Last week, in Impression Products, Inc. v. Lexmark International, Inc., Case No. 15-1189 (May 30, 2017), the Supreme Court ruled that under the “exhaustion doctrine,” patent owners cannot use patent law to impose restrictions on the downstream sales or transfers of lawfully purchased patented goods. The decision took many patent practitioners by surprise. Not only did the Court reverse an en banc decision of the Federal Circuit, but it overturned the widespread view that patentees could enforce post-sale restrictions on the use or resale of patented products through patent infringement lawsuits so long as the post-sale restrictions were “clearly communicated.”
For copyright lawyers, however, the “exhaustion” restrictions the Court imposed on patentees were already familiar: they are the same ones the Court imposed four years ago on copyright owners under the Copyright Act’s first sale doctrine, 17 U.S.C. § 109(a). See Kirtsaeng v. John Wiley & Co., Inc., 568 U.S. 519, 538 (2013) (Court rejects imposition of geographical restrictions on the application of the first sale doctrine on the ground that it contradicts “the very basic concept of copyright law that, once you’ve sold a copy legally, you can’t restrict its resale.”) Indeed, Chief Justice Roberts’ near-unanimous opinion[1] for the Court in Impression Products emphasized that patent law’s exhaustion doctrine and the Copyright Act’s first sale doctrine derive from a shared lineage, namely, “the ‘common law’s refusal to permit restraints on the alienation of chattels.” (Opinion at p. 6, quoting Kirtsaeng, 568 U.S. at 538.) As a result, “differentiating the patent exhaustion and copyright first sale doctrines would make little theoretical or practical sense [as] [t]he two share a ‘strong similarity . . . and identity of purpose.” (Id. at p. 14, quoting Bauer & Cie v. O’Donnell, 229 U.S. 1.13 (1913).) In short, the Supreme Court’s Impression Products means that patent and copyright owners will now be subject to the same basic set of “exhaustion” requirements.
The dispute giving rise to the Supreme Court’s excursion into the doctrine of patent exhaustion arose out of Lexmark’s various attempts to prevent consumers from taking their lawfully purchased used Lexmark copier toner cartridges to remanufacturers to be refilled with new toner ink at lower prices than charged by Lexmark. Lexmark sued one of the remanufacturers for patent infringement, contending that the remanufacturer’s use of Lexmark’s...
