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Washington Law Review

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The Federal Circuit serves as the central appellate court for U.S. patent law appeals. Outside of patent law, scholars have noted the Federal Circuit’s distinct lack of influence on the law. Thus, unnoticed, the Federal Circuit has become one of the most influential actors in the creation of intellectual property licensing law. Its influence reaches across all areas of intellectual property, industries, and all federal circuits and state courts. But the Federal Circuit’s influence on licensing law is more than just a matter of academic interest: licensing is critical to innovation in the information economy. Licenses underlie the creation and distribution of ideas, information, inventions, and works. Products as diverse as open source software and soybean seed rely on licensing.

The Federal Circuit’s influence emerged out of failed attempts to create uniform statutory licensing law, which has left licensing law to develop as common law. Since its creation in 1982, the Federal Circuit has decided more cases involving licensing law than any other state or federal court. Many courts have looked to and followed the Federal Circuit’s decisions. The Federal Circuit’s general approach has been to uphold modern licensing models, which fosters both technological and business model innovation. This approach is consistent with the approach taken by most other courts, including the Supreme Court. At the urging of the U.S. Solicitor General and others, the Supreme Court probed the Federal Circuit’s licensing law jurisprudence in a recent case, Quanta Computer, Inc. v. LG Electronics, Inc. [128 S.Ct. 2109 (2008)] While the Supreme Court reversed the Federal Circuit in a unanimous decision, upon close inspection, the reversal actually amounts to an affirmation of the Federal Circuit’s core licensing-law jurisprudence.

This Article begins by describing in Part I the emergence of licensing as the dominant transaction model in the information economy. It then explores in Part II the development of licensing law in the United States and how, in the wake of failed attempts to create uniform statutory licensing law, the law has evolved largely as common law. This Article then explains in Part III and Part IV how the Federal Circuit has begun to shape this common law by deciding more and more cases involving licenses, and how other courts now look to the Federal Circuit for guidance in deciding licensing-related cases.

In Part V, this Article explores the nature of the Federal Circuit’s licensing-law jurisprudence, focusing on its “first sale” jurisprudence. This Part also examines how the Federal Circuit’s case law meshes with the decisions of other circuits and the Supreme Court, including the Supreme Court’s recent Quanta Computer decision. This Article concludes in Part VI that the Federal Circuit has been a good but sometimes imperfect steward of modern licensing practices. This is well illustrated by the Quanta Computer case. In that case, the Supreme Court unanimously overturned the Federal Circuit’s ruling, yet left the Federal Circuit’s core licensing-law jurisprudence relatively intact despite numerous urgings through amicus briefs and academic literature to send a stern corrective message to the Federal Circuit as it had in several recent patent cases. This Article also highlights some areas that the Federal Circuit should give heightened attention to, given its highly influential role in the creation of licensing law.



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