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US Supreme Court Limits Patent Claims 118

Posted by kdawson
from the handing-down-common-sense dept.
Aire Libre and other readers noted a unanimous Supreme Court decision that denied LG Electronics's attempt to evade the first-sale doctrine by use of "business method" patents. LG licensed patents to Intel, then attempted to dictate what use Intel's customers could make of the Intel products incorporating LG patents. The decision (PDF) notes how easily patents can be written up as "business methods" to nullify the first-sale doctrine ("exhaustion") and to give the patent owner perpetual control downstream. Aire Libre adds, "That reasoning bodes well for copyright freedom as well, in light of the growing number of copyright holders who seek to nullify the Copyright Act's limitation on the distribution right by claiming the goods are 'licensed, not sold,' or subject to some restrictive EULA."
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US Supreme Court Limits Patent Claims

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  • by Quarters (18322) on Monday June 09, 2008 @06:11PM (#23717201)

    That reasoning bodes well for copyright freedom as well...

    Reason has no place in a legal proceeding. Sad, but true. This ruling doesn't have any direct implications on copyright issues. Any perceived reason the justices showed with this ruling can only be tested against copyright if and when a similar dispute regarding copyright makes it to the Supreme Court. Until a person or organization has deep enough pockets to push/appeal a court case to the SC we'll never know if the justices' reason extends to copyright or not.

    • by moderatorrater (1095745) on Monday June 09, 2008 @06:24PM (#23717361)
      Strengthening the first sale doctrine does have bearing on Copyright issues, although how much depends on the judge.
      • Exactly. If the Supreme Court feels this way about patents, then, "reasonably", they'll feel the same way about copyright. Now we wait for copyright to reach the supreme court.
        • by wamerocity (1106155) on Monday June 09, 2008 @07:14PM (#23717883) Journal
          Wow, two good rulings in the space of 30 days. I might just start regaining faith in the judicial process again. Between this and the suit between Autodesk (autocad) and that guy on eBay who was told he couldn't sell used copies online. I thought that the eventuality of that decision was going to be tougher DRM restrictions from the software makers that make sold software impossible to install without some kind of online verification. But this ruling looks like the ball may be rolling in the right direction. Maybe I'll just wait to see what pans out before I get too excited... I've been severely disappointed in our government many times...
        • by thtrgremlin (1158085) on Monday June 09, 2008 @07:48PM (#23718137) Homepage Journal
          ... will likely make its way to the supreme court. The complexity of the case, and the controversy over YOUR Intellectual Property versus MY culture. Lawrence Lessig is on staff for RDR Books defending, the same lawyer that fought (ok, and lost) in Eldred v. Ashcroft. I know this is too much to ask, but I see no reason not to revert back to the Statute of Anne. Give copyright holders a FIRM grip over their IP to allow them to reap its rewards and present it the way they desire, BUT, after a "Limited Period of Time", give it to the people to let it grow and thrive.

          Unless we are going to argue reincarnation, this lifetime is the only one I have. 'Forever' is my entire lifetime, or anyone elses. Nothing that is part of my culture can be remixed or reused by myself or virtually any generation I will ever see when there is a term limit of life + 70 years / 120 years.

          Anyway, Lessig and others learned some HARD lessons, such as the power of money among other things, not to mention the series of some good small wins for EFF over the past year, for GPL and such, showing the value free and freedom to the public.

          In light of the entire history of supreme court they can seem small, they have ruled on the side of reason defying long standing law, and majority opinion: Brown v. Board of Education of Topeka, 347 U.S. 483 (1954), United States v. Causby, 328 U.S. 256 (1946). United States v. Miller, 317 U. S. 369. While Miller had to do with government taking, why can not the same PROPERTY law apply as they keep arguing. "It is the owner's loss, not the taker's gain, which is the measure of the value of the property taken." was ruled. As for Rowling v. RDR Books, IMO, an idea only becomes culture AFTER it is given to the public. And you CAN'T copyright an IDEA. Making cultural references to an idea aren't piracy, and not even plagiarism, it is literature in its absolute meaning.

          So I hope that this case shows that the supreme court is ready to rule on the side of reason that Congress CAN NOT hide away like it did after LaMacchia with the NET Act. Eldred v. Ashcroft 537 U.S. 186 (2003) ruled the way it did because the argument made could not beat the argument of big money, so YES, I think this case COULD have major implications in the near future over copyright.

          The only circumstances under which I could be persuaded otherwise would be if they tax this PROPERTY progressively with respect to the amount of time on copyright, gross value earned from copyright, and number of copyrights held by a person. This would make it EQUAL with real property. At present, any vaguely original though or artistry I express in a tangible way has GREATER protection than the home for my family. And before I am accused of making a straw man, consider the ways you can loose and reclaim an IP versus the way you can loose and reclaim your house.

          Hope that wasn't too off topic for anyone, just my thoughts on the supreme court and reason.
          • by the eric conspiracy (20178) * on Monday June 09, 2008 @08:21PM (#23718343)
            You really can't limit term of copyright to the author's lifetime. People work for companies that fund their work in exchange for a regular salary. This would bind the value of the work to the age and health of the employee, leading to all sorts of economic pressure to not fund the work of older people.

            • Re: (Score:3, Interesting)

              by thtrgremlin (1158085)
              I am not sure I understand. I was arguing for a reasonable, fix period of time without respect to the life of the author. When an employee is making content for a company, that content gets a fixed 95 years from time of publication, or 120 years max. However, profit wise, I am sure the content industry is aware of "The Long Tail", even if it is an issue they like to avoid. In this respect the content industry is interested in control, not profit, when making purchases, as copyright value for an individual w
            • Re: (Score:3, Insightful)

              by steelfood (895457)
              What about life of author or 20 years, whichever is longer.

              Heck, we could go up to life of author or 70 years and still result in more reasonable copyright terms than what we have now.
            • Re: (Score:3, Insightful)

              by Ed Avis (5917)
              That doesn't make any sense. Even with infinite copyright, if an older worker is no longer producing new material you can lay them off and still keep getting royalties from the work they produced when young. The value of employing someone depends on the work they are doing now, not what they did in the past. A fourteen year copyright term doesn't change the economics.

              Of course, this applies only if you assume companies are out to get the maximum profit. If you assume that record companies and publishers
              • by Mikkeles (698461)
                'If you assume that record companies and publishers are charitable trusts set up to provide employment for talented authors and look after them in their old age,...'

                Well, that seems to be be their self-view, what with their 'Think of the Artists!!' refrain ;^)

              • by Ed Avis (5917) <ed@membled.com> on Tuesday June 10, 2008 @07:00AM (#23723297) Homepage
                Oh, I see what you meant: if the copyright term is the author's lifetime, then a work produced by a 20 year old has more value than one produced by a 70 year old. It's a fair point but somehow people feel that it is fair for authors to exercise control over their work while they live.

                I think the original formulation struck a good balance: 14 years, extensible for another 14 while the author is alive. This still has a bias towards younger authors but it's less.
                • Then allow it to be renewable by the rights holder (when the rights are transfered). Rights are transfered at death whether or not there was a will, because a copyright is property (Remember, the copyright is the property, not the work itself). The only disadvantage for older artists would be the pressure to sell out so that they can get a larger fraction of the copyright value sooner, but this is little different than an older person paying extra for a car with greater longevity because it is less likely t
            • You really can't limit term of copyright to the author's lifetime. People work for companies that fund their work in exchange for a regular salary. This would bind the value of the work to the age and health of the employee, leading to all sorts of economic pressure to not fund the work of older people.
              Also evil publishers will keep JK Rowling alive but incapacitated for centuries using stem cells like the Emperor in Warhammer 40K.
          • As for Rowling v. RDR Books, IMO, an idea only becomes culture AFTER it is given to the public. And you CAN'T copyright an IDEA. Making cultural references to an idea aren't piracy, and not even plagiarism, it is literature in its absolute meaning.
            Apparently, the author of the encyclopedia actually lifted 90% of his book directly from the HP series. Like, cut and pasted.

            You can't call that "not piracy."
            • Re: (Score:3, Insightful)

              by Xiaran (836924)
              Do you have a reference for that? All Ive heard is that it is an encyclopedia documenting the HP universe. I would be surprised if it didnt quote large part of the HP books as references, but I have heard nothing about cutting and pasting 90% of the book.

              The HP case is kind of reminding me of the rather stupid cease and desist letters that Paramount was sending to Star Trek fan sites years ago. They quickly stop doing that when some suit in Paramount realised that the *only* reason that ST is a successfu
    • by taustin (171655) on Monday June 09, 2008 @06:32PM (#23717449) Homepage Journal
      The "first sale doctrine" has already been used to kill attempts by copyright holders to limit downstream use. The rulings have been consistently correct. The general reasoning, as was used in Softman V. Adobe [wikipedia.org] is that if A) there is a one time fee, and not ongoing payments, and B) use is unlimited, not time limited, it is a "sale of goods" not a license. And if it is a sale of goods, then the first sale doctrine applies, and that's that.

      It may vary somewhat from state to state, but for the most part, the Uniform Commercial Code [cornell.edu] is the standard for all state laws that will determine whether software is sold as a sale of goods or licensed. And being a copyright issue, this will generally be decided in federal court anyway.

      This ia a good ruling, but for anyone who pays attention, not a big surprise.
      • Re: (Score:3, Informative)

        by mr_matticus (928346)
        This is, yet again, an overbroad reading of the state of the art. The sale of goods is a component and applies to the transaction, but it does not preclude a license to the software as well. In fact, the opinion in the very case you cite reflects that. The EULA does not apply to the distributor because the package was never opened--the distributor has every right to move the box as it likes consistent with DFS.

        This has exactly zero bearing on whether the software is licensed to users (it is, and this too
      • Re: (Score:3, Informative)

        Don't forget ProCD v. Zeidenberg [wikipedia.org], though, which upheld shrinkwrap licenses.

    • Re: (Score:1, Funny)

      by Anonymous Coward
      I think I'll patent the business process of....obtaining a patent. That will be the end of this nonsense once and for all. Bahaha!
    • by samkass (174571)
      Probably for the best... the summary's description of Copyright usage sounds an awful lot like the GPL...
    • Re: (Score:3, Interesting)

      by TekPolitik (147802)

      That reasoning bodes well for copyright freedom as well...

      Reason has no place in a legal proceeding.

      I agree that the reasoning does not bode anything for copyright freedom, but not for the reasons you indicate. Reasoning is actually very important to legal proceedings. Evidential issues can often get in the way, but if the evidence produces a clear set of facts then with very few exceptions, reasoning will provide a clear answer. It's comparatively rare to see this in court because usually when a case m

      • Re: (Score:3, Informative)

        by russotto (537200)

        The reason this doesn't mean anything for copyright freedom (at least in the way the summary suggests) is that the "licensed vs sold" distinction isn't as great as it might seem. You own the physical copy you buy, but you have to have a license to make copies of that. When you run software in (or install software on) a computer the computer makes copies, and you need a licence to do that. This is really not legally controversial.

        You're right, it's not, not in the US. 17 USC 117(a) states specifically that

      • by Forbman (794277)
        Well, if I buy a book, do I need a license to read it? No. It's copyrighted. If I buy a song, do I need a license to listen to it? Well, no, not technically, although I'm sure I paid some sort of license fee for the device needed to listen to the product due to terms imposed on the manufacturer (if I bought the device new), whether it's for LP vinyl, CD, cassette tape, 8-track, etc.

        But if I had my own laboratory, equipment and inclination, there's nothing stopping me from using a small diode laser or two an
    • by Mikkeles (698461)
      But maybe for other patent restrictions; for example: I wonder how

      'The doctrine says that the sale of an invention exhausts the patent-holder's right to control how the purchaser uses it.'

      will affect Monsantos restrictions on reuse of seed?

  • That's strange (Score:5, Interesting)

    by Daetrin (576516) on Monday June 09, 2008 @06:18PM (#23717297)
    It clearly seems like LG was in the wrong here, but this was a case where both parties actually produce and sell goods using the patents they own. Has the US Supreme Court had anything to say about the numerous cases involving patent squatters/submarine patents? That seems like it ought to be a more serious issue.
    • Re:That's strange (Score:4, Informative)

      by raehl (609729) <raehl311 AT yahoo DOT com> on Monday June 09, 2008 @06:38PM (#23717527) Homepage
      Er, like their ruling that drastically reduced cases where an injunction was appropriate, this taking away the big injunction stick from patent trolls?

      http://www.infoworld.com/article/06/05/15/78316_HNebaypatent_1.html?source=rss&url=http://www.infoworld.com/article/06/05/15/78316_HNebaypatent_1.html [infoworld.com]
    • by waterbear (190559) on Monday June 09, 2008 @06:51PM (#23717643)
      It clearly seems like LG was in the wrong here, but this was a case where both parties actually produce and sell goods using the patents they own. Has the US Supreme Court had anything to say about the numerous cases involving patent squatters/submarine patents? That seems like it ought to be a more serious issue.

      If you look at the Supreme Court's decision (http://www.supremecourtus.gov/opinions/07pdf/06-937.pdf [supremecourtus.gov]) it will be clear how it turns, first, on whether the patent license to Intel permits Intel to sell goods that practice the patents, and second, did the goods sold by Intel practice the patents. The answer to both questions was yes, triggering the application of the doctrine of exhaustion of patent rights with respect to the product that was sold. That was true even where the patent had method claims, and when those would not be completely practiced until the sold product was combined with other components. The rationale for that aspect was that the sold items practiced the patent by embodying all of the inventive matter and having in practice no other use except to practice the patent: the components left to be added were standard stuff, while all of the inventive content was in the items sold.

      None of that depended in any way on the question whether the patent licensor engaged in manufacture on its own account. The court did not need to consider that. So the decision clearly applies to patent holders who grant licenses to others to sell patented products, irrespective of whether the licensors themselves do manufacturing or not.

      -wb-
    • The article was pretty light on the facts; on all the facts, LG Electronics came out better than the article would suggest. the contract of sale limited the products to be used only with Intel chipsets. Moreover, LG marked all of the products as for use only with Intel products. LG intended the products only to be used with Intel chipsets; otherwise, they would have charged a higher price. It isn't an open and shut issue. If LG meant for the products to be resold,they would have asked for a higher price fro
      • by Ed Avis (5917)

        LG intended the products only to be used with Intel chipsets; otherwise, they would have charged a higher price.

        That hardly seems like an argument you can make in a court of law.

        Whatever the other effects of this holding may be, licensees will only be able to buy all the bundle of intellectual property rights (which slashdotters hate) or none at all. They can't only buy the portion of the bundle that they can afford.

        That may be so, but it has the same ring as 'You won't be able to buy the right to just play

  • by Enleth (947766) <enleth@enleth.com> on Monday June 09, 2008 @07:03PM (#23717775) Homepage
    As far as I know, selling processors and chipsets to other manufacturers making the actual computers is a major business for Intel, probably even much bigger than direct consumer sales. It's damn obvious then, that whatever Intel sells, most of it will be incorporated in a product of its own ans sold again by other companies and that's the whole purpose of Intel producing most of its inventory at all (chipsets etc.).

    Taking that into consideration, isn't Intel likely to go medieval at anyone mobbing their most important customers with such a blatantly bogus claim? Sure, LG is big - but probably not big enough to stand chances with Intel if they were to release the hell hou^W^W^W^W^W^W lawyers...
    • Re: (Score:3, Interesting)

      by Enleth (947766)
      Oh, and there's something else that caught my attention.

      From the court decision (actually, the license agreement between LG and Intel):

      "[the license] is granted by either party hereto . . . to any third party for the combination by a third party of Licensed Products of either party with items, components, or the like acquired . . . from sources other than a partyhereto, or for the use, import, offer for sale or sale of such combination." Brief for Petitioners 8 (quoting App. 164).

      A literal (as requred for t
  • 8 years later (Score:4, Insightful)

    by Xelios (822510) on Monday June 09, 2008 @07:10PM (#23717841)
    This suddenoutbreakofcommonsense only took 8 years, and one stubborn company that refused to settle when all the others did. It may have been an obvious outcome to some, but apparently not to the Federal Circuit Court of Appeals or the unnamed number of other companies who gave in to the royalty demands.

    The real question in all this is why the appeal court sided with LG.
    • by icebike (68054)
      Are you aware of any other companies that paid royalties to LGE in regard to this issue? Just asking, since that wasn't even hinted at in TFA.

      As to why the appeals court sided with LG, -well,
      that's why we have a Supreme Court, but bear in mind that this case has been in litigation since 2002 and the Supreme court only accepted the case in 2007. Prior to that time, the lower courts were following the law and the decisions of the SCOTUS from a prior era.
      • by Xelios (822510)
        Other articles about this case mention other companies involved:

        Quanta Computer makes laptops for major U.S. computer sellers and is the only company sued by LG that hasn't settled. It is among several large Korean companies that bought computer components from Intel.
        Article [lloyds.com]
    • Remember kids: Jack Thompson eats a kitten every time a story is tagged "suddenoutbreakofcommonsense."

      Please tag responsibly.

  • by tkohler (806572) on Monday June 09, 2008 @07:34PM (#23718027)
    This is about "method" patents, not only "business method" patents. The SCOTUS maintained that the first sale doctrine applies to method patents as well. This is a big deal for industries with complex supply chains where an end product (like a laptop) has components that have passed through many hands. In the same way that a patent holder of a surface mount resistor can't charge a royalty to the PC brand if they already charged the mother-boardmaker, a holder of a method patent for example, a "method of caching operations in a processor", cannot charge a royalty to everyone who buys and sells the product. The licensors are left with the decision to pick where in the value chain to insert their bite, at the low end where their value added is great but profits are lower, or higher up where the profits are higher but the contribution of the invention is diluted. IANAL
  • by Whuffo (1043790) on Monday June 09, 2008 @08:34PM (#23718429) Homepage Journal
    While this isn't the big change that we are hoping for, it's a step in the right direction. Little by little is the way that our legal system works on social issues like this one and the tide is finally turning.

    What was clarified in this decision is that vendors don't have the right to control the downstream licensees of their patents, and the first sale doctrine was reaffirmed.

    This will change the way that EULAs are interpreted in the future. Specifically, any restrictions against resale or limiting the uses the product can be used for will no longer be valid.

  • by Animats (122034) on Monday June 09, 2008 @10:19PM (#23719353) Homepage

    This further limits any legal action Apple might take against Psystar for shipping computers that run retail copies of the MacOS.

    Apple is limited on the copyright front by antitrust law; the requirement in the EULA that purports to require that the software only be run on Apple hardware is probably an illegal tying arrangement. (Don't argue otherwise without doing some reading first. There's a history of relevant cases and the party trying to enforce the tying terms usually loses.)

    With this decision, Apple is also limited on the patent front. Apple's patent rights were "exhausted" when the boxed copy of the MacOS was sold. They can't raise a patent claim based on some restriction on later use of the software, not even for "method" claims.

    • Sure it wouldn't reverse what has already happened, but since Apple ships computers with MacOS preinstalled wouldn't they be able to get around this just by making retail copies of MacOS "upgrade" licenses, requiring an existing MacOS license?

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