because defendant’s sales had eroded its prices and strained its customer relations.Continue Reading eBay Decision Negates Presumption of Irreparable Harm for PI’s