Lifescan Scotland, Ltd. v. Shasta Technologies, LLC
734 F.3d 1361
| Fed. Cir. | 2013Background
- LifeScan owns U.S. Patent No. 7,250,105, a method patent covering measuring a substance (glucose) by using two working sensor parts on a disposable test strip, comparing their currents, and indicating an error if they differ beyond a threshold.
- LifeScan sells OneTouch Ultra meters (which perform the measuring, comparing, and error-indicating steps) and sells or gives away disposable test strips; Shasta makes third‑party GenStrip test strips designed to work with LifeScan meters.
- LifeScan sued Shasta for induced and contributory infringement; the district court granted a preliminary injunction enjoining Shasta from making, using, or selling its strips, finding LifeScan likely to succeed because patent exhaustion did not apply.
- Shasta appealed, arguing the authorized transfer of LifeScan meters (sales and promotional giveaways) exhausted LifeScan’s rights in the method patent under Quanta and Univis because the meter substantially embodies the inventive features of the claimed method.
- The Federal Circuit majority reversed the preliminary injunction, holding that (1) the meter substantially embodies the inventive features of the '105 method claims and thus authorized transfers of the meter exhaust LifeScan’s patent rights with respect to downstream strip use, and (2) exhaustion applies to authorized transfers of title even when the transfer is a gift.
Issues
| Issue | LifeScan's Argument | Shasta's Argument | Held |
|---|---|---|---|
| Whether LifeScan’s meters substantially embody the '105 method claims so that authorized transfers exhaust the patent | Meters do not substantially embody the claims; inventive concept resides in the strips or strip+configuration | Meters perform the measuring/comparing/error‑indicating steps (the inventive features) and thus substantially embody the method | The meter substantially embodies the inventive features (meter performs the key steps); exhaustion applies |
| Whether authorized gifts (free distribution) of meters trigger exhaustion | No; exhaustion requires a "sale" or "consideration" — free transfers do not exhaust patent rights | Yes; exhaustion follows any authorized, unconditional transfer of title, regardless of consideration | Authorized, unconditional transfers of title (including gifts) exhaust patent rights |
| Whether possible noninfringing uses of the meter defeat exhaustion | Quanta requires no reasonable noninfringing use; meters have reasonable noninfringing uses, so no exhaustion | Users have no reasonable noninfringing use for the meters other than practicing the patented method; alternative uses not intended by LifeScan are irrelevant | Meters’ intended use is to practice the patent; alleged alternative uses are not relevant because not intended/reasonable for users |
| Public‑policy/antitrust concern: Allowing exhaustion would improperly extend LifeScan’s patent to unpatented consumables | Preventing exhaustion protects the patentee’s ability to control consumables and obtain reward for method practice | Allowing exhaustion avoids improper extension (tying) of patent to unpatented strips and preserves competition in consumables | Exhaustion prevents extending the patent monopoly to unpatented, replaceable strips; exhaustion is appropriate here |
Key Cases Cited
- Quanta Computer, Inc. v. LG Elecs., 553 U.S. 617 (2008) (sale of components that "substantially embody" a method patent exhausts patent rights)
- United States v. Univis Lens Co., 316 U.S. 241 (1942) (sale of blanks that embody essential features exhausts patent rights, including for method patents)
- Adams v. Burke, 84 U.S. 453 (1873) (authorized sale carries with it right to use a patented article)
- Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U.S. 425 (1894) (sale of one element of a combination can exhaust rights when the other element is unpatentable or perishable)
- Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917) (patentee cannot use patent to control unpatented supplies)
- Carbice Corp. of Am. v. Am. Patents Dev. Corp., 283 U.S. 27 (1931) (control over unpatented materials beyond patent scope is unlawful)
- Keurig, Inc. v. Sturm Foods, Inc., 732 F.3d 1370 (Fed. Cir. 2013) (sale of a brewer exhausted method claims covering use of brewer with disposable cartridges)