Lexmark International, Inc. v. Impression Products, Inc.

The U.S. Court of Appeals for the Federal Circuit has sua sponte ordered an en banc hearing to consider the issue of international patent exhaustion.  Lexmark International, Inc. v. Impression Products, Inc., Case No. 14-1617 (Fed. Cir., Apr. 14, 2015).

The present Federal Circuit rule, which dates back to the 2001 Federal Circuit decision in Jazz Photo (IP Update, Vol. 4, No. 9), is difficult to reconcile with the international exhaustion principles pronounced by the Supreme Court in the copyright context in its 2012 decision inKirtsaeng v. John Wiley & Sons (IP Update, Vol. 15, No. 5).

The Federal Circuit also noted the apparent tension between its 1992 Mallinckrodt decision and the Supreme Court’s 2008 Quanta Computer decision (IP Update, Vol. 11, No. 6) as to whether patent owners can restrict the scope of exhaustion attended the sale of a patented article.

The parties were ordered to file new briefs addressing the following issues:

(a) Should this court overrule Jazz Photo Corp. v. International Trade Commission, 264 F.3d 1094 (Fed. Cir. 2001)?
(b) The case involves (i) sales of patented articles to end users under a restriction that they use the articles once and then return them and (ii) sales of the same patented articles to resellers under a restriction that resales take place under the single-use-and-return restriction. Do any of those sales give rise to patent exhaustion? In light of Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), should this court overrule Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992), to the extent it ruled that a sale of a patented article, when the sale is made under a restriction that is otherwise lawful and within the scope of the patent grant, does not give rise to patent exhaustion?