John W. Osborne


The Supreme Court held in United States v. Univis Lens Co. that the authorized disposition of an article embodying the essential features of a patent claim exhausts that claim. The Federal Circuit’s LGE v. Bizcom decision, currently under review by the Supreme Court in Quanta v. LGE, improperly held that patent exhaustion could be disclaimed by contract. Patent exhaustion is a limitation on statutory rights which cannot be expanded by contract. Moreover, Quanta v. LGE is governed by the contributory infringement statute. Contributory infringement and exhaustion are opposite ends of the same principle in the Quanta v. LGE factual scenario. The statute provides a right to recovery for a component embodying the essential features of a system or method patent and exhaustion precludes a further recovery for the same invention. Reversal in Quanta v. LGE is compelled on its specific facts, but there is no basis for a broad holding which would govern the disposition of components which do not contributorily infringe or which are separately and distinctively patented and not otherwise licensed.