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LG Electronics, Inc. v. Hitachi Ltd. is a March 13, 2009 court case decided in the United States District Court for the Northern District of California which held that LG Electronic (LGE) had exhausted its patent rights with respect to Hitachi Ltd products due to the authorized sale to Intel corporation of products embodying the four patents. A second issue was the licensee's (Hitachi) foreign sales of products embodying the LGE method patents. LGE had authorized to Quanta Computer a worldwide license agreement that was also binding to the third-party manufacturer Hitachi. Judge Wilken issued a summary judgment for Hitachi.

Background
The four LGE U.S. patents 4,939,641 ; 5,379,379 ; 5,077,733 ; 4,918,645 at issue here were also litigated on issues of patent exhaustion in previous court cases. Three patents ('641, '379, and '733) were the focus of the Supreme Court case, Quanta v. LG Electronics, 128 S. Ct. 2109 (2008), Additionally, the ‘645 patent was also at issue in the lower court cases of Quanta v LGE but was not part of the of the Supreme Court case. The Supreme Court held in Quanta that method patents can be exhausted. The Supreme Court did not explicitly address the issue of foreign sales of a method patent.

Facts
The data processed by a computer is stored principally in random access memory, also called main memory. Frequently accessed data are generally stored in cache memory, which permits faster access than main memory and is often located on the microprocessor itself. . The ‘641 patent monitors data requests to the main and the cache memory and ensures that the slower main memory has the most current data accessed from the faster cache memory. The ‘379 patent coordinates “read from” and “write to” requests to the main memory. If requests are taken in a serial order, a slow down of the computers processing speed will occur, as the “read from” requests are faster to process than “write to” commands. Although, a stale version of data might occur if the “read from” command occurs before a “write to” command that is in queue to be processed. This patent gives priority to all “read from” commands unless there is a “write to” request in queue for the same data. In this case the “write to” request is processed before the “read from” request to ensure the most current data. The ‘733 patent manages and prioritizes data traffic on the interfacing bus connection between two computer components. The management and priority method of rotating access across the bus prevents any monopoly of a single computer component. . The ‘645 patent defines a method where stored data can be recalled from another memory site. A requesting agent is used to access stored data through the interfacing bus from another memory site. The replying agent then gives access to the data stored on it’s memory to the requesting agent. On September 7, 2000, LGE authorized the sale of products embodying the four patents to Intel corporation. The license agreement authorized Intel to "make, use, sell (directly or indirectly), offer to sell, import or otherwise dispose of" products practicing the LGE patents. A separate master agreement was to inform third parties that the license "does not extend, expressly or by implication, to any product that you make by combining an Intel product with any non-Intel product".

Issue
The Supreme Court's rationale in Quanta stated that "the authorized sale of an article that substantially embodies a patent exhausts the patent holders rights and prevents the patent holder from invoking patent law to control postsale use of the article". The first issue in this case, "LGE now charges Hitachi with infringing the patents-in-suit in the same way that it alleged the defendants in Quanta infringed those patents: by combining in its products Intel parts that are subject to the license agreement with non-Intel parts in a way that practices the method taught in the patents." It was determined by the court that the use of the Intel CPU and non-Intel parts had substantially embodied LGE's method patents and therefore exhausted LGE's patent rights. LGE claimed that the facts were different than in Quanta. The court held that the computer components (Intel CPU and non Intel parts) substantially embodied the patent method which was the legal issue at hand and not the individual patents (components) as was considered in Quanta.

The second issue, LGE contended that in "Quanta's holding regarding exhaustion applies only when the first authorized sale of patented items occurs in the United States sales." LGE had authorized to Quanta a worldwide license agreement that was also binding to the third party manufacture Hitachi. In consideration for the worldwide license agreement that was was granted to Intel in the year 2000 by LGE; LGE's was granted a license to use their original patents which included patents '641, '379, '733, and '645. The court held that LGE's grant of the worldwide license agreement constituted a sale for exhaustion purposes.

Conclusion
Partial Summary judgment was awarded to Hitachi by the court to use the method patent without paying a royalty to LGE because of patent exhaustion and the worldwide license agreement.