Federal Circuit Finds Patent Exhaustion From Sale Of Keurig Coffee Machines

In Keurig, Inc. v. Sturm Foods, Inc., the Federal Circuit upheld the district court's decision that Keurig's patent rights were exhausted by the sale of its machines, and so not infringed by the defendant's sale of replacement coffee cartridges. Foley &Lardner LLP represented the appellee in this appeal, but this summary is based only on the public record, as reflected in the Federal Circuit decision.

The Patents At Issue

The patents at issue were Keurig's U.S. Patent 7,165,488 and U.S. Patent 6,606,938. Claim 6 was designated as representative:

6. A method of brewing a beverage from a beverage medium contained in a disposable cartridge, comprising the following steps, in sequence: (a) piercing the cartridge with a tubular outlet probe to vent the cartridge interior; (b) piercing the cartridge with a tubular inlet probe; (c) admitting heated liquid into the cartridge interior via the inlet probe for combination with the beverage medium to produce a beverage; and (d) extracting the beverage from the cartridge interior via the outlet probe.

Keurig asserted that Sturm was liable for contributory infringement because the use of Sturm's replacement cartridges "in certain Keurig brewer models" directly infringed its claims. As summarized by the Federal Circuit, "Sturm asserted the affirmative defense of patent exhaustion and moved for summary judgment of noninfringement, which the district court granted."

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Lourie and joined by Judge Mayer. Judge O'Malley filed a concurring opinion.

The Federal Circuit summarized the doctrine of patent exhaustion as follows:

"The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item." Quanta [Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617,] 625 [(2008).] The rationale underlying the doctrine rests upon the theory that an unconditional sale of a patented device exhausts the patentee's right to control the purchaser's use of that item thereafter because the patentee has bargained for and received full value for the goods.

The Federal Circuit explained that "[t]he leading cases in which the patent exhaustion doctrine has been applied to method claims are Quanta and United States v. Univis Lens Co., 316 U.S. 241 (1942)," and summarized these cases as establishing that "method claims are exhausted by an authorized sale of an item that...