QUANTA COMPUTER, INC., ET AL. v. LG ELECTRONICS, INC.

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Case Basics
Docket No. 
Petitioner 
Quanta Computer, Inc., et al.
Respondent 
LG Electronics, Inc.
Advocates
(on behalf of the Petitioners)
(on behalf of the Respondent)
(on behalf of the United States, as amicus curiae, supporting the Petitioners)
Term:
Facts of the Case 

LG Electronics owned patents for a group of products, including microprocessor chips used in personal computers. It licensed the patents to Intel, but in a well-publicized separate agreement excluded from the license any Intel customer that integrated the chip with non-Intel components. One purchaser disregarded the agreement and used the chips in computers made for Dell, Hewlett-Packard and Gateway. LG Electronics sued those who passed the chips down the line of commerce to companies that had not purchased licenses.

Question 

May a patent holder seek royalties from companies other than its direct purchaser as the patented product is integrated into larger components during the manufacturing process?

Conclusion 
Decision: 9 votes for Quanta Computer, Inc., et al., 0 vote(s) against
Legal provision:

The Court concluded unanimously that it could not. Writing for the Court, Justice Clarence Thomas relied on the theory of "patent exhaustion," which provides that a patented item's initial authorized sale terminates all patent rights to that item, denying LGE royalties from companies down the line of commerce.

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QUANTA COMPUTER, INC., ET AL. v. LG ELECTRONICS, INC.. The Oyez Project at IIT Chicago-Kent College of Law. 11 September 2014. <http://www.oyez.org/cases/2000-2009/2007/2007_06_937>.
QUANTA COMPUTER, INC., ET AL. v. LG ELECTRONICS, INC., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2000-2009/2007/2007_06_937 (last visited September 11, 2014).
"QUANTA COMPUTER, INC., ET AL. v. LG ELECTRONICS, INC.," The Oyez Project at IIT Chicago-Kent College of Law, accessed September 11, 2014, http://www.oyez.org/cases/2000-2009/2007/2007_06_937.