VIEWS: 3 PAGES: 15 POSTED ON: 8/15/2011
Context • When or whether a sale of item occurs in a license? • Standards: • Terms of restriction • Contractual vs. non-contractual • General intent – a license is a license • Trade expectations • What is the effect of an unconditional sale, whether in or out of a license? • Distinguish contract claims and infringement claims • Sale as a form of license – conveys some privileges re infringement Copyright • Section 109: • Entitled to sell or otherwise dispose of possession of that copy • Display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located. • Neither the owner of a particular phonorecord nor any person in possession of a particular copy of a computer program may, for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord or computer program by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending. Except for non-profit and except for program embodied in a machine • Central Point Software case Section 117 • (a) Notwithstanding section 106, it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided: • (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in a machine and is used in no other manner, or • (2) that such new copy or adaptation is for archival purposes only and that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful. • (b) Any exact copies prepared in accordance with the provisions of this section may be transferred, along with the copy from which such copies were prepared, only as part of the lease, sale, or other transfer of all rights in the program. Adaptations so prepared may be transferred only with the authorization of the copyright owner. Machine maintenance or repair. • Notwithstanding section 106, it is not an infringement for the owner or lessee of a machine to make or authorize the making of a copy of a computer program if such copy is made solely by virtue of the activation of a machine that lawfully contains an authorized copy of the computer program, for purposes only of maintenance or repair of that machine, if-- • (1) such new copy is used in no other manner and is destroyed immediately after the maintenance or repair is completed; and • (2) with respect to any computer program or part thereof that is not necessary for that machine to be activated, such program or part thereof is not accessed or used other than to make such new copy by virtue of the activation of the machine. Patent Issues • Issues because of nature of rights: make, use sell • Exhaustion by sale of item • “Unless the parties provide otherwise, the purchaser of a patented article has an implied license not only to use and sell it, but also to repair it to enable it to function properly….This implied license covers both the original purchaser of the article and all subsequent purchasers.” • Implied license from sale of product to complete the patented invention Met Coil p.346 • Patented machine and method to connect metal ducts • Bends them and finishes with end pieces • Sells machine to do the bending • Korners sells corner pieces that attach • Claims induces infringement • Issue – whether the buyers infringe • Defense? Source of implied license • Sale of non-patented equipment • No non-infringing use • “Circumstances” “plainly indicate that the grant of a license should be inferred” • What circumstances here? • How to avoid the implied license? • Notice? • Agreement? Anton/Bauer p. 350 • Patented battery pack connection • Parts: male part, female part with locking device. Individual items not patented. • AB: Sells the female plates • PAG sells male parts • Sues for inducement – issue is whether the buyers infringe • Held: implied license What was lower court thinking? • “The lower court based its decision on its finding that the PAG L75 battery pack is not a "replacement" for any component of the mechanical and electrical combination claimed in the '204 patent.” • Why wrong? • Replacement relates to repair issue • “The court also found that the circumstances do not indicate that an implied license is granted. While the court acknowledged that Anton/Bauer does not expressly deny a license, it concluded that Anton/Bauer's actions do not lead a consumer to believe that it may use a non-Anton/Bauer male plate to complete the patented combination.” • Why wrong? • AB argues cannot have implied license where buy the other part first • Court rejects – why? Source of license • Consider: • Reliance or representation? • Mere fact of sale if not denied? • “In other words, sale of an unpatented article exhausts the seller's right to control the future sale and use of that article, but only certain circumstances exhaust the seller's patent right and result in an implied license…. The Court's statements in Univis demonstrate how closely related the exhaustion doctrine is to the grant of an implied license. Indeed, they suggest that an implied license stems from the exhaustion of a patent right.” Problem 7.7 • Micron holds patents related to a configuration of parts that includes a microprocessor manufactured by Micron. The microprocessor is not itself patented. Micron sells a large quantity of the microprocessors each month. For six months, IBM manufactures its own computers with these microprocessors, using the patented Micron configuration pursuant to a license from Micron. The license expires, but IBM continues to purchase Micron microprocessors and uses them in the patented Micron configuration. Micron sues for patent infringement. What result if the following can be proven: • a. The Micron processors are not used in any other computer in the marketplace because they are specially designed for the Micron configuration. • b. The processors could be modified by a buyer and would then be useful in other, non-patented configurations, but this would increase the cost. • c. The Micron configuration is subject to a U.S. patent, but the processors could be used in other countries as part of the Micron configuration because Micron has no patents outside the U.S. • d. The processors can be used as replacement parts in systems that have the Micron configuration and have previously been sold. Assume that the replacement would not infringe the patent. Jazz Photo p.357 • Patented camera – “lens-fitted film packages” (LFFP) • Sold with notices etc. that they are intended for single use • Court holds that the notices were non-contractual – mere advice • "a seller's intent, unless embodied in an enforceable contract, does not create a limitation on the right of a purchaser to use, sell, or modify a patented product so long as a reconstruction of the patented combination is avoided" • Companies refurbish and resell. • Issue? • Repair vs. reconstruction What is “reconstruction”? • Reconstruction? • New article made after “viewed as a whole” the original was spent • Useful life finished • Performance gone • Repair: • Same thing is still there • Parts with lesser life span • Includes the right to preserve useful life • “appellants state that but for the exposed roll of film and its container, any portion of the case that was broken by the photo processor, and the winding wheel in certain cameras, the refurbished LFFP is substantially the original camera, for which the patent right has been exhausted.” • The Commission placed weight on Fuji's intention that the LFFP not be reused. …. However, the patentee's unilateral intent, without more, does not bar reuse of the patented article, or convert repair into reconstruction. See Hewlett-Packard, 123 F.3d at 1453, 43 USPQ2d at 1658 ("a seller's intent, unless embodied in an enforceable contract, does not create a limitation on the right of a purchaser to use, sell, or modify a patented product so long as a reconstruction of the patented combination is avoided").
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