Quanta Computer v. LG Electronics

Citation: ''LG Electronics, Inc. v. Quanta Computer, Inc.’’, 453 F.3d 1364, 79 U.S.P.Q.2D (BNA) 1443 (Fed. Cir. 2006).

Factual Background:
Quantas Computer, Inc., (Quantas), buys microprocessors and chipsets from Intel or its authorized distributors to install in computers. Intel and other distributors are authorized to sell these products under an agreement with LG Electronics, (LGE), provided that they do not combine them with non-Intel products. Defendants combined the products with other computer components and LGE brought suit alleging patent infringement.

Procedural History
The District Court granted summary judgment in favor of defendants finding no patent infringement but held that LGE's rights to any system claims were exhausted. The Appellate Court reversed in part, affirmed in part, and vacated in part, and arguments are scheduled to be heard by the Supreme Court in the 2007-2008 session.

Appellate Court Decision
The Appellate Court

The court held that the sale of the licensed products by Intel did not imply a license with respect to the asserted patents and that "[t]o prevail, defendants were required to establish that the products have no noninfringing uses and that 'the circumstances of the sale . . . 'plainly indicate that the grant of a license should be inferred.'" Because Intel had expressly informed the defendants of the limitations of the agreement there could be no finding of an implied license.

The Appellate Court reversed the lower court's holding that the system claims were exhausted, affirmed with respect to the method claims, and vacated summary judgment with respect to the doctrine of equivalents.