United States v. Univis Lens Co.

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United States v. Univis Lens Co.
Seal of the United States Supreme Court.svg
Argued April 9–10, 1942
Decided May 11, 1942
Full case nameUnited States v. Univis Lens Co., Inc., et al.
Citations316 U.S. 241 ( more )
62 S. Ct. 1088; 86 L. Ed. 1408; 1942 U.S. LEXIS 1241; 53 U.S.P.Q. (BNA) 404
Court membership
Chief Justice
Harlan F. Stone
Associate Justices
Owen Roberts  · Hugo Black
Stanley F. Reed  · Felix Frankfurter
William O. Douglas  · Frank Murphy
James F. Byrnes  · Robert H. Jackson
Case opinions
MajorityStone, joined by Roberts, Black, Reed, Frankfurter, Douglas, Murphy, Byrnes
Jackson took no part in the consideration or decision of the case.

United States v. Univis Lens Co., 316 U.S. 241 (1942), is a decision of the United States Supreme Court explaining the exhaustion doctrine and applying it to find an antitrust violation because Univis's ownership of patents did not exclude its restrictive practices from the antitrust laws. [1] The Univis case stands for the proposition that when an article sold by a patent holder or one whom it has authorized to sell it embodies the essential features of a patented invention, the effect of the sale is to terminate any right of the patent holder under patent law to control the purchaser's further disposition or use of the article itself and of articles into which it is incorporated as a component or precursor.

Supreme Court of the United States Highest court in the United States

The Supreme Court of the United States is the highest court in the federal judiciary of the United States. Established pursuant to Article III of the U.S. Constitution in 1789, it has original jurisdiction over a narrow range of cases, including suits between two or more states and those involving ambassadors. It also has ultimate appellate jurisdiction over all federal court and state court cases that involve a point of federal constitutional or statutory law. The Court has the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution or an executive act for being unlawful. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The court may decide cases having political overtones, but it has ruled that it does not have power to decide nonjusticiable political questions. Each year it agrees to hear about one hundred to one hundred fifty of the more than seven thousand cases that it is asked to review.

The exhaustion doctrine, also referred to as the first sale doctrine, is a U.S. common law patent doctrine that limits the extent to which patent holders can control an individual article of a patented product after a so-called authorized sale. Under the doctrine, once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be "exhausted," and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew, unless it is specifically authorized by the patentee to do so.

United States Antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.



Univis, the owner of various method and product patents on optical lenses, manufactured lens blanks and sold them to licensees. When the unpatented blanks were ground and polished they became patented lenses. The licenses required the licensees to sell the lenses at prices that Univis fixed.

Lens (optics) optical device which transmits and refracts light

A lens is a transmissive optical device that focuses or disperses a light beam by means of refraction. A simple lens consists of a single piece of transparent material, while a compound lens consists of several simple lenses (elements), usually arranged along a common axis. Lenses are made from materials such as glass or plastic, and are ground and polished or molded to a desired shape. A lens can focus light to form an image, unlike a prism, which refracts light without focusing. Devices that similarly focus or disperse waves and radiation other than visible light are also called lenses, such as microwave lenses, electron lenses, acoustic lenses, or explosive lenses.

Cross-sections of lenses according to Univis's U.S. Patent No. 1,845,940 Cross-sections of lenses according to Univis's U.S. Patent No. 1,845,940.jpg
Cross–sections of lenses according to Univis's U.S. Patent No. 1,845,940

The lens blanks were specially adapted for making the patented lenses, and consequently the only use to which the blanks would be put and the only object of their sale was to enable the manufacture of the patented lenses. Thus, the Court was led to assume that sale of the blanks by an unlicensed manufacturer to an unlicensed finisher, who created the patented lenses by grounding and polishing the lenses, would be a contributory infringer.

Supreme Court decision

Chief Justice Stone delivered the opinion of the Court Cropped detail of File,Chief Justice Harlan Fiske Stone photograph circa 1927-1932.jpg
Chief Justice Stone delivered the opinion of the Court

Because the sale of the blanks would be contributory infringement, the Court ruled, the sale of the blanks exhausted the patent. Therefore, the case was governed by the exhaustion doctrine, which holds that—

An incident to the purchase of any article, whether patented or unpatented, is the right to use and sell it, and upon familiar principles the authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold.

The sale exhausts the patent monopoly "and the patentee may not thereafter, by virtue of his patent, control the use or disposition of the article," such as by fixing the resale price of the sold article. That the sold article was the unfinished lens blank, not the patented finished lens, did not alter the case:

[W]here one has sold an uncompleted article which, because it embodies essential features of his patented invention, is within the protection of his patent, and has destined the article to be finished by the purchaser in conformity to the patent, he has sold his invention so far as it is or may be embodied in that particular article. The reward he demanded and received is for the article and the invention which it embodies and which his vendee is to practice upon it. He has thus parted with his right to assert the patent monopoly with respect to it and is no longer free to control the price at which it may be sold either in its unfinished or finished form.

This principle applied equally '[w]hether the licensee sells the patented article in its completed form or sells it before completion for the purpose of enabling the buyer to finish and sell it." Since Univis's ownership of the patents did not shield its restrictions over post-sale conduct, the ordinary rules of law applied, under which price fixing is illegal.

A post-sale restraint, also termed a post-sale restriction, as those terms are used in United States patent law and antitrust law, is a limitation that operates after a sale of goods to a purchaser has occurred and purports to restrain, restrict, or limit the scope of the buyer's freedom to utilize, resell, or otherwise dispose of or take action regarding the sold goods. Such restraints have also been termed "equitable servitudes on chattels".

Price fixing agreement over prices between participants on the same side in a market

Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.

Finally, the Court declined to try to separate (and preserve) the beneficial or pro-competitive features of the licensing system from the illegal ones. Any valid "features are so interwoven with and identified with the price restrictions which are the core of the licensing system that the case is an appropriate one for the suppression of the entire licensing scheme although some of its features, independently established, might have been used for lawful purposes."

Subsequent developments

The exhaustion doctrine as restated in the Univis decision has remained a governing principle of United States patent and antitrust law. The Supreme Court relied on Univis in its 2008 decision in Quanta Computer, Inc. v. LG Electronics, Inc. to hold that the sale of patented microprocessors exhausted the patent monopoly including patents covering the combination of the patented microprocessors with other components, where (as in Univis) the essential features of the invention were all contained in the microprocessors, i.e., the sold article embodies the essential features of the patented invention. (Quanta's primary patents were on microprocessors, but it also had patents on products combining the patented microprocessors and other apparently conventional devices, such as PCs. See exhausted combination doctrine for an explanation of such patents.)

Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), is a decision of the United States Supreme Court in which the Court reaffirmed the validity of the patent exhaustion doctrine, and in doing so made uncertain the continuing precedential value of a line of decisions in the Federal Circuit that had sought to limit Supreme Court exhaustion doctrine decisions to their facts and to require a so-called "rule of reason" analysis of all post-sale restrictions other than tie-ins and price fixes. In the course of restating the patent exhaustion doctrine, the Court held that the exhaustion doctrine is triggered by, among other things, an authorized sale of a component when the only reasonable and intended use of the component is to practice the patent and the component substantially embodies the patented invention by embodying its essential features. The Court also overturned, in passing, the part of decision below that held that the exhaustion doctrine was limited to product claims and did not apply to method claims.

The exhausted combination doctrine, also referred to as the doctrine of theLincoln Engineeringcase, is the doctrine of U.S. patent law that when an inventor invents a new, unobvious device and seeks to patent not merely the new device but also the combination of the new device with a known, conventional device with which the new device cooperates in the conventional and predictable way in which devices of those types have previously cooperated, the combination is unpatentable as an "exhausted combination" or "old combination". The doctrine is also termed the doctrine of the Lincoln Engineering case because the United States Supreme Court explained the doctrine in its decision in Lincoln Engineering Co. v. Stewart-Warner Corp.

See also

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  1. United States v. Univis Lens Co., 316 U.S. 241 (1942).