In Lexmark Int'l, Inc. v. Impression Prods, Inc. (Feb. 12, 2016), the Federal Circuit made two rulings that will give patentees more control of their patent rights. In this case, Lexmark sold printer cartridges at its regular price that were not subject to any post-sale restrictions. Lexmark also sold printer cartridges at a discount price that were subject to a single use restriction and required the buyer to return the printer cartridge to Lexmark after use. Lexmark sued Impression for patent infringement for reselling to third parties Lexmark's used printer cartridges that were subject to a post-sale restriction and for importing into the U.S. Lexmark printer cartridges that were purchased outside the U.S. (regardless of whether they were subject to a post-use restriction). Impression argued that Lexmark's patent rights were exhausted because the first sale of its products exhausted its patent rights prohibiting Lexmark from imposing post-sale restrictions on its printer cartridges and from restricting any printer cartridge first sold outside the U.S. from being imported into the U.S.
The Federal Circuit held that Lexmark's patent rights were not exhausted. First, the Federal Circuit confirmed that a "sale made under a clearly communicated, otherwise-lawful restriction as to post-sale use or resale does not confer on the buyer and a subsequent purchaser the ‘authority' to engage in the use or resale that the restriction precludes." This ruling ensures that patentees can limit the patent rights conveyed to the buyer when selling products allowing the patentee to control the future use and resale of products covered by a patent.
Second, the Federal Circuit confirmed that a sale outside the U.S. cannot exhaust patent rights even if the patentee does not reserve its patent rights when making the sale. Patent rights are limited to the U.S. and cannot be exhausted by a sale outside the U.S. This decision was surprising because the U.S. Supreme Court recently held that a sale outside the U.S. exhausted a party's copyright. The Federal Circuit, however, decided not to follow this copyright decision believing patent rights and copyrights to be different. The Federal Circuit's decision in this case regarding foreign sales applies only to the defense of patent exhaustion. A defendant, depending on the facts of the case, might be able to argue that the foreign sale by the patentee constituted an express or implied license.
Because the Federal Circuit distinguished U.S. Supreme Court cases in making its ruling, it is possible that the Supreme Court may review this case.