[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

Shubha Ghosh
Professor of Law
SMU Dedman School of Law
Dallas, Texas USA
The First Sale Doctrine Before The U.S. Supreme Court:
Intellectual Property Implications For India
"Bad laws are the worst sort
of tyranny."
-Edmund Burke
The United States Supreme
Court will be hearing oral arguments
in a case called Quanta
Computers v. LG Electronics in
January, 2008. At issue in the case is
the status of the first sale doctrine in
light of recent decisions by the United
States Court of Appeals for the Federal
Circuit, the intermediate appeals court
for the review of claims under patent
law. The Federal Circuit has created a
doctrine called the conditional sale
doctrine which allows patent owners to
impose conditions on the sale of license
of a patented invention which limits the
application of the first sale doctrine.
The following is a summary of an argument
from a brief that I submitted on
behalf of the American Antitrust Institute
that supports Quanta’s position in
the case. Although resolving issues of
U.S. law, the outcome of this case has
important implications for the development
of intellectual property law globally
and in India.
For over a century and a half, the first
sale doctrine (also known as the exhaustion
doctrine) has provided certainty
for users, manufacturers and
other business entities in the distribution
of goods and services protected by
intellectual property law. Patent and
copyright law grants to inventors and
authors limited rights to control the distribution
of the products of their creativity.
However, the first sale doctrine
creates a bright-line rule that ensures
that purchasers of these works can further
transfer these items to third parties
without the interference of the original
intellectual property owners. In this
way, the first sale promotes an active
and vibrant marketplace for works created
through the benefit of patent and
copyright and therefore is integral to
the goals of innovation and competition
that are at the foundation of the system
of intellectual property rights. The
doctrine of conditional sale, as articulated
and applied by the United States
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