For over 150 years, the U.S. Supreme Court has recognized the doctrine of patent exhaustion, holding that the initial sale of patented merchandise terminates all patent rights to that item.

The owner of an automobile, which includes hundreds of patented components, may transfer it without fear of incurring liability for selling a patented item. In Quanta Computer Inc. v. LG Electronics Inc., 2008 WL 2329719 (June 9, 2008), a unanimous Supreme Court warmly endorsed the exhaustion doctrine in an action brought against one of the world’s largest manufacturers of notebook computers. Quanta is the latest in a series of high-profile Supreme Court reversals of U.S. Court of Appeals for the Federal Circuit decisions that favored patent holders.

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