Keurig v. Sturm Foods: Patent Exhaustion for an a fortiori Sale of a Patented Product

Category: Infringement 
By: Jesus Hernandez, Blog Editor/Contributor 
TitleKeurig, Inc. v. Sturm Foods, Inc., No. 2013-1072 (Fed. Cir. Oct. 17, 2013).
IssueKeurig argues that the district court erred by declining to apply the substantial embodiment test articulated by the Supreme Court in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), which Keurig insists is the only relevant analysis for exhaustion of its asserted method claims.
Keurig at *5.
Holding[A fact pattern necessitating application of the Quanta/Univis substantial embodiment test] is not the case before us, which presents an a fortiori fact situation in which the product sold by Keurig was patented. […] “[W]here a person ha[s] purchased a patented machine of the patentee or his assignee, this purchase carrie[s] with it the right to the use of the machine so long as it [is] capable of use.” Quanta, 553 U.S. at 625 (quoting Adams v. Burke, 84 U.S. 453, 455 (1873)). The Court’s decision in Quanta did not alter this principle.
Keurig at *7.
Procedural HistoryKeurig filed suit against Sturm, alleging, inter alia, that the use of Sturm’s Grove Square cartridges in certain Keurig brewer models directly infringed method claim 29 of the ’488 patent and method claims 6–8 of the ’938 patent, and that Sturm induced and contributed to that infringement. Sturm asserted the affirmative defense of patent exhaustion and moved for summary judgment of noninfringement, which the district court granted.
Keurig at *4.
Legal Reasoning (Lourie, Mayer, and O’Malley)
Exhaustion and the Substantial Embodiment Test
Patent Exhaustion, generallyPatent exhaustion is an affirmative defense to a claim of patent infringement, ExcelStor Technology, Inc. v. Papst Licensing GMBH & Co. KG, 541 F.3d 1373, 1376 (Fed. Cir. 2008), and like other issues in which there are no disputed factual questions, may be properly decided by summary judgment. […] “The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item.” Quanta, 553 U.S. at 625.
Keurig at *5 (some internal citations omitted).
Substantial Embodiment Test: Exhaustion in view of Quanta and Univis 
UnivisIn Univis, the Supreme Court determined that claims to methods for manufacturing eyeglass lenses, and to the finished lenses themselves, were exhausted when the patent holder sold unpatented lens blanks (unpolished blocks of glass) to a manufacturer and distributor that polished and shaped the blanks into finished lenses by practicing the patented methods. [...]
Keurig at *6 (internal citations omitted).
QuantaIn Quanta, the Court held that method claims for managing and synchronizing data transfers between computer components were exhausted when the patent holder licensed a manufacturer to produce and sell unpatented microprocessors and chipsets that performed the patented methods when incorporated with memory and buses in a computer system. Quanta, 553 U.S. at 621.
Keurig at *6.
Substantial Embodiment TestThe Court thus established that method claims are exhausted by an authorized sale of an item that substantially embodies the method if the item (1) has no reasonable noninfringing use and (2) includes all inventive aspects of the claimed method. Id. at 638. Both of the Univis and Quanta opinions emphasized the unpatented nature of the products sold. Thus, the substantial embodiment test provided a framework for determining whether the sale of an unpatented component […], which by itself does not practice the patented method, is still sufficient for exhaustion.
Keurig at *6-7 (emphasis added).
Substantial Embodiment Test does not Apply in an A Fortiori Sale of Patented Item
Entire Product Sold by Keurig Already Covered by Patent
Keurig sold its patented brewers without conditions and its purchasers therefore obtained the unfettered right to use them in any way they chose, at least as against a challenge from Keurig. We conclude, therefore, that Keurig’s rights to assert infringement of the method claims of the ’488 and ’938 patents were exhausted by its initial authorized sale of Keurig’s patented brewers.
Keurig at *7.
The claims of both the ’488 patent and the ’938 patent are directed to the brewers and the use of the brewers; therefore, Keurig cannot preclude an individual who purchased one of its brewers from using a non-Keurig cartridge with that brewer.
Keurig at *8.
Patent Exhaustion on a Claim-by-Claim basisKeurig’s argument that patent exhaustion must be adjudicated on a claim-by-claim basis is unavailing. The Court’s patent exhaustion jurisprudence has focused on the exhaustion of the patents at issue in their entirety, rather than the exhaustion of the claims at issue on an individual basis. [...] Keurig’s decision to have sought protection for both apparatus and method claims thus means that those claims are judged together for purposes of patent exhaustion.
Keurig at *8 (internal citations omitted).
For the foregoing reasons, we conclude that the dis- trict court did not err in holding that Keurig’s asserted rights under its ’488 and ’938 patents were exhausted by the sale of its brewer. The noninfringement judgment of the district court is therefore affirmed.
Keurig at *9.

O’MALLEY, Circuit Judge, concurring in the result. Keurig, O'Malley Op. at *1.
Keurig’s patent rights covering normal methods of using its brewers to brew coffee would be exhausted by the sale of the Keurig brewers, regardless of which patent or patents contain the relevant apparatus and method claims. Thus, the majority’s conclusion that exhaustion should not be assessed on a claim-by-claim basis is dicta.
Keurig, O'Malley Op. at *1-2.

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