U.S. Supreme Court Extends the Limitation of “Exhaustion” for Patent RightsMay 30, 2017

A United States patent entitles the patent holder to exclude others from making, using, offering for sale, or selling [its] invention throughout the United States or importing the invention into the United States. However, when a patentee sells one of its products, the patentee can no longer control that item through the patent laws— its patent rights are said to “exhaust.”

Today, In Impressions Products, Inc. v. Lexmark, the Supreme Court was faced with two questions about the patent exhaustion doctrine: First, whether a patentee that sells an item under an express restriction on the purchaser’s right to reuse or resell the product may enforce that restriction through an infringement lawsuit. And second, whether a patentee exhausts its patent rights by selling its product outside the United States, where American patent laws do not apply.

Lexmark International, Inc. designs, manufactures, and sells toner cartridges to consumers in the United States and abroad. It owns several patents that cover components of those cartridges and the manner in which they are used.

Lexmark brought suit against a number of remanufacturers who had acquired empty cartridges from purchasers in the United States, refilled and resold them. Impression Products, Inc. was one of the remanufactures sued for patent infringement.

Using the principle laid out in the exhaustion doctrine (that patent laws do not include the right to “restrain [ ] . . . further alienation” after an initial sale), the Supreme Court provided two different clarifications on the exhaustion doctrine. First, a patentee’s decision to sell—whether on its own or through a licensee— exhausts all of its patent rights in that item regardless of any restrictions the patentee purports to impose. Second, an authorized sale outside of the United States additionally exhausts all rights under the Patent Act.

The Supreme Court emphasized that restrictions on consumers in the resale or redistribution of purchased products may be enforced through contract law, but not through patent infringement.

For more information or if you have questions, please contact one of our MVS IP attorneys or call us at (515) 288-3667.