by Dennis Crouch
The case here is interesting and important – especially as it relates to patent pools and FRAND license offers. I have posted the relevant holding, while I think more about its potential impact.
In 2012, JVC Kenwood sued Nero, Inc. for infringing its patents relating to methods of playing and burning optical discs (DVD and Blueray). See, for example, U.S. Patent No. 6,141,491. These patents are considered standard-essential parts of the patent pools formed around these technology standards and all of the (legit) disc and hardware manufacturers pay the license fee. That license is obviously designed to cover end-users as well who are the ultimate consumers of the DVD technology.
Nero sells software that helps folks play and burn discs from their computers. As such, Nero does not directly infringe the patents under section 271(a). JVC alleges instead that Nero should be held liable for contributory and induced infringement under 271(b) and (c).
JVC’s case a number of major theoretical problems: Most important to the District Court and Federal Circuit was that the consumers are already licensed to use the discs and, as such, the alleged underlying direct infringement is actually a licensed use.
The court held, on summary judgment, that JVC is “barred from asserting claims of direct infringement against end users for use of Nero software with DVD and Blu-ray optical discs made or sold by a party whose products have been expressly released from claims of infringement by JVC with regard to the Patents.” The court held that, absent direct infringement, Nero cannot be liable for indirect infringement. . . . We affirm on that ground.
The district court also (alternatively) held that the licensed manufacture and sale of the discs exhausted the patent rights as to those discs. On appeal, the Federal Circuit vacated that ruling – finding that the evidence was “sketchy.” It appears to me that the court did not want to further confuse the exhaustion doctrine with this case and perhaps Judges Newman, Dyk, and Reyna could not agree on the correct formulation.