Supreme Court Continues to Address Patent Concerns

The Supreme Court has taken on another possibly landscape-changing patent case that will determine if patent holders are able to sue everyone up and down the food chain for a patent infringement. "This case, officially between LG and Quanta, really concerns the question of how many times patent holders can get a cut of any component found violating a patent. Currently, patent holders will often sue up and down the food chain. So, if you happen to have a patent on a component within a motor that is used in automobile wipers, you could sue the motor maker, the wiper maker and the auto manufacturer -- and get all three to pay, even though the same product is used throughout the supply chain. This case will look at whether or not it makes sense to allow for that type of double, triple or quadruple dipping."

Comments

It doesn't...

[repvik]

Of course it doesn't make sense to sue the whole food chain. Sue the manufacturer of the specific part, and leave it at that. Imagine how much fun it'd be if someone discovered that Award (or some other major BIOS manufacturer) had violated a patent in their BIOSes. There is no way the rest of the food chain can verify that no patents have been violated. Of course they can sue Award for damages, but imagine 400 companies suing Award. Anyone get any money? Nah. It would be incredibly expensive for a large manufacturer (eg. Dell) to verify that each and every component it uses does not violate any patents or IP. Same way with a car. Car manufacturers manufacture a fraction of the components themselves, and buy eg. wiper motors from Bosch.

Re:It doesn't...

[Kjella]

Well, that was my first thought. But when I reversed it "Should you never sue anyone but the closest in the chain" it wasn't really that clear. I'm sure there are ways to construct some sort of shell company that'll be the the actual infringer, while others are turning the real profit. A classic example are all the cafes and restaurants that go bankrupt, but the building owners which are often the same, never do. Legally they have one company owning it, and one renting and operating it. Or some sort of transit company which buys legally produced goods abroad, then sells them in the US violating US patents. It can be basicly massless with no money to collect. But yes, in the general case where they've bought it at normal rates then the original producer should be the one paying.

Patent Laundering

[Nymz]

If you deny legal redress, with exception for 'first sale' defendants, then you could certainly expect to see shady companies simply subcontracting out for any possible patent infringing items.

1) Setup a puppet company
2) Infringe all you want
3) Profits!!! stay safe (safely stolen) from patent holders

No joke, they can.

[Kadin2048]

While you're at it.. sue the drivers of the cars with the patent-infringing wiper motor. They're obviously benefiting from the innovation without having compensated the patent-holder. They can, actually, do exactly this. "Use" of an infringing device is considered infringement. Generally, patentholders don't bother to go after end users of consumer product, because it's wringing blood from a stone and really terrible PR, but they sometimes threaten it as a way to discourage use of a possibly-infringing product. (Cf. Anti-Ford ads taken out by competitors alleging that Ford's products infringed the Selden patent.)