The case is LG Electronics vs Quanta, where LG licensed the technology to Intel, who made the chips used, but wanted to charge buyers of the chips an additional royalty.

Basically, patent exhaustion says that if someone licenses a patent from you, and they sell stuff made with that patent to someone else, the recipient can use that stuff without any more restrictions. It’s a 100 year old precident, but the patent court decided to ignore it.

You can find a very good primer on why this happened here.

The district court ruled for Quanta, but the patent court ruled for LG on appeal, and the Supreme Court completely reversed the patent court, which is becoming a regular thing.

The special patent court is out of control and needs to be abolished.