November 16, 2007 | By Fred von Lohmann

You Bought It, You Own It: Quanta v. LG Electronics

Earlier this week, EFF filed an amicus brief with the U.S. Supreme Court in Quanta v. LG Electronics, a case that asks whether patent owners can impose restrictions on what you can do with a product after you buy it. The brief, filed on behalf of EFF, Consumers Union, and Public Knowledge, makes a simple point: when a consumer buys a patented product from an authorized seller, the patent owner is not entitled to use patent law to restrict the purchaser's subsequent ability to use, repair, or resell the product.

In other words, you bought it, you own it.

"You bought it, you own it" is a principle that EFF has been fighting for on several fronts, against efforts by patent and copyright owners to put their intellectual property rights ahead of your tangible property rights. So, for example, EFF is defending Troy Augusto in his fight to resell CDs on eBay, notwithstanding UMG's "not for resale" labels. In 2004, EFF filed a brief in ACRA v. Lexmark, where Lexmark relied on a "single use only" label on laser printer toner cartridges to interfere with the market for refilled cartridges. And EFF has fought against copyright owners who try to use DRM to reach into your living room and restrict your uses of the CDs, DVDs, and other media that you've purchased.

In Quanta v. LG, the Supreme Court will addresses this issue in the patent context. For over a century, the Supreme Court has stood behind the "patent exhaustion doctrine," which establishes that the patent is "exhausted" upon the first sale of a product. Once it's been sold, the purchaser is free to use, repair, or resell it without fear of patent liability.

But trouble began in 1992, when the Federal Circuit (the federal court of appeal that handles patent cases) turned the patent exhaustion doctrine on its head in a case called Mallinckrodt v. Medipart, finding that patent owners could trump the exhaustion doctrine by imposing "conditions" on the sale. This opened the door for the "single use only" labels that you find on Lexmark's printer toner cartridges. It also gives the green light to a host of other post-sale use restrictions, such as "personal use only, not for resale" or "for use only with authorized components." Needless to say, these restrictions jeopardize independent repair services and refurbishers, and are already interfering with secondary markets like eBay and Craigslist. All of this is bad news for consumers.

Fortunately, EFF isn't alone in this fight. A number of amicus briefs have been filed urging the Supreme Court to reassert the patent exhaustion doctrine, including briefs from Dell, HP, eBay, IBM, NCR, independent auto repair services, and at least one biotech firm. Briefs in support of LG will be filed in December, and oral argument is set for January 16.


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