Impact
Until the Federal Circuit’s Mallinckrodt decision, an unbroken line of Supreme Court and lower court precedents held that the patentee’s patent right over a product that the patentee sold (or that a licensee authorised to make a sale sold) ended at the point of sale. Accordingly, a customer did not commit patent infringement by disobeying a notice, contract, or other “remote control” limitation that the patentee sought to impose on the use of goods that it had sold to the customer. The Supreme Court’s rationale in exhaustion doctrine cases was that the purchasers acquired an unlimited property right in the patented products, and that it was inconsistent with that property right for the patentee to control how the purchasers used or disposed of the products once they had become the property of the purchasers. The legal reasoning in all of these decisions begins with that principle, and the rest of the analysis consists of applying it to the particular facts. Until the 2008 Supreme Court decision in the Quanta case, however, the Federal Circuit's Mallinckrodt decision superseded the earlier line of exhaustion cases.
It has been observed that under the doctrine of the Mallinckrodt case, a patentee may sell its patented product with a legally effective notice prohibiting purchasers from engaging in any of the following conduct:
- Prohibiting repair of patented products and parts replacement (for example, the seller labels the device: "Licensed for use only until element B wears out")
- Prohibiting modification or enhancement of patented devices (for example, the manufacturer places a notice on the machine stating "Machine licensed for use only as is, without modification")
- Charging different prices in different niche markets and preventing arbitrage from one market to another (for example, selling semiconductor chips labeled "For use only in microwave oven market")
- Permitting resale only in specified channel of distribution
The Federal Circuit’s Mallinckrodt doctrine has not avoided criticism as allegedly stating legal rules that contradict Supreme Court decisions. Thus in 2007, the United States Solicitor General filed an amicus curiae brief in Quanta Computer, Inc. v. LG Electronics, Inc., stating, as to the first prong, "The test adopted by the Federal Circuit in Mallinckrodt thus reflects a fundamental misunderstanding of the role and scope of the patent-exhaustion doctrine. ... The court of appeals’ approach cannot be reconciled with those precedents," and more generally that the Federal Circuit’s Quanta opinion based on Mallinckrodt “rests on the same erroneous understanding of patent exhaustion that infuses the Federal Circuit’s approach to this area of the law."
The effect of Mallinckrodt may have been restricted by the Supreme Court's 2008 decision in Quanta Computer, Inc. v. LG Electronics, Inc., which broadly reaffirmed the exhaustion doctrine without mentioning Mallinckrodt. It is too early to state, however, what the impact of Quanta on the Mallinckrodt doctrine will be.
Read more about this topic: Mallinckrodt, Inc. V. Medipart, Inc.
Famous quotes containing the word impact:
“Television does not dominate or insist, as movies do. It is not sensational, but taken for granted. Insistence would destroy it, for its message is so dire that it relies on being the background drone that counters silence. For most of us, it is something turned on and off as we would the light. It is a service, not a luxury or a thing of choice.”
—David Thomson, U.S. film historian. America in the Dark: The Impact of Hollywood Films on American Culture, ch. 8, William Morrow (1977)
“One can describe a landscape in many different words and sentences, but one would not normally cut up a picture of a landscape and rearrange it in different patterns in order to describe it in different ways. Because a photograph is not composed of discrete units strung out in a linear row of meaningful pieces, we do not understand it by looking at one element after another in a set sequence. The photograph is understood in one act of seeing; it is perceived in a gestalt.”
—Joshua Meyrowitz, U.S. educator, media critic. “The Blurring of Public and Private Behaviors,” No Sense of Place: The Impact of Electronic Media on Social Behavior, Oxford University Press (1985)
“As in political revolutions, so in paradigm choice—there is no standard higher than the assent of the relevant community. To discover how scientific revolutions are effected, we shall therefore have to examine not only the impact of nature and of logic, but also the techniques of persuasive argumentation effective within the quite special groups that constitute the community of scientists.”
—Thomas S. Kuhn (b. 1922)