Keurig, Incorporated v. Sturm Foods, Inc. , 732 F.3d 1370 ( 2013 )

United States Court of Appeals
for the Federal Circuit
______________________
KEURIG, INCORPORATED,
Plaintiff-Appellant,
v.
STURM FOODS, INC.,
Defendant-Appellee.
______________________
2013-1072
______________________
Appeal from the United States District Court for the
District of Delaware in No. 10-CV-0841, Judge Sue L.
Robinson.
______________________
Decided: October 17, 2013
______________________
MICHAEL A. ALBERT, Wolf, Greenfield & Sacks, P.C., of
Phoenix, Arizona, argued for plaintiff-appellant. With
him on the brief were GERALD B. HRYCYSZYN; and
CHELSEA A. LOUGHRAN, of Boston, Massachusetts. Of
counsel was KAREN E. KELLER, Shaw Keller, LLP, of
Wilmington, Delaware.
ALLEN A. ARNTSEN, Foley & Lardner LLP, of Madison,
Wisconsin, argued for defendant-appellee. With him on
the brief were CRAIG S. FOCHLER, SCOTT R. KASPAR and
2 KEURIG, INC. v. STURM FOODS, INC.
AARON J. WEINZIERL, of Chicago, Illinois; and KIMBERLY
K. DODD, of Milwaukee, Wisconsin.
ERIK PAUL BELT, McCarter & English, LLP, of Boston,
Massachusetts, for amicus curiae, Boston Patent Law
Association. With him on the brief was KELLY A. GABOS.
______________________
Before LOURIE, MAYER, and O’MALLEY, Circuit Judges.
Opinion for the court filed by Circuit Judge LOURIE.
Concurring opinion filed by Circuit Judge O’MALLEY.
LOURIE, Circuit Judge.
Keurig, Inc. (“Keurig”) appeals from the decision of
the United States District Court for the District of Dela-
ware granting summary judgment that Sturm Foods, Inc.
(“Sturm”) does not infringe claim 29 of Keurig’s U.S.
Patent 7,165,488 (the “’488 patent”) and claims 6–8 of
Keurig’s U.S. Patent 6,606,938 (the “’938 patent”).
Keurig, Inc. v. Sturm Foods, Inc., No. 10-841, 2012 WL
4049799 (D. Del. Sept. 13, 2012). Because the district
court did not err in concluding that Keurig’s patent rights
were exhausted and hence were not infringed by Sturm,
we affirm.
BACKGROUND
Keurig manufactures and sells single-serve coffee
brewers and beverage cartridges for use in those brewers.
Consumers insert a cartridge into the brewer, hot water is
forced through the cartridge, and a beverage is dispensed.
Keurig owns the ’488 and ’938 patents directed to brewers
and methods of using them to make beverages. Claim 6 of
the ’938 patent is representative of the method claims,
which are the only claims at issue:
KEURIG, INC. v. STURM FOODS, INC. 3
6. A method of brewing a beverage from a bever-
age 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 inte-
rior via the inlet probe for combination with the
beverage medium to produce a beverage; and
(d) extracting the beverage from the cartridge in-
terior via the outlet probe.
’938 patent col. 4 ll. 40–50. Claims 1–21 of the ’488 patent
and claims 1–5 of the ’938 patent, which were not assert-
ed in the instant case, recite apparatus claims directed to
brewers. Keurig also holds at least one design patent
directed to its own brand of cartridges, but that patent
was not asserted here. See Keurig, Inc. v. JBR, Inc., No.
11-11941, 2013 U.S. Dist. LEXIS 73845 (D. Mass. May 24,
2013) (alleging infringement of Keurig’s U.S. Patent
D502,362, inter alia).
Sturm manufactures and sells cartridges for use in
Keurig’s brewers under the brand name “Grove Square.”
Sturm does not make or sell brewers.
Keurig filed suit against Sturm, alleging, inter alia,
that the use of Sturm’s Grove Square cartridges in certain
Keurig brewer models directly infringed method claim 29
of the ’488 patent and method claims 6–8 of the ’938
patent, and that Sturm induced and contributed to that
infringement. Sturm asserted the affirmative defense of
patent exhaustion and moved for summary judgment of
noninfringement, which the district court granted.
Keurig, 2012 WL 4049799, at *12.
4 KEURIG, INC. v. STURM FOODS, INC.
The district court held that the Supreme Court’s
substantial embodiment test—providing that method
claims are exhausted by sale of an unpatented component
article if that article includes all the inventive aspects of
the patented method and has no reasonable noninfringing
use—did not apply to the facts of this case. Id. at *5–6.
Instead, the court concluded that the exhaustion of
Keurig’s patent rights had been triggered by Keurig’s
initial authorized sale of a patented item that completely
practiced the claimed invention, viz., the brewer. Id. The
court also noted that Keurig’s method claims were not
saved from exhaustion merely because a consumer could
potentially use non-Keurig cartridges in a Keurig brewer
in a noninfringing way. Id. at *6.
The district court then severed the remaining non-
patent issues and entered final judgment on its patent
exhaustion-related decision pursuant to Federal Rule of
Civil Procedure 54(b). Keurig, Inc. v. Sturm Foods, Inc.,
No. 10-841 (D. Del. Nov. 2, 2012), ECF No. 371. Keurig
timely appealed. We accept the district court’s Rule 54(b)
certification of this partial judgment and exercise jurisdic-
tion pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
Summary judgment is appropriate if the movant
“shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). We review the grant of sum-
mary judgment under the law of the regional circuit in
which the district court sits, here, the Third Circuit.
Lexion Med., LLC v. Northgate Techs., Inc., 641 F.3d
1352, 1358 (Fed. Cir. 2011). The Third Circuit reviews
the grant of summary judgment without deference, draw-
ing all reasonable inferences in favor of the nonmovant.
Nicini v. Morra, 212 F.3d 798, 805–06 (3d Cir. 2000) (en
banc); see also Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986).
KEURIG, INC. v. STURM FOODS, INC. 5
Keurig argues that the district court erred by declin-
ing to apply the substantial embodiment test articulated
by the Supreme Court in Quanta Computer, Inc. v. LG
Electronics, Inc., 553 U.S. 617 (2008), which Keurig
insists is the only relevant analysis for exhaustion of its
asserted method claims. Keurig maintains that, under
the Quanta test, its rights were not exhausted because its
brewers are capable of many uses that do not infringe the
asserted method claims, specifically when used with
reusable cartridges that have premade holes and there-
fore are not pierced during brewing. Keurig further
contends that exhaustion must be adjudicated on a claim-
by-claim basis.
Sturm responds that the Quanta test was formulated
to address an exhaustion issue based on the sale of un-
patented items and therefore is not applicable here.
Sturm argues that use of Keurig’s brewers with a non-
Keurig cartridge cannot constitute infringement because
Keurig’s authorized sale of those brewers, which are
covered by the asserted patents, exhausted Keurig’s
rights. We agree with Sturm that Keurig’s method claims
were exhausted.
Patent exhaustion is an affirmative defense to a claim
of patent infringement, ExcelStor Technology, Inc. v.
Papst Licensing GMBH & Co. KG, 541 F.3d 1373, 1376
(Fed. Cir. 2008), and like other issues in which there are
no disputed factual questions, may be properly decided by
summary judgment. See Transcore v. Elec. Transaction
Consultants, 563 F.3d 1271, 1274 (Fed. Cir. 2009). “The
longstanding doctrine of patent exhaustion provides that
the initial authorized sale of a patented item terminates
all patent rights to that item.” Quanta, 553 U.S. at 625.
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. See
6 KEURIG, INC. v. STURM FOODS, INC.
Princo Corp. v. ITC, 616 F.3d 1318, 1328 (Fed. Cir. 2010)
(en banc).
The leading cases in which the patent exhaustion doc-
trine has been applied to method claims are Quanta and
United States v. Univis Lens Co., 316 U.S. 241 (1942). In
Univis, the Supreme Court determined that claims to
methods for manufacturing eyeglass lenses, and to the
finished lenses themselves, were exhausted when the
patent holder sold unpatented lens blanks (unpolished
blocks of glass) to a manufacturer and distributor that
polished and shaped the blanks into finished lenses by
practicing the patented methods. See 316 U.S. at 250–51.
The Court held that the method claims were exhausted
because the patent holder sold an unpatented, “uncom-
pleted article” that embodied essential features of the
patented method. Id.In Quanta, the Court held that method claims for
managing and synchronizing data transfers between
computer components were exhausted when the patent
holder licensed a manufacturer to produce and sell unpat-
ented microprocessors and chipsets that performed the
patented methods when incorporated with memory and
buses in a computer system. Quanta, 553 U.S. at 621.
The Court compared the subject items to the lens blanks
in Univis. Id. at 630. As in Univis, the Court concluded
that exhaustion was triggered by sale of the components
because their only reasonable and intended use was to
practice the patent and because they embodied essential
features of the patented invention. Id. at 631.
The Court thus established that method claims are
exhausted by an authorized sale of an item that substan-
tially embodies the method if the item (1) has no reasona-
ble noninfringing use and (2) includes all inventive
aspects of the claimed method. Id. at 638. Both of the
Univis and Quanta opinions emphasized the unpatented
nature of the products sold. Thus, the substantial embod-
KEURIG, INC. v. STURM FOODS, INC. 7
iment test provided a framework for determining whether
the sale of an unpatented component (e.g., lens blanks
that are further ground and polished or microprocessors
and chipsets that are further attached to memory and
buses in a computer system), which by itself does not
practice the patented method, is still sufficient for ex-
haustion. The Court held that it is.
But that is not the case before us, which presents an a
fortiori fact situation in which the product sold by Keurig
was patented. Keurig acknowledges that its brewers are
commercial embodiments of the apparatus claims of the
’488 and ’938 patents. Appellant Br. 27–28. Keurig did
not assert its cartridge patent against Sturm and does not
dispute that its rights in its brewers were exhausted with
respect to the apparatus claims of the asserted patents.
See generally Reply Br. Instead, Keurig alleges that
purchasers of its brewers infringe its brewer patents by
using Sturm cartridges to practice the claimed methods
and therefore that Sturm is liable for induced infringe-
ment. However, as the Supreme Court long ago held,
“[W]here a person ha[s] purchased a patented machine of
the patentee or his assignee, this purchase carrie[s] with
it the right to the use of the machine so long as it [is]
capable of use.” Quanta, 553 U.S. at 625 (quoting Adams
v. Burke, 84 U.S. 453, 455 (1873)). The Court’s decision in
Quanta did not alter this principle. Keurig sold its pa-
tented brewers without conditions and its purchasers
therefore obtained the unfettered right to use them in any
way they chose, at least as against a challenge from
Keurig. We conclude, therefore, that Keurig’s rights to
assert infringement of the method claims of the ’488 and
’938 patents were exhausted by its initial authorized sale
of Keurig’s patented brewers.
To rule otherwise would allow Keurig what the Su-
preme Court has aptly described as an “end-run around
exhaustion” by claiming methods as well as the apparatus
that practices them and attempting to shield the patented
8 KEURIG, INC. v. STURM FOODS, INC.
apparatus from exhaustion by holding downstream pur-
chasers of its device liable for infringement of its method
claims—a tactic that the Supreme Court has explicitly
admonished. Id. at 630. “Such 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.’” Id. (quoting
Adams, 84 U.S. at 457). Here, Keurig is attempting to
impermissibly restrict purchasers of Keurig brewers from
using non-Keurig cartridges by invoking patent law to
enforce restrictions on the post-sale use of its patented
product. Id. at 638.
We agree with the district court that a consumer’s po-
tential use of different types of cartridges, viz., cartridges
that would not infringe the claimed methods, cannot save
Keurig’s method claims from exhaustion. Such an out-
come would also be counter to the spirit of the doctrine of
patent exhaustion because Keurig could control use of the
brewers after it sold them. The claims of both the ’488
patent and the ’938 patent are directed to the brewers and
the use of the brewers; therefore, Keurig cannot preclude
an individual who purchased one of its brewers from
using a non-Keurig cartridge with that brewer.
Moreover, Keurig’s argument that patent exhaustion
must be adjudicated on a claim-by-claim basis is unavail-
ing. The Court’s patent exhaustion jurisprudence has
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. See id. at 634–35; Univis, 316
U.S. at 249–50. Keurig’s decision to have sought protec-
tion for both apparatus and method claims thus means
that those claims are judged together for purposes of
patent exhaustion.
To permit a patentee to reserve specific claims from
exhaustion would frustrate the purposes of the doctrine,
one of which is to provide an efficient framework for
KEURIG, INC. v. STURM FOODS, INC. 9
determining when a patent right has been exhausted. If
Keurig were allowed to assert its claims to methods of
brewing a beverage using the subject brewers of its appa-
ratus claims of the same patent, the effect would be to
vitiate the doctrine of patent exhaustion. The confusion
that would be created by Keurig’s approach would pro-
duce uncertainty regarding the rights of both third parties
and end users.
The doctrine of patent exhaustion has the effect of
providing an efficient means for ensuring the termination
of the patent right. See Univis, 316 U.S. at 251 (“[T]he
purpose of the patent law is fulfilled . . . when the patent-
ee has received his reward . . . .”); United States v. Mason-
ite Corp., 316 U.S. 265, 278 (1942) (“The test has been
whether or not there has been such a disposition of the
article that it may fairly be said that the patentee has
received his reward for the use of the article.”). Permit-
ting Keurig to recover multiple times on its patented
brewers by holding Sturm or any other cartridge manu-
facturer liable for direct, induced, or contributory in-
fringement based on the independent manufacture and
sale of cartridges for use in those brewers would be con-
tradictory to these policies and the law.
CONCLUSION
For the foregoing reasons, we conclude that the dis-
trict court did not err in holding that Keurig’s asserted
rights under its ’488 and ’938 patents were exhausted by
the sale of its brewer. The noninfringement judgment of
the district court is therefore affirmed.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
______________________
KEURIG, INCORPORATED,
Plaintiff-Appellant,
v.
STURM FOODS, INC.,
Defendant-Appellee.
______________________
2013-1072
______________________
Appeal from the United States District Court for the
District of Delaware in No. 10-CV-0841, Judge Sue L.
Robinson.
______________________
O’MALLEY, Circuit Judge, concurring in the result.
I concur in the judgment only. I agree with the major-
ity’s conclusion that Keurig’s asserted patent rights were
exhausted by the sale of its patented brewers. Reaching
this result requires application of a single principle: “[t]he
longstanding [rule] . . . that the initial authorized sale of a
patented item terminates all patent rights to that item.”
Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617,
625 (2008). This would include all rights to claims which
recite methods which involve the normal and intended
use of the patented item. The conclusion that the rights
to the asserted methods were exhausted by the brewer
sales in this case does not, however, depend upon whether
exhaustion should be assessed on a claim-by-claim or
patent-by-patent basis. Keurig’s patent rights covering
2 KEURIG, INCORPORATED v. STURM FOODS, INC.
normal methods of using its brewers to brew coffee would
be exhausted by the sale of the Keurig brewers, regard-
less of which patent or patents contain the relevant
apparatus and method claims. Thus, the majority’s
conclusion that exhaustion should not be assessed on a
claim-by-claim basis is dicta. To the extent it could be
characterized as anything other than dicta, I must dissent
from that conclusion. There could be instances where
assessing exhaustion on a claim-by-claim basis—the same
way we conduct almost every analysis related to patent
law—would be necessary and appropriate. “[E]ach claim
must be considered as defining a separate invention.”
Jones v. Hardy, 727 F.2d 1524, 1528 (Fed. Cir. 1984).
“Because patent claims are independent of each other, it
stands to reason that the legal doctrine of patent exhaus-
tion should apply on a claim-by-claim basis.” Amicus Br.
of Boston Patent Law Ass’n at 7. Thus, to the extent the
majority purports to lay down a blanket rule affecting
cases with facts that diverge widely from those we consid-
er today, I must dissent.