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  • pg 1
• 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
• Sale as a form of license – conveys some privileges
  re infringement
• 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
   • 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
•   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
• Sells machine to do the bending
• Korners sells corner pieces that
• Claims induces infringement
• Issue – whether the buyers infringe
• Defense?
Source of implied
• Sale of non-patented equipment
• No non-infringing use
• “Circumstances” “plainly indicate
  that the grant of a license should be
• 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
• 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
•   “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
•   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
•   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
•         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?
• 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
• 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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