Section 2-312 of the Uniform Commercial Code (UCC) discusses warranties of title against infringers. Unless disclaimed, a “merchant regularly dealing in goods of the kinds” automatically warrants to the buyer that the goods being sold are “free of the rightful claim of any third person by way of infringement or the like.” The accompanying notes make clear that when goods are sold out of the seller’s normal stock (rather than special ordered) “it is the seller’s duty to see that no claim of infringement of a patent or trademark by a third party will impair the buyer’s title.” On the other hand, if the buyer makes a special order with its own specifications, any patent liability “will run from buyer to seller” and “the buyer is under an obligation in good faith to indemnify the seller for any loss suffered.”
In the 2008 case of Pacific Sunware of California, Inc. v. Olaes Enterprises, Inc, the California Court of Appeals interpreted the parallel provision in the California Uniform Commercial Code. The court there -HISTORY focused on the phrase “rightful claim” and held that a “rightful claim” is not limited to winning claims. Rather, the seller is liable to defend the buyer against any “nonfrivolous claim of infringement that has any significant and adverse effect on the buyer’s ability to make use of the purchased goods.” (Reversing the lower court ruling).
In its analysis, the court relied upon Professor Hricik’s 1997 Texas Tech Law Review article on how to “shift liability” for patent infringement. [link]
At this point, I will note that Patently-O hereby disclaims all warrantees – especially this one.