Implied License Defense Rejected Where Express Disclaimer Limited Use

Case: LG Elecs., Inc. v. Bizcom Elecs., Inc. , No. 05-1261 (Fed Cir. July 07, 2006)

The One Sentence Summary: Summary judgment for defendants affirmed in part, reversed in part, and vacated in part in a patent infringement case alleging that defendants' combination of components with other computer components infringed LGE's patents consisting of those combinations.

What They Were Fighting About: Plaintiff patent owner LGE had an agreement with Intel that Intel would not combine Plaintiff's computer components with non-Intel products, and that it would notify its customers that they were not authorized to combine the components with non-Intel products. LGE did not claim patent ownership over the components but over the combination of the components with non-Intel products. LGE sued defendants for infringement of multiple patents after they combined the components with non-Intel products.

Federal Circuit Holdings:

• Defendants failed to show that there was an implied license to use the components in combination. "In a suit for patent infringement, the burden of proving the establishment of an implied license falls upon the defendant. To 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." Id. at 4-5 (citations omitted). In light of Intel's express disclaimer to the defendants that they were not authorized to use the components in combination, the court held no license could be implied.
• The court reversed the trial court's holdings that the claims were exhausted because "[the] exhaustion doctrine . . . does not apply to an expressly conditional sale or license. In such a transaction, it is more reasonable to infer that the parties negotiated a price that reflects only the value of the use rights conferred by the patentee." Id. at 5-6.
• The court remanded LGE's infringement claims as to a defendant who may have been a licensee of Microsoft, as LGE had contractually agreed not to sue Microsoft, its suppliers, their subsidiaries, or their licensees.
• In determining the meaning of "requesting agent" in LGE's '645 patent, the court explained, "the proper claim construction is the ordinary and customary meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention . . . . When prior art that sheds light on the meaning of a term is cited by the patentee, it can have particular value as a guide to the proper construction of the term, because it may indicate not only the meaning of the term to persons skilled in the art, but also that the patentee intended to adopt that meaning." Id. at 16. The court found that the trial court failed to give proper weight to the incorporated industry standard, and adopted LGE's proffered meaning. Id. at 17.
• The court further found there was a question of fact as to whether defendants infringed LGE's '379 patent under the doctrine of equivalents. The court explained that the doctrine of equivalents, "by its very nature, extends beyond the patent's literal claim scope, because otherwise a finding of no literal infringement would be a foreordained conclusion of no infringement at all. At the same time, however, if our case law on the doctrine of equivalents makes anything clear, it is that all claim limitations are not entitled to an equal scope of equivalents." Id. at 27-28 (quotations and citations omitted).