Federal Circuit Rules Regarding Exhaustion of U.S. Patent Rights

Posted on Feb 15, 2016 in Blog

In Lexmark Int’l, Inc. v. Impression Prods., Inc., No. 14-1617 (Fed. Cir. 2016), the Federal Circuit issued an important opinion regarding patent exhaustion (the termination of a patent owner’s ability to claim infringement damages following the first authorized sale of a patented product).  Lexmark sells patented printer cartridges with restrictions: the buyer may not refill the cartridges with toner and the cartridges may only be returned to Lexmark.  Impression argued that the sale of the cartridges created patent exhaustion, and thus Impression’s sale of recycled Lexmark printer cartridges did not entitle Lexmark to patent infringement damages.  The details of this controversy have previously been described here.  The Federal Circuit ruled that the resale of a patented article is not subject to patent exhaustion when resale/reuse authorization is clearly denied in the sale (subject to known, lawful limits).  Furthermore, the Federal Circuit ruled that a foreign sale of an article that is protected by a U.S. patent does not create patent exhaustion (and thus does not avoid patent infringement if that product is then imported back into the United States).

– by Lawrence Ashery