BAD NEWS FOR PTSC !

By Diane Bartz

WASHINGTON, June 9 (Reuters) - The U.S. Supreme Court on Monday ruled in favor of Taiwan's Quanta Computer Inc (2382.TW: Quote, Profile, Research), which South Korea's LG Electronics Inc (066570.KS: Quote, Profile, Research) had sued over whether its license to a patent automatically passed to whoever purchases the goods.

The decision overturns an appellate court ruling.

LG Electronics, which holds the patents on the products, had an agreement that allowed Intel Corp (INTC.O: Quote, Profile, Research) to make the chips and chip sets, but explicitly barred it from mixing the components with parts from other manufacturers.

Quanta, among others, bought the components from Intel and used them to make notebook computers. LG Electronics then sued the company and others for the "systems and methods" of using the components to make a functioning computer.

A U.S. District Court in California decided Quanta and the others did not infringe the patents. But a U.S. appeals court overturned the decision and ruled in favor of LG Electronics.

The Supreme Court unanimously overturned the appeals court's decision, ruling that it was wrong on two main points.

Quanta argued that LG Electronics had licensed its technology to Intel, which in turn made microprocessor chips that it sold to Quanta. Quanta used the chips to make computers under contract for Dell Inc (DELL.O: Quote, Profile, Research), Hewlett-Packard Co (HPQ.N: Quote, Profile, Research) and Gateway Inc.

LG Electronics argued that it had structured the license so that it did not extend to any of Intel's customers. (Additional reporting by James Vicini) (Reporting by Diane Bartz; Editing by Gerald E. McCormick and Lisa Von Ahn)