IP Law Daily, PATENT—Fed. Cir.: Sale of beverage cartridges for use in Keurig beverage brewers did not indirectly infringe Keurig’s patents, (Oct 18, 2013)

By Mark Engstrom, J.D.

A federal district court did not err in holding that Sturm Foods, a dry foods company that manufactured and sold beverage cartridges for use in Keurig single-serve brewers, did not indirectly infringe two Keurig patents that described a brew chamber for a single-serve brewing device and a method of puncturing and venting the disposable cartridges that were placed in that chamber, the U.S. Court of Appeals for the Federal Circuit has ruled (Keurig, Inc. v. Sturm Foods, Inc, October 17, 2013, Lourie, A.). Because Keurig’s patent rights were exhausted by the authorized sale of its brewer, the district court’s judgment of non-infringement was affirmed. Judge O’Malley wrote a concurring opinion to dispute the majority’s assertion that exhaustion should not be assessed on a claim-by-claim basis.

Background. Keurig manufactured single-serve beverage brewers and the disposable beverage cartridges that the brewers used. Consumers placed a single-serve beverage cartridge into a brew chamber and the brewer forced hot water through the cartridge, mixing the water with a dry “beverage medium” and dispensing the result as a single serving of the desired beverage.

Keurig alleged that Sturm had induced and contributed to the infringement of one method claim of its “brew chamber” patent and three method claims of its “puncturing and venting” patent. According to Keurig, the claims were directly infringed when consumers used Sturm’s cartridges in Keurig’s brewers. Sturm successfully asserted the affirmative defense of patent exhaustion (a.k.a. the “first sale” doctrine), which terminated a patent holder’s exclusive right to control the use of a patented item after the item was sold in an unconditional, authorized sale. The district court granted summary judgment of non-infringement to Sturm. Keurig appealed.

Appeal. Keurig argued that Sturm was liable for indirect infringement because purchasers of its single-serve brewers were infringing its patents by using Sturm’s cartridges to practice the claimed methods. The Federal Circuit disagreed. According to the U.S. Supreme Court, a person’s purchase of a patented machine included the right to use that machine “so long as it was capable of use.” Because Keurig had sold its patented brewers without condition, its purchasers obtained the unfettered right to use those brewers in any way they chose, at least with respect to a challenge from Keurig.

The Federal Circuit found that Keurig’s asserted patent rights were exhausted by the initial authorized sale of its patented brewers. To rule otherwise would improperly permit Keurig to conduct an “end-run around exhaustion” by claiming methods and the apparatus that practiced those methods, and then shielding the apparatus patent from exhaustion by holding downstream purchasers liable for infringing the method claims. As the U.S. Supreme Court explained in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), “[s]uch a result would violate the longstanding principle that, when a patented item is ‘once lawfully made and sold, there is no restriction on [its] use to be implied for the benefit of the patentee.’”

Accordingly, consumer use of different types of cartridges—cartridges that would not infringe the claimed methods—did not save Keurig’s method claims from exhaustion. A finding of infringement would contravene the spirit of the exhaustion doctrine, the court explained, because Keurig would be allowed to control the use of its brewers after it sold them. Because the asserted claims were directed to Keurig’s brewers and their use, Keurig could not preclude consumers from using non-Keurig cartridges in its patented brewers. Doing so would vitiate the doctrine of patent exhaustion.

Concurrence. Judge O’Malley wrote separately to express his view that “the majority’s conclusion that exhaustion should not be assessed on a claim-by-claim basis is dicta.”

Keurig had argued that patent exhaustion should be adjudicated on a claim-by-claim basis. According to the majority, however, the Supreme Court’s patent exhaustion jurisprudence “focused on the exhaustion of the patents at issue in their entirety, rather than the exhaustion of the claims at issue on an individual basis.” Because Keurig sought patent protection for its apparatus claim as well as its method claims, the majority considered the claims together for the purpose of patent exhaustion.

Judge O’Malley disagreed with the majority’s approach. Because patent claims were independent of each other, “the legal doctrine of patent exhaustion should apply on a claim-by-claim basis,” the judge concluded.

The case is No. 2013-1072.

Attorneys: Michael A. Albert (Wolf, Greenfield & Sacks, P.C.) for Keurig, Inc. Allen A. Arnsten (Foley & Lardner LLP) for Sturm Foods, Inc.

Companies: Keurig, Inc.; Sturm Foods, Inc.

Cases: Patent FedCir