The Supreme Court Affirms the First Sale and Exhaustion Doctrine
Posted on Jun 1, 2017 in Blog
On May 30, the Supreme Court in Impression Products v Lexmark International, Inc. in a 7-1 opinion written by Justice Roberts ruled that “once a patentee decides to sell-whether on its own or through a licensee, that sale exhausts its patent rights, regardless of any post-sale restrictions the patentee purports to impose, either directly or through a license.” The ruling affirmed the doctrine of exhaustion. That is, after a product covered by a patent has been sold by the patent owner or by others with the consent of the owner, the right of the patent owner to control what the buyer may do with the product ceases. This limitation is also referred to as the “exhaustion doctrine” or “first sale doctrine”.
The ruling reversed the decision of the Federal Circuit in Lexmark Int’l, Inc. v. Impression Prods., 816 F.3d 721 (Fed. Cir. 2016). The facts of the case are as follows: Lexmark sells patented printer cartridges for use with its printers with the restriction that used cartridges must be returned to Lexmark. Some cartridges are sold within the United States while other cartridges are sold internationally. Impression Products recycles and resells used Lexmark cartridges. Lexmark sued Impression for infringement alleging that Impression acquired spent cartridges, including some returned program cartridges that have been altered by chip replacement and toner refilling. Impression then sells them in the United States and imports them into the United States. Lexmark alleged direct infringement under §271(a). The Federal Circuit concluded that Impression infringed Lexmark’s patent. It stated “a patentee, when selling a patented article, subject to a single-use/no resale restriction that is lawful and clearly communicated to the purchaser does not, by that sale, give the buyer, or downstream buyers the resale/reuse authority that has been expressly denied.” It further held that when a U.S. patented product is sold to a foreign buyer, importation of the product into the United States by the buyer infringes the patent. Both of these rulings were reversed by the Supreme Court’s decision.
– by Manny D. Pokotilow