On Quanta

Over at Patently-0, Fordham’s Mark Patterson offers a prediction in Quanta Computer v. LG Electronics, the patent exhaustion case currently before the Supreme Court:

The Federal Circuit’s cases beginning with Mallinckrodt and continuing through Quanta have allowed patentees to use contract, or even simply unilateral notice, to eliminate the application of the exhaustion doctrine. By simply prohibiting certain conduct in their “license” agreements, patentees can under current Federal Circuit law transform what would be permissible conduct into patent infringement. The Supreme Court, however, said in Univis that “sale of [a patented article] exhausts the monopoly in that article and the patentee may not thereafter, by virtue of his patent, control the use or disposition of the article.” The Court’s forthcoming decision will likely reestablish that rule.

I have a lot of sympathy for the proposition that Univis [United States v. Univis Lens Co., 316 U.S. 241 (1942)] should govern Quanta, but it’s easy to overlook the fact that the Court has another precedent to look to – one that arguably points the other way:  General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938).

The difficulty in this and conceptually similar “exhaustion” and “first sale” cases is that patent law (and other IP doctrines) have never settled on a single perspective for assessing the scope of the IP right.  Is that scope — including what the patentee is willing to license or sell — presumptively a matter of the patentee’s prerogative?  Is that scope a matter of a bargain between the patentee and the purchaser of the patented product or licensee of the patent (alternatively, is it matter of a bargain between the patentee and “the public”)?  Is it a question of public policy, informed by considerations of “Progress,” by third party interests, and by other things?

In practice, and even in the context of a single doctrine — exhaustion, to pick a non-random example — it is all three (and then some).  Does Quanta require that the Court choose one?