Supreme Court to Hear Semiconductor Chip Patent "Exhaustion" Case

The Supreme Court has decided, for the first time in many years, to hear arguments in a patent licensing case. The dispute involves whether the "exhaustion doctrine"-the rule that a patentee's or licensee's sale of a product "exhausts" patent rights over the sold product-is still alive and kicking. LG Electronics bought a patent portfolio from Wang Labs and began trying to enforce it. LG negotiated a license with Intel that, by its terms, gave Intel the right to make, use, and sell microprocessors and chipsets embodying the patented technology, but purported to withhold the right of purchasers of Intel microprocessors and chipsets to practice that technology. The LG-lntel agreement required Intel to send notices to its customers warning them that Intel's patent license did not apply to them.