On February 12, the Federal Circuit in Lexmark Int’l, Inc. v. Impression Prods., Inc. held that recent Supreme Court decisions do not invalidate two principles of patent exhaustion: that U.S patent rights are not exhausted by foreign sales of a patented item, nor by sales of a patented item made subject to lawful and clearly communicated post-sale restrictions on resale and use. For now, this ruling preserves the status quo and clears up ambiguity following the Supreme Court’s Quanta and Kirtsaeng decisions, but the ruling is a strong candidate for Supreme Court review in the future. In Quanta Computer, Inc. v. LG Electronics, Inc. (2008), the Supreme Court had found patent exhaustion when a patentee granted a licensee the unconditional right to manufacture and sell patented products, but also attempted to restrict the ability of downstream purchasers to combine and resell the products. In Lexmark, the Federal Circuit acknowledged Quanta but maintained its rule that “resale or reuse, when contrary to the known, lawful limits on the authority conferred at the time of the original sale, remains unauthorized and therefore remains infringing conduct.” The court pointed out that Quanta did not address a patentee sale, let alone a restricted one, but a sale made by a licensee granted the unrestricted authority to sell. In Kirtsaeng v. John Wiley & Sons, Inc. (2013), the Supreme Court had held that an authorized foreign sale of an item exhausts the copyright holder’s right to prevent importation or resale of that item. In Lexmark, the Federal Circuit held that Kirtsaeng does not apply to patent exhaustion, emphasizing the differences between the Copyright Act and the Patent Act and the fact that Kirtsaeng did not address patent law. The Federal Circuit reaffirmed that “a U.S. patentee, merely by selling or authorizing the sale of a U.S.-patented article abroad, does not authorize the buyer to import the article and sell and use it in the United States, which are infringing acts in the absence of patentee-conferred authority.”

Read more about Lexmark Int’l, Inc. v. Impression Prods., Inc. here, or read the Federal Circuit’s opinion here (PDF).