Supreme Court Limits Patent Royalty Claims

The Supreme Court has limited the ability of patent owners to collect multiple royalties on the use of their patented technologies. In a case that involved a patent for computer chipsets (Quanta Computer v. LG Electronics ), the justices overturned an earlier appeals court ruling and unanimously affirmed the high court's longstanding position that the sale of an invention terminates the patent-holder's right to control how the purchaser uses it. George C. Best, a patent attorney with the Washington, D.C., law firm Foley & Lardner, says the decision applies to patent-licensing agreements regardless of the technology. For example, he says the court's decision curtails licensing strategies that could have been used for patents claiming technology used in medical devices, including diagnostic equipment or new materials. "The effect of this decision, in many cases, will be to limit the patent owner to a single bite at the royalty apple rather than licensing each level in the production process," Best says. "Patent owners who are undertaking a licensing campaign will need to review this decision and craft their strategies carefully to maximize the value of their intellectual property."