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The Federal Circuit Invokes Patent Exhaustion Based on an Unconditional Covenant Not to Sue

In TransCore, LP v. Electronic Transaction Consultants Corp., No. 2008-1430 (Fed. Cir. Apr. 8, 2009), the Federal Circuit addressed the question of whether a covenant not to sue is equivalent to a non-exclusive patent license for purposes of patent exhaustion. Following closely in Quanta’s footsteps, the Federal Circuit held that “an unconditional covenant not to sue” does authorize sales “by the covenantee for purposes of patent exhaustion.”