Recent U.S. Court Decisions And Developments Affecting Licensing

By John Paul and Brian Kacedon

John Paul

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP,

Brian Kacedon

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP,

LifeScan Scotland, Ltd. v. Shasta Technologies

Giving Away Products Embodying an Invention Triggers Patent Exhaustion and Can Prevent Patent Owners from Collecting Royalties on Those Products

The doctrine of patent exhaustion limits patent owners to a single compensation for their patented products or methods by preventing them from charging additional royalties on a patented item once an authorized sale of the item occurs. In a recent case, LifeScan Scotland, Ltd. v. Shasta Technologies, No. 2013-1271 (Fed. Cir. Nov. 4, 2013), the Federal Circuit held that a patent owner's ability to collect royalties is exhausted even when it gives away that item, if the item substantially embodies the inventive aspect of the claims.

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