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This article is part of MIP Week, a weekly email newsletter written by the editors of Managing IP magazine. Take a one week trial to Managing IP and find many more related articles.

Quanta and LG settle eight-year patent dispute

Eklavya Gupte, London

Quanta Computer is to pay royalties to LG Electronics for use of its patents on microprocessor chips and chip computer technology, after they settled their eight-year dispute this week

The agreement came almost two months after the US Supreme Court ruled in favour of Quanta on the question of patent exhaustion.

The agreement ends the litigation between the parties in the US District Court for the Northern District of California. They both filed stipulations with the court dismissing all claims in two lawsuits with prejudice.

Lee Jeong Hwan, executive vice president of LG Electronics Intellectual Property Center, said in a statement: "The parties have reached an amicable resolution to the lawsuits, with Quanta agreeing to pay licensing fees for use of certain LG patents. LG works tirelessly to protect its intellectual property and will continue to do so."

The first case, LG Electronic v Q-Lity Computer, was filed in 2001, while the second case, LG Electronics v Quanta Computer c and Quanta Computer USA, was filed in 2008.

On June 9 this year, the US Supreme Court said that patent exhaustion "does not apply to an expressly conditional sale or license", overturning a lower court decision, and ruling in favour of LG.

LG had licensed the patents to Intel, which then sold the chips to the computer companies. However, the licence agreement did not expressly authorize Intel's customers to combine the chips with non-Intel products, which Quanta did.

Managing IP's July/August 2008 issue looked at how the Supreme Court's decision in Quanta v LG could make it harder for licensors to collect downstream royalties.