On May 30, 2017, the Supreme Court issued its decision in Impression Products, Inc. v. Lexmark International, Inc., 137 S. Ct. 1523 (2017), expanding the scope of patent exhaustion to cover sales involving post-sale restrictions and international sales. Lexmark involved two categories of sales of Lexmark’s patent-protected toner cartridges: domestic sales, including post-sale restrictions on reuse and resale, and international sales.
The Court held that the sale of a patented item exhausts the patentee’s exclusionary right over that item, regardless of whether the sale is within the U.S. or outside the U.S. Location is irrelevant for patent exhaustion; what matters is the patentee’s decision to make a sale. This also applies to patent licensees: any sale made under a license, whether within the U.S. or outside the U.S., is an authorized sale and triggers patent exhaustion.
The Court noted that if the patentee negotiates a contract or license restricting the purchaser’s right to use or resell the item, it may be able to enforce the restriction as a matter of contract law. However, a patentee may not restrict reuse or resale with a patent infringement lawsuit.
The Court relied upon patent exhaustion’s development from the “borderless common law principle” against restraints on alienation. This brings patent-exhaustion jurisprudence in line with copyright’s first-sale doctrine. See Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013). Therefore, patent exhaustion would provide a defense for patent infringement at the ITC where patented goods sold by a patentee or its licensee abroad are later imported into the United States. — Daniel M. Huttle (Associate, New York)