Supreme Court rules sales in US and abroad extinguish seller’s patent rights
Supreme Court rules sales in US and abroad extinguish seller’s patent rights

The Supreme Court ruled [opinion, PDF] on Tuesday that restrictions placed on a patented product could not be enforced through an infringement suit because an authorized sale exhausts all rights under the Patent Act [LII materials]. In Impression Products, Inc. v. Lexmark International, Inc. [SCOTUSBlog materials], the court found that although the Patent Act allows patentees to stop others from making, using or selling their inventions, when a patentee chooses to sell an item, “that product ‘is no longer within the limits of the monopoly’ and instead becomes the ‘private, individual property’ of the purchaser, with the rights and benefits that come along with ownership.” According to Justice Robert’s opinion, allowing the patent to extend past the moment of sale would “clog the channels of commerce.” The court differentiated between licenses and the sale of a product:

When an item passes into commerce, it should not be shaded by a legal cloud on title as it moves through the marketplace. But a license is not about passing title to a product, it is about changing the contours of the patentee’s monopoly: The patentee agrees not to exclude a licensee from making or selling the patented invention, expanding the club of authorized producers and sellers.

The court considered sales both domestically and internationally and reached the same conclusion on both fronts. The ruling concerning domestic sales was unanimous. Justice Ginsburg concurred with the domestic decision but dissented on the court’s ruling concerning international sales.

Lexmark International, Inc. [official website] manufactures printer cartridges. Lexmark offers two options when purchasing cartridges. The more expensive option allows purchasers to obtain cartridges free of restrictions on its use; the other option, a so-called “Return Program”, is a single-use contract that offers cartridges at a discounted price provided they are returned to Lexmark when empty. Impression Products, Inc. [official website] acquired single-use cartridges that a third-party had physically altered to enabled Impression to re-use and resell them in the US. Lexmark sued Impression for patent infringement. The Federal Circuit ruled in favor of Lexmark in respect of both the sale of cartridges domestically and internationally. The Supreme Court heard arguments [JURIST report] in March.