Document: 128 S. Ct. 2109 (2008) QUANTA COMPUTER, INC., et al., Petitioners, v. LG ELECTRONICS, INC. No. 06-937. Supreme Court of United States. Argued January 16, 2008. Decided June 9, *2112 Maureen E. Mahoney, Washington, D.C., for petitioners. Thomas G. Hungar, the States as amicus curiae, by special leave Court, supporting Carter Phillips, respondent. Terrence D. Garnett, Vincent K. Yip, Peter Wied, Paul, Hastings, Janofsky & Walker LLP, Los Angeles, CA, Counsel Record, J. Scott Ballenger, Barry Blonien, Melissa B. Arbus, Anne W. Robinson, Latham Watkins Maxwell A. Fox, Minato-Ku, Tokyo, Petitioners. Virginia Seitz, Jeffrey T. Green, P. Kushan, Rachel H. Townsend, Quin M. Sorenson, Sidley Austin Respondent. *2113 Justice THOMAS delivered opinion Court. For over 150 years this has applied doctrine patent exhaustion to limit rights that survive initial authorized sale a patented item. In case, we decide whether applies components system must be combined with additional in order practice methods. The Appeals Federal Circuit held does not apply method patents at all and, alternative, it here because sales were license agreement. We disagree on both scores. Because patents, and authorizes substantially embody suit, exhausted patents. I Respondent Electronics, Inc. (LGE), purchased portfolio computer technology 1999, including three issue here: U.S. Patent Nos. 4,939,641 ('641); 5,379,379 ('379); 5,077,733 ('733) (collectively LGE Patents). main functions are carried out microprocessor, or central processing unit, which interprets program instructions, processes data, controls other devices system. A set wires, bus, connects microprocessor chipset, transfers data between devices, keyboard, mouse, monitor, hard drive, memory, disk drives. processed stored principally random access also called memory. Webster's New World Dictionary Computer Terms 334, 451 (8th ed.2000). Frequently accessed generally cache permits faster than memory is often located itself. Id., 84. When copies problems may arise when one copy changed but still contains original "stale" version data. Handy, Cache Memory Book 124 (2d ed.1993). '641 addresses problem. It discloses ensuring most current retrieved from monitoring requests updating stale requested. Bizcom Inc., 453 F.3d 1364, 1377 (C.A.Fed.2006). '379 relates coordination read from, write to, 1378. Processing these chronological can slow down execute requests. first ensures speedy access, result retrieval outdated if request certain piece before an outstanding same efficient organizing while maintaining accuracy allowing only until needs there request. Asustek Computer, C 01-02187 CW Order Construing Disputed Phrases, p. 42 (ND Cal., Aug. 20, 2002). Upon receiving such request, executes pending then returns so up-to-date retrieved. Ibid. '733 problem managing traffic bus connecting two components, *2114 no device monopolizes bus. allows multiple share giving heavy users greater access. This describes methods establish rotating priority under each alternately preset number cycles heavier maintain more without "hogging" indefinitely. 37-38. licensed portfolio, Patents, Intel Corporation (Intel). cross-licensing agreement (License Agreement) manufacture sell microprocessors chipsets use Patents (the Products). License Agreement "`make, use, (directly indirectly), offer sell, import otherwise dispose of'" its own products practicing Patents. Brief Petitioners 8 (quoting App. 154).[1] Notwithstanding broad language, some limitations. Relevant here, stipulates "`is granted either party hereto . any third combination Licensed Products items, like acquired sources hereto, import, combination.'" 164). purports alter usual rules exhaustion, however, providing that, "`[n]otwithstanding anything contrary contained Agreement, parties agree nothing herein shall way effect would sells Products.'" separate (Master Agreement), agreed give written notice customers informing them had obtained "`ensur[ing] product you purchase thus infringe LGE,'" "`does extend, expressly implication, make combining non-Intel product.'" 9 (emphasis deleted) 198). Master provides "`a breach have grounds termination License.'" 176). Quanta Quanta), group manufacturers. received required Agreement. Nonetheless, manufactured computers using parts buses ways modify follows Intel's specifications incorporate into systems. filed complaint against Quanta, asserting infringed District summary judgment holding purposes doctrine, resulted forfeiture potential infringement actions *2115 legitimate purchasers Products. 65 U.S.P.Q. 2d (BNA) 1589, 1593, 1600 (N.D.Cal.2002). court found although do fully issue, they reasonable noninfringing therefore their completed Univis Lens Co., 316 241, 62 1088, 86 L. Ed. 1408 (1942). Asustek, supra, 1598-1600. subsequent limiting ruling, apparatus composition-of-matter claims describe physical object, process, method, operations product. 248 F. Supp. 912, 918 (N.D.Cal.2003). includes claims, did apply. affirmed part reversed part. claims. concluded products. F.3d, 1370. certiorari, 551 ___, 28, 168 805 (2007). II longstanding item terminates 19th-century cases addressing extensions Woodworth planing machine. Purchasers licenses machine duration term sought continue through extended term. extension affect already secured who bought "in ordinary pursuits life." Bloomer McQuewan, 14 How. 539, 549, 532 (1853); see ibid. ("[W]hen passes hands purchaser, longer within limits monopoly"); Millinger, 1 Wall. 340, 351, 17 581 (1864). Adams Burke, 453, 21 700 (1873), dismissal holder's suit alleging licensee violated postsale restrictions where coffin-lids could used. "[W]here person ha[s] patentee his assignee," held, "this carrie[s] right long [is] capable use." 455. Although permitted article Henry A.B. Dick 224 1, 32 364, 56 645 (1912),[2] *2116 decision was short lived. 1913, refused uphold price-fixing provisions license. See Bauer Cie O'Donnell, 229 14-17, 33 616, 57 1041 (1913). Shortly thereafter, Motion Picture Co. Universal Film Mfg. 243 502, 518, 37 416, 61 871 (1917), explicitly overruled Dick. holder attempted purchasers' film projectors show made company. noted "increasing frequency" holders Dick-style thereby secure market control related, unpatented items. U.S., 509, 516-517, 416. Observing "the primary purpose our laws creation private fortunes owners `to promote progress science useful arts,'" id., 511, 416 Const., Art. I, § 8, cl. 8), scope grant inventor patent, pursuant [patent] statute, limited invention described patent." Accordingly, reiterated rule vend single, unconditional sale, sold being outside monopoly law rendered free every restriction vendor attempt put upon it." 516, recently discussed Univis, 1408, relied. Company, eyeglass lenses, purchaser lens blanks[3] fusing together different segments create bi- tri-focal lenses licensees agreed-upon rates. Wholesalers grind blanks finished Univis-licensed prescription retailers resale fixed rate. Finishing retailers, after grinding consumers sued Sherman Act, 15 U.S.C. §§ 3, 15, unlawful restraints trade. asserted defense antitrust suit. certiorari determine Univis' survived manufacturer shielded pricing scheme Act. assumed containing practiced wholesalers finishing ground lenses. 248-249, 1088. explained "embodi[ed] essential features [were] utility polished 249, that: "where uncompleted which, embodies invention, protection destined conformity he far *2117 embodied particular article." 250-251, sum, traditional bar following sufficiently patent even completely patentsuch intended terms patent. With history mind, turn parties' arguments. III argues inapplicable reasons linked tangible never sale. Rather, patentwhich occurs embodying patentis permissible extent transferred assignment contract. turn, reason preclude points allow avoid entirely inserting specifications. better argument. Nothing Court's approach supports LGE's argument cannot exhausted. true device, nonetheless "embodied" product, exhausts rights. Our precedents differentiate transactions involving embodiments those apparatuses materials. To contrary, repeatedly method. Ethyl Gasoline Corp. States, 309 436, 446, 457, 60 618, 84 852 (1940), example, motor fuel produced combustion motors.[4] Similarly, previously described, optical partially 248-251, These rest solid footing. Eliminating seriously undermine doctrine. Patentees seeking simply draft rather apparatus.[5] Apparatus *2118 "may nearly will difficult distinguish process function apparatus." ex rel. Steinmetz Allen, 192 543, 559, 24 48 555 (1904). By characterizing instead claim machine's performing task, drafter shield practically exhaustion. case illustrates danger end-run around On theory, practices downstream liable infringement. Such violate principle "once lawfully sold, [its] implied benefit patentee." Adams, Wall., 700. reject category, exhaustible. B next consider trigger incomplete necessarily exhaust article, Univis. Just been observes, Patentsor indeed, alluntil If, item, require parts. dead letter unless triggered essentially, completely, invention. Otherwise, authorize complete exception minor stepsay, socket extend end user. LGE, part, reasons. First, maintains should contain aspects needed practiced. Second, asserts "patentable distinction" since subject (citing 248-252, 1088). contrast, "independent distinct products" systems patents." 13. Finally, analogous individual elements *2119 impermissibly "ascrib[e] element status itself." Aro Convertible Top Replacement 365 336, 344-345, 81 599, 5 592 (1961). governs case. As explained, "embodie[d] [the] invention." 249-251, Each attributes shared relinquishment respect sold." met standard "without [they were] object [was] enable [finishing retailer] polish prospective wearer." Here, suggested incorporating Patents.[6] Nor discern one: chipset connected And apparent permit essential, inventive, feature performed unique. explained: "The finish precisely manner bifocal blanks. Indeed, appellees contended licensing supported covering relating Consequently, appears perform contribute claimed novelty lenses." O.T.1941, 855 10 (footnote citations omitted). While covered necessary working lens, 41 258, 262-263 (S.D.N.Y.1941), *2120 That included detail referred Those mention treated incidental noting, "[t]he blank manner," 1,876,497, 2, "then polished," 1,632,208, Tr. Record pp. 498. Like blanks, constitute material step application common addition Everything inventive about They checking comparing various Naturally, carry attached buses, additions system, enables function. specifically designed attached; creative added alternative follow know internal structure, guards trade secret. 3. itself designing lacking unpersuaded attempts articles removal characterizes sharing "basic nature" virtue similarity, "patentably steps" involved 26-27. But think nature final step, consists adding deleting material, relevant characteristic. noninventive: customer's prescription, combined, according design, components. regard across general principle: not, A, B, relationship prevent composed shatter-resistant glass embodied, exhausted, different. *2121 thousands analysis altered fact consideration patentby, featuresexhaust reliance misplaced dealt question replacement infringes here. importantly, squarely applicable disclose new existing "cover[ing] totality [so] element, separately viewed, grant." 344, 599; Mercoid Mid-Continent Investment 320 661, 667-668, 64 268, 88 376 (1944) (noting any" elements). Aro's warning viewed equivalent specific context aspect chipset; rather, design themselves Having Exhaustion holder. cites General Talking Pictures Western Elec. 304 175, 58 849, 82 1273 (1938), 305 124, 59 116, 83 amplifiers commercial breaching buyer selling home use. authority "could convey petitioner what knew sell." Pictures, 181, 849. i.e., overlooks important structure Intel-LGE transaction. restricts intend combine broadly [or] sell'" 154). sure, customers, neither contends breached respect. 9; 9. event, provision requiring *2122 appeared suggest Hence, conditioned Quanta's abide directions notice. disclaimed 8. irrelevant based turns Alternatively, invokes "making" article. 43. rephrasing adds above, making is, purposes, words, further results partshere, memoryto No conditions prevents products.[7] IV invoking ability took monopoly, result, assert Quanta. reversed. ordered. NOTES [1] 145-198 sealed; therein unsealed briefs, latter. [2] Company mimeograph machines stipulating used ink, paper, supplies Company. rejected notion "can keep retaining title," Dick, 18, "any stipulation, inherently violative substantive law" "valid enforceable," 31, 364. requirement, buys qualified use," "an title machine, limitations 26, [3] "rough opaque pieces suitable size, composition polished, multi-focal eyeglasses." 244, [4] (1) fluid additive increasing gasoline efficiency, (2) mixing fluid, (3) motors. Corp., 618. fuel. 459, refiners relinquished patentee's exclusive [5] One commentator recommends strategy "will numerous regarding good, force intrude deeply stream commerce." Thomas, Of Text, Technique, Tangible: Drafting Claims Around Rules, Marshall Info. 219, 252 (1998); 225-226 (advocating conversion noting "[e]ven novice encounter scant difficulty converting artifact technique back again"). [6] suggests overseas, parts, engineered disable features. 21-22, n. 10. teaches "capable patent," uses infringing. 1088 added). Whether country functioning infringing it. suggesting disabled solution. real [7] note contract include breach-of-contract claim, express damages might available though operates eliminate damages. Keeler Standard Folding Bed 157 659, 666, 738, 39 848 (1895) ("Whether protect himself assignees contracts brought us, opinion. obvious contract, inherent meaning laws").

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