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Patent Exhaustion Inapplicable To Practice of Related But Separate Invention by Third Parties Interacting with Licensed Products

February 26, 2015

Federal Circuit

Patent Exhaustion Inapplicable To Practice of Related But Separate Invention by Third Parties Interacting with Licensed Products

February 26, 2015

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Helferich Patent Licensing, LLC v. The New York Times Co., ___ F.3d ___ (Feb. 10, 2014) (TARANTO, Bryson, Chen) (N.D. Ill.: Darrah) (4 of 5 stars)

Federal Circuit reverses summary judgment of noninfringement based on patent exhaustion. The case involves seven patents containing claims to mobile device handsets and other claims to systems and methods for transmitting data to handsets.  The patentee previously licensed its portfolio to handset manufacturers, but filed against content providers who transmitted data to the handsets.  Exhaustion did not bar the suit, even though the patents necessarily involved use of the already licensed handsets.

The Court extensively surveyed patent exhaustion precedent, concluding that courts have found exhaustion “only when the patentee’s assertion of infringement was, or depended on, an assertion that an authorized acquirer [of a product practicing the patent] was using the same invention by infringing the asserted claims.”  Slip op. at 20.  In contrast, there was no allegation here that the handset users were themselves infringing; rather, the infringement charges were directed solely at third parties transmitting data to the handsets in a manner covered by the content claims.  The Court also emphasized that the handset and content claims were separately patented, unlike in patent exhaustion precedents involving complementary products, where the fact that one of the products was not separately patented was critical to the application of exhaustion.  Moreover, the defendants did not argue that the claims could be infringed only with a handset with the inventive features in the patentee’s other patents.

Stressing the novelty of the defendants’ argument, the Federal Circuit declined extent the exhaustion doctrine, emphasizing that (1) cases grounding exhaustion in the common law of property suggested that the doctrine only protected the activities of the handset owners; (2) Congressional silence on the subject of exhaustion supported hewing closely to established precedent; (3) expanding the exhaustion doctrine to cover related products or third-party use could have dramatic implications for patent policy in the areas of software, communications, and social networking; and (4) restriction requirements imposed by the PTO during prosecution supported the conclusion that the content claims and handset claims were directed to distinct inventions.

Authors: Chris W. Dryer, Michael C. Tyler

The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This post is for general information purposes only and is not intended to be and should not be taken as legal advice. No attorney-client relationship is formed.

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CAFC Summary
Federal Circuit
Patent Exhaustion (NO)

Blog Authors

Chris W. Dryer | Principal

Chris Dryer’s practice emphasizes patent litigation and appeals. He has experience litigating intellectual property cases in the U.S. International Trade Commission, federal district courts, and the United States Court of Appeals for the Federal Circuit involving a wide array of...

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