The Misinterpretation of the Patent Exhaustion Doctrine and the Transgenic Seed Industry in Light of Quanta v. LG Electronics

Abstract

The Supreme Court’s recent interpretation of the patent exhaustion doctrine mandates that the transgenic seed industry use contract law instead of patent law to enforce post-sale restrictions. Prior to Quanta Computer, Inc. v. LG Electronics, Inc., the federal district courts and the Federal Circuit held that patent exhaustion was not triggered if a sale was restricted and that post-sale restrictions are enforceable under federal patent law. In Quanta, the Court held that all authorized sales trigger patent exhaustion regardless of restrictions and that post-sale restrictions are not enforceable under patent law. Although Quanta is a case about computer components, the Court’s decision affects the transgenic seed industry. Both the computer industry and the transgenic seed industry relied heavily upon the same pre-Quanta federal case law for interpretation of the patent exhaustion doctrine. This broad holding removes uniform federal remedies under patent law for violating post-sale restrictions, and the seed industry must now rely on a patchwork of state contract law to enforce post-sale restrictions.