November 2013
Patent Exhaustion Is Triggered by the Authorized Sale of a Patented Item That Completely Practices the Claimed Invention
| Judges: Lourie (author), Mayer, O’Malley (concurring) |
| [Appealed from D. Del., Judge Robinson] |
In Keurig, Inc. v. Sturm Foods, Inc., No. 13-1072 (Fed. Cir. Oct. 17, 2013), the Federal Circuit affirmed the district court’s judgment of noninfringement that patent exhaustion had been triggered by an authorized sale of a patented item that completely practiced the claimed invention.
Keurig, Inc. (“Keurig”) manufactures and sells single-serve coffee brewers as well as beverage cartridges for use in the brewers. Keurig owns U.S. Patent Nos. 7,165,488 (“the ’488 patent”) and 6,606,938 (“the ’938 patent”), which are directed to brewers and methods for using them to make beverages. Sturm Foods, Inc. (“Sturm”) manufactures and sells single-serve beverage cartridges for use in Keurig’s brewers, but it does not manufacture or sell brewers.
Keurig filed suit against Sturm alleging that customers using the Sturm cartridges in certain Keurig brewers infringed the method claims of the ’488 and ’938 patents, and that Sturm induced and contributed to that infringement. Sturm argued patent exhaustion as an affirmative defense and moved for SJ of noninfringement. The district court granted Sturm’s motion, determining that patent exhaustion was triggered by the initial sale of Keurig’s patented brewer that completely practiced the claimed invention. Keurig appealed.
“The doctrine of patent exhaustion has the effect of providing an efficient means for ensuring the termination of the patent right. Permitting Keurig to recover multiple times on its patented brewers by holding Sturm or any other cartridge manufacturer liable for direct, induced, or contributory infringement based on the independent manufacture and sale of cartridges for use in those brewers would be contradictory to these policies and the law.” Slip op. at 9 (citations omitted).
On appeal, Keurig argued that the district court erred by declining to apply the substantial embodiment test articulated by the Supreme Court in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008). Keurig specifically argued that, “under the Quanta test, its rights were not exhausted because its brewers are capable of many uses that do not infringe the asserted method claims.” Slip op. at 5. Keurig further contended that “exhaustion must be adjudicated on a claim-by-claim basis” rather than on the patent as a whole. Sturm responded by arguing that “the Quanta test was formulated to address an exhaustion issue based on the sale of unpatented items,” and therefore did not apply in this case because Keurig’s brewers were patented. Sturm further argued that “use of Keurig’s brewers with a non-Keurig cartridge cannot constitute infringement because Keurig’s authorized sale of those brewers, which are covered by the asserted patents, exhausted Keurig’s rights.” Id.
The Federal Circuit agreed with Sturm that the substantial embodiment test did not apply in this case because Keurig acknowledged that its brewers were commercial embodiments of the ’488 and ’938 patents. The Court reasoned that “as the Supreme Court long ago held, ‘[W]here a person ha[s] purchased a patented machine of the patentee or his assignee, this purchase carrie[s] with it the right to the use of the machine so long as it [is] capable of use.’” Id. at 7 (alterations in original) (quoting Quanta, 553 U.S. at 625). Following this precedent, the Court held that “Keurig sold its patented brewers without conditions and its purchasers therefore obtained the unfettered right to use them in any way they chose.” Id. Therefore, “Keurig’s rights to assert infringement of the method claims of the ’488 and ’938 patents were exhausted by its initial authorized sale of Keurig’s patented brewers.” Id. The Court explained that the consumer’s use of different types of cartridges in a noninfringing way could not save Keurig’s method claims from exhaustion. “Such an outcome would . . . be counter to the spirit of the doctrine of patent exhaustion because Keurig could control use of the brewers after it sold them.” Id. at 8. The Court further stated that patent exhaustion jurisprudence has been focused on “exhaustion of the patents at issue in their entirety, rather than the exhaustion of the claims at issue on an individual basis.” Id. (citing Quanta, 553 U.S. at 634-35; United States v. Univis Lens Co., 316 U.S. 241, 249-50 (1942)).
Therefore, the Court affirmed the district court’s decision that Keurig’s asserted rights under the ’488 and ’938 patents were exhausted by the sale of the patented brewer.
Judge O’Malley concurred in the judgment that Keurig’s patent rights were exhausted. Judge O’Malley disagreed with the majority decision that exhaustion should not be assessed on a claim-by-claim basis. Judge O’Malley instead expressed a belief that “[t]here could be instances where assessing exhaustion on a claim-by-claim basis—the same way [the Court] conduct[s] almost every analysis related to patent law—would be necessary and appropriate.” O’Malley Concurrence at 2.
