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Supreme Court hears arguments on appellate review, patent-exhaustion doctrine
Supreme Court hears arguments on appellate review, patent-exhaustion doctrine

The US Supreme Court [official website] heard oral arguments Tuesday in Microsoft Corp. v. Baker and Impression Products, Inc. v. Lexmark International, Inc. [dockets]. In Microsoft Corp. v. Baker [SCOTUSblog materials] the court heard arguments [transcript, PDF] on whether a federal court of appeals has jurisdiction to review an order denying class certification after the plaintiffs voluntarily dismiss their claims. Petitioner argued that the appellate court lacked jurisdiction in cases where plaintiffs dismiss their claims with prejudice, as allowing for such an exception would thwart the discretionary review process outlined in Federal Rules of Civil Procedure 23(f) [text]. According to petitioners, Rule 23(f) expressly deals with the issue that respondents face and gives court of appeals discretionary authority to review, which would be violated if respondents were able to force review of their claim. Respondents in return argued that plaintiffs dismissal with prejudice creates a final judgement under 28 USC § 1291 [text], which permits the appellate review. Respondents countered that petitioners’ argument relies on the closing judgment of the case not being a final decision. According to respondents, this view is incorrect as “a final judgement always is a final decision.”

In Impression Products, Inc. v. Lexmark International, Inc. [SCOTUSblog materials], the court heard arguments [transcript, PDF] on the application of the patent-exhaustion doctrine in conditioned sales specifying post-sale restriction and whether any geographical distinctions are placed on the exhaustion doctrine. Under the patent exhaustion doctrine, or first sale doctrine, patent rights are terminated after the first authorized sale of a patented item. Petitioner argued that the court has consistently held that post-sale restrictions are not enforceable via the Patent Act [text]. Further, the first sale doctrine bars use of patent law to enforce post-sale restrictions. Based upon the domestic implications of the Patent Act as well as trade agreements that do not preclude exhaustion, petitioner argued that the foreign sale exhausts all patent rights as well. Respondent in turn argued that sales agreements can confer only partial rights, therefore any sale does not automatically confer total authority thereby exhausting patent rights. Furthermore, respondent argued that the Patent Act does not specify the domestic nature of patent rights and the US’ participation in the Paris Convention [WIPO contents] and other international agreements on patent rights is an indication that world-wide exhaustion should not be automatic on an international sale.