United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Robert Blakey J United States District Judge.
Varex Imaging Corporation sued Defendant Richardson
Electronics, Ltd. for patent infringement. Defendant moved to
dismiss Plaintiff's complaint for failure to state a
claim under Rule 12(b)(6), arguing that Plaintiff's sale
of the patented invention terminated its patent rights,
thereby precluding any infringement claim. For the reasons
explained below, this Court denies Defendant's motion.
produces X-ray tubes, including its flagship product, the
MCS-7078 X-ray tube, nicknamed the Snowbird. Amended
Complaint  at ¶¶ 10, 12. In connection with its
development of the Snowbird X-ray tube, Plaintiff obtained
several patents, including U.S. Patent No. 6, 456, 692 (the
‘692 patent”), entitled “High Emissive
Coatings on X-Ray Tube Components, ” and U.S. Patent
No. 6, 519, 317 (the ‘317 patent), entitled “Dual
Fluid Cooling System for High Power X-Ray tubes.”
Id. at ¶¶ 11, 27, 31. The ‘692
patent discloses “an X-ray tube with a vacuum enclosure
in which a cathode generates electrons that are converted
into X-rays upon collision with a rotating anode, which is
supported by a rotor incorporating a highly emissive coating,
and in which the bearing assembly that supports the rotor is
located at least partially within the rotating anode.”
Id. at ¶ 30. The ‘317 patent discloses
“a system and method for cooling a high-power X-ray
tube in which an X-ray tube is disposed within a housing, a
first coolant in the housing absorbs heat from the X-ray
tube, and a second coolant flows through a passageway within
the tube that directs the flow of the second coolant
proximate to a portion of the X-ray tube.” Id.
at ¶ 34. The Snowbird X-ray tube incorporates the
emmisive coating claimed in the ‘692 patent and the
dual coolant system claimed in the ‘317 patent.
Id. at ¶ 36.
sells its Snowbird X-ray tubes to Toshiba/Canon for use in
the Toshiba/Canon Aquilion Computed Tomography
(“CT”) System. Id. at ¶ 10. For any
given CT scanner, Toshiba/Canon purchases numerous X-ray
tubes, as the tubes are consumables that require periodic
replacement during the scanner's useful life.
Id. at ¶ 16. When Toshiba/Canon returns spent
Snowbird tubes to Plaintiff, Plaintiff scraps the X-ray tube
insert and examines components to see if they can be
refurbished and reused; the tube itself is destroyed.
Id. at ¶ 25.
manufactures and sells aftermarket components for medical
devices, including an X-ray tube called the ALTA750, an
alternative to the Snowbird X-ray tube. Id. at
¶¶ 37-38. Defendant manufactures the ALTA750 by
combining used Snowbird components and newly-manufactured
components. Id. at ¶¶ 41-44. The ALTA750
X-ray tube is then placed in a used Snowbird X-ray tube
housing and sold to Defendant's customers. Id.
at ¶ 45.
sued Defendant, claiming that Defendant's ALTA750 X-ray
tube infringes both the ‘692 and the ‘317
patents. Defendant has moved to dismiss, invoking the
doctrine of patent exhaustion.
Discussion & Analysis
survive a motion to dismiss under Rule 12(b)(6), a complaint
must provide a “short and plain statement of the
claim” showing that the pleader merits relief,
Fed.R.Civ.P. 8(a)(2), so the defendant has “fair
notice” of the claim “and the grounds upon which
it rests, ” Twombly, 550 U.S. at 555 (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)). A
complaint must also contain “sufficient factual
matter” to state a facially plausible claim to
relief-one that “allows the court to draw the
reasonable inference” that the defendant committed the
alleged misconduct. Iqbal, 556 U.S. at 678 (2009)
(quoting Twombly, 550 U.S. at 570). This
plausibility standard “asks for more than a sheer
possibility” that a defendant acted unlawfully.
Id. In evaluating a complaint under Rule 12(b)(6),
this Court accepts all well-pleaded allegations as true and
draws all reasonable inferences in the plaintiff's favor.
Id. This Court need not, however, accept a
complaint's legal conclusions as true. Brooks v.
Ross, 578 F.3d 574, 581 (7th Cir. 2009).
moving to dismiss Plaintiff's complaint, Defendant argues
that Plaintiff's right to assert an infringement claim
with respect to the Snowbird X-ray tube ceased with the sale
of the tube to Toshiba/Canon. Defendant argues that, because
its ALTA750 tube is essentially a refurbished Snowbird tube,
Plaintiff's claims are barred by the doctrine of patent
exhaustion and must be dismissed under Impression
Products, Inc. v. Lexmark International, Inc., 137 S.Ct.
Lexmark, the patentee designed, manufactured, and
sold laser printer toner cartridges to consumers and held a
number of patents covering components of those cartridges and
their use. 137 S.Ct. at 1529. Impression Products, a
remanufacturer, acquired empty Lexmark toner cartridges,
refilled them, and resold them. Id. Lexmark sued for
patent infringement, and Impression Products moved to
dismiss, invoking the doctrine of patent exhaustion.
Id. at 1529-30. The Supreme Court agreed with
Impression Products that Lexmark's patent rights were
exhausted when it sold the cartridges: the Court noted that,
although the Patent Act grants patentees the right to exclude
others from making, using, offering for sale, or selling
their inventions, the longstanding doctrine of patent
exhaustion limits that right to exclude. Id. at
1531. “When a patentee chooses to sell an item . . .
[that] sale terminates all patent rights to that item.”
Id. (quoting Quanta Computer, Inc. v. LG
Electronics, Inc., 553 U.S. 617, 625 (2008)).
here similarly argues that, when Plaintiff sold its Snowbird
X-ray tubes to Toshiba/Canon, its right to exclude others
from using, making, or selling those tubes terminated. As a
result, Plaintiff no longer has patent rights to enforce
against Defendant as to those tubes, and any infringement
claim based on the tubes necessarily fails. As explained
below, however, Plaintiff's sale of the tubes does not
necessarily end the matter.
the doctrine of patent exhaustion, “the initial
authorized sale of a patented item terminates all patent
rights to that item.” Quanta Computer, 553
U.S. at 625. “The right of use transferred to a
purchaser by an authorized sale ‘include[s] the right
to repair the patented article.'” Auto. Body
Parts Ass'n v. Ford Glob. Techs., LLC, 930 F.3d
1314, 1323 (Fed. Cir. 2019) (quoting Kendall Co. v.
Progressive Med. Tech., Inc., 85 F.3d 1570, 1573 (Fed.
Cir. 1996)). But the right of repair does not “permit a
complete reconstruction of a patented device or
component.” Id. (citing Helferich Patent
Licensing, LLC v. N.Y. Times Co., 778 F.3d 1293, 1303-05
(Fed. Cir. 2015); Kendall, 85 F.3d at 1573-74).
See also Robert Bosch LLC v. Trico Prod. Corp., No.
12 C 437, 2014 WL 2118609, at *2 (N.D. Ill. May 21, 2014)
(“The unrestricted sale of a patented product
‘exhausts' the patentee's right to control the
purchaser's use of the product. After the sale, the
purchaser ‘has the rights of any owner of personal
property, including the right to use it, repair it, modify
it, discard it, or resell it, subject only to overriding
conditions of the sale.' But the right to repair the
purchased product does not include the right to
‘construct an essentially new article on the template
of the original, for the right to make the article remains
with the patentee.'”) (quoting Jazz Photo Corp.
v. International Trade Com'n, 264 F.3d 1094, 1102,
1105 (Fed. Cir. 2001)).
it is not enough to find that Plaintiff sold the tubes to
Toshiba/Canon. The sales notwithstanding, the Court must go
on to analyze whether Defendant's conduct amounts to a
“permissible repair” of the spent X-ray tube, or
whether Defendant ...