Business Regulations in Quanta Computer v. LG Electronics

Was there a binding agreement between Quanta and LG?

Based on the case Quanta Computer v. LG Electronics, there was no binding agreement between Quanta and LG (Clement, 2008). Instead, there was a binding agreement between LG and Intel. In the agreement, LG had entered into a contract with Intel by allowing it to produce and trade some of its microprocessors under its patents. The agreement required Intel to notify its customers that the microprocessors were protected under LG’s patents. Based on these illustrations, it is apparent that a binding agreement only existed between LG and Intel. Similarly, for a binding agreement to be reached the involved parties must agree to the terms and conditions offered in the contract (Mueller, 2009). In this case, there was no agreement reached between LG and Quanta.

Though the agreement was “well-publicized,” is it binding and does it make the contract legal?

According to the case study, the agreement was well-publicized as required. Owing to this, I believe that the agreement was obligatory to Intel and LG. The contract was binding because if either of the parties failed to meet the expectations of the contract it was to be fined under the court of law (Willmott & Christensen, 2005). In accordance with the contract law, the consent of the involved parties, exchange of valuable products or services, and offers to be made must be fulfilled for a contract to be executable (McKendrick, 2007). Based on the case, the above conditions were met. Therefore, the contract between LG and Intel was legal.

It is worth noting that LG lost this case because of the existence of patent exhaustion law. Under this law, a patent owner is prohibited from seeking further payments for a particular product once it has been sold (Mead, 2008). Therefore, Quanta was protected under this law. Through this, I believe that the defense was valid.

What constitutes the acceptance of an agreement, critical elements required, and their application in this case

With regard to the contract laws, the consent of the involved parties, exchange of valuable products or services, and offers to be made must be fulfilled for a contract to be executable. Based on this case, the consent of both LG and Intel was reached before the contract was signed. In the contract, LG permitted Intel to produce and trade some of its microprocessors under its copyrights (Nard & Wagner, 2008). The offer made in this contract was that Intel was to notify its customers that the microprocessors were protected under LG’s patents. On the other hand, the valuable products that were to be exchanged were the microprocessor chips.

Recommendations for moving forward with this type of agreement to protect both parties

If LG wants to prevent Quanta from using its microprocessor chips in their computers, they should forbid Intel from selling their patents to third parties with the help of contract law rather than patent law as it did in the case (Clarkson, 2012). To achieve this, a contract between Intel and LG should be made to necessitate Intel to obtain their consent before selling LG’s patents. With this contract in place, Intel will be liable to penalties if is breaches the contract. Through this approach, LG will be able to control major business transactions unlike through the patent law (Elias, 2000).

References

Clarkson, K. W. (2012). Business law: text and cases : legal, ethical, global, and corporate environment. Mason, OH: South-Western Cengage Learning.

Clement, P. (2008, June 9). Supreme Court of the United States: Quanta Computer v. LG Electronics. Web.

Elias, S. (2000). Patent, copyright & trademark: a desk reference to intellectual property law. Berkeley: Nolo Press.

McKendrick, E. (2007). Contract law. Basingstoke: Palgrave Macmillan.

Mead, L. (2008). CIMA Official Learning System Fundamentals of Ethics, Corporate Governance and Business Law. Burlington: Elsevier Science & Technology.

Mueller, J. M. (2009). Patent law. New York: Aspen Publishers.

Nard, C. A., & Wagner, R. P. (2008). Patent law. New York, NY: Foundation Press.

Willmott, L., & Christensen, S. (2005). Contract law. South Melbourne, Victoria, Australia: Oxford University Press.

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