Keurig, Incorporated v. Sturm Foods, Inc.
2013 WL 5645192, 732 F.3d 1370, 108 U.S.P.Q. 2d (BNA) 1648 (2013)
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Rule of Law:
The initial authorized sale of a patented apparatus exhausts all patent rights to that item, including method claims describing its normal and intended use, thereby precluding infringement claims against third parties for manufacturing components used in the apparatus.
Facts:
- Keurig, Inc. manufactures and sells single-serve coffee brewers and beverage cartridges designed for use in those brewers.
- Keurig owns U.S. Patent 7,165,488 (the '488 patent) and U.S. Patent 6,606,938 (the '938 patent), which are directed to brewers and methods of using them to make beverages.
- Method claims within these patents describe steps for brewing, such as piercing a cartridge, admitting heated liquid, and extracting the beverage.
- Sturm Foods, Inc. manufactures and sells unpatented beverage cartridges under the brand name “Grove Square” that are designed for use in Keurig’s brewers.
- Sturm Foods, Inc. does not manufacture or sell coffee brewers.
Procedural Posture:
- Keurig, Inc. filed a lawsuit against Sturm Foods, Inc. in the United States District Court for the District of Delaware, alleging direct, induced, and contributory infringement of method claims of its '488 and '938 patents based on the use of Sturm’s cartridges in Keurig brewers.
- Sturm Foods, Inc. asserted the affirmative defense of patent exhaustion and moved for summary judgment of noninfringement.
- The District Court granted Sturm’s motion for summary judgment, concluding that Keurig’s patent rights were exhausted by its authorized sale of the patented brewers.
- The District Court then severed the remaining nonpatent issues and entered a final judgment on its patent exhaustion decision pursuant to Federal Rule of Civil Procedure 54(b).
- Keurig, Inc. timely appealed the District Court’s decision to the United States Court of Appeals for the Federal Circuit.
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Issue:
Does the authorized sale of a patented coffee brewer exhaust a patent holder's rights to assert method claims describing the normal use of that brewer, precluding infringement claims against a third-party cartridge manufacturer?
Opinions:
Majority - Lourie, Circuit Judge
Yes, the authorized sale of a patented coffee brewer exhausts a patent holder's rights to assert method claims describing the normal use of that brewer, thereby precluding infringement claims against a third-party cartridge manufacturer. The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item. Keurig sold its patented brewers without conditions, and purchasers therefore obtained the unfettered right to use them in any way they chose, at least as against a challenge from Keurig. While Quanta and Univis established a 'substantial embodiment test' for exhaustion triggered by the sale of unpatented components, this case presents an a fortiori situation because Keurig sold the patented brewers themselves, which are commercial embodiments of its apparatus claims. Allowing Keurig to assert method claims would constitute an impermissible 'end-run around exhaustion,' violating the principle that once a patented item is lawfully made and sold, there is no restriction on its use to be implied for the benefit of the patentee. The potential for consumers to use non-infringing cartridges does not save Keurig’s method claims from exhaustion, as the focus is on the authorized sale of the patented item that fully practices the invention. Furthermore, patent exhaustion applies to the patents in their entirety, rather than on a claim-by-claim basis, to prevent patentees from recovering multiple times and to provide clarity to third parties and end-users.
Concurring - O’Malley, Circuit Judge
Yes, the authorized sale of a patented coffee brewer exhausts a patent holder's rights to assert method claims describing the normal use of that brewer. I concur in the judgment that Keurig’s asserted patent rights were exhausted by the sale of its patented brewers. This conclusion is reached by applying the single principle that the initial authorized sale of a patented item terminates all patent rights to that item, including rights to method claims involving the normal and intended use of that item. However, the majority’s conclusion that exhaustion should not be assessed on a claim-by-claim basis is considered dicta because the outcome in this case does not depend on it. To the extent it could be characterized as anything other than dicta, I must dissent from that conclusion, as there could be instances where assessing exhaustion on a claim-by-claim basis would be necessary and appropriate, given that each claim defines a separate invention.
Analysis:
This case significantly clarifies the application of the patent exhaustion doctrine to method claims when a patentee holds both apparatus and method claims covering the same invention. It distinguishes situations involving the sale of a patented product (where exhaustion is direct and broad) from those involving unpatented components (where the Quanta 'substantial embodiment test' applies). The decision reinforces that patentees cannot use method claims to control the post-sale use of their patented products, thereby preventing them from establishing a 'closed system' where consumers are restricted to purchasing consumables solely from the patentee after buying the primary device. This limits a patentee's ability to extract multiple 'rewards' for a single patented item.
