Appeals Court Patent Ruling Could Hamstring Tech Markets, Cause Consumer Uncertainty, CCIA Tells Supreme Court

BY CCIA Staff
November 15, 2007

Patent holders should not be able to demand royalties from all subsequent buyers once a product is sold into the stream of commerce, the Computer & Communications Industry Association argued in a friend-of-the-court brief before the Supreme Court.

In documents filed earlier this week, CCIA attorneys urged the high court to invalidate so-called “conditional sales” that would give patent rights holders the ability to seek for royalties long after a sale was otherwise complete. For example, under the rule adopted by the lower court, a patent holder can “conditionally” sell a patented component of a product, and then seek patent royalties from subsequent purchasers, such as the product vendor, retailer, and even the end-user. Such arrangements eviscerate long-standing legal precedent and threaten the well being of the high-tech sector, CCIA’s brief argued, which depends on predictable transactions and the recombination of technologies long after the initial sale.

“In the long term, the rule will create a shadow economy of permissions that advantage opportunists, especially those who own patents outside their core business and so have little need to cooperate in promoting stable and predictable markets in those areas,” CCIA wrote. “It will disrupt and skew the entire business ecology of the IT sector to favor upstream patent interests at the expense of assemblers, integrators, vendors, and end users and likely return the world to a less efficient economy based on vertical integration and stovepiped products and services that do not interoperate.”

The filing in the case of Quanta Computer Inc v. LG Electronics can be found here.

Related Articles

CCIA Expresses Disappointment In Flawed 9th Circuit Qualcomm Decision

Aug 11, 2020

Washington — The 9th Circuit today overturned a district court decision by Judge Lucy Koh, holding that Qualcomm had not violated the antitrust laws by refusing to license competitors in violation of its contractual obligation to do so, by refusing to sell chips unless the customer first took a patent license, and by engaging in…

New Morning Consult Poll Shows Americans’ Use, Views On Tech In Times Of Covid

Jul 23, 2020

Washington — A Morning Consult poll shows Americans have found value in a range of tech services they are using even more frequently during the pandemic. The poll, commissioned by the Computer and Communications Industry Association, showed how important consumers found video chat, video streaming, food delivery services and the range of services gaining popularity.…

CCIA Asks Supreme Court To Review Constitutionality of ITC’s Actions In Patent Case Illustrating Expanded Use Of ITC Against US Companies

Apr 27, 2020

Washington — As the International Trade Commission has increasingly expanded its jurisdiction to include ruling on domestic patent issues, the Computer & Communications Industry Association filed an amicus brief Monday afternoon asking the Supreme Court to grant cert and review the misuse of the ITC by foreign entities against US companies. The Federal District court…