A review of developments in Intellectual Property Law
Patent Exhaustion: Supreme Court Expands
Patent-Limiting Doctrine
By Kevin E. Noonan, Ph.D.
The U.S. Supreme Court at
the end of the past term
handed down a decision,
Impression Products, Inc.
v. Lexmark International,
Inc., that greatly expanded
the doctrine of patent
exhaustion.1 This equitable doctrine prevents a
patent holder from restricting further sales or
use of a patented invention once the patentee
has received the benefits of her patent from
a first sale. In doing so, the Court upset the
settled expectations of many patent holders
and their licensees. Paradoxically, the decision
is not inconsistent with the Court’s recent
pronouncements in other patent cases and
other areas of intellectual property.2 All of these
decisions are also consistent with the Court’s
recent trend of limiting patent rights to the
greatest extent possible as patent cases continue
to come before it.
Background and the Opinion
In its Lexmark opinion, the Cour t reversed
the Federal Circuit regarding the metes and
bounds of the patent exhaustion doctr ine.
Simply stated, the Court ruled tha t the
doctrine precludes a patente e from using the
patent laws to enforce any agreement that
restricte d a purchaser’s post-sale ownership
rights in a patented article. The decision
also reversed Federal Circuit prec edent that
permitted paten tees to limit the scope of
rights transferr ed to purchasers upon sale
of a patented article, provided that such
restrictions were “clearly worded.”3 This
portion of the decision was not entirely
surprising, being consistent with earlier
cases.4 What was unexpected, howev er, was
the Court’s further decision that exhaus tion
arose even as a consequence of sales of
patented products sold abroad. This decision
overturned the Federal Circ uit’s Jazz Photo
Corp. v. International Trade Commission
decision, which had held that such products
were outside the reach of exhausting U.S.
patent rights.5
The case in Lexmark arose over the
resale of laser printer toner cartridges, sold
by Lexmark both in the U.S. and abroad.
These cartridges were sold at a discount
under an agreement that prohibited the
buyer from selling the cartridges to any
third party for reloading with new toner.
Each cartridge contained a microchip that
prevented third-party reloading, but technology
developed in ways that the chip could be
overridden. Petitioner/accused infringer
Impression Products reloaded and sold Lexmark
cartridges obtained from discount purchasers,
both foreign and domestic. The district court
dismissed Lexmark’s infringement suit as to
U.S. sales, but permitted pursuit of a patent
infringement remedy for foreign sales; the
Federal Circuit affirmed as to foreign sales
(continued on page 2)
Fall 2017 Vol. 15, Issue 4
PAGE 4
Patent Litigation
Management - Strategic
Decisions Can Help
Manage the Cost
of Litigation
PAGE 10
Uniform Domain Name
Dispute Resolution
Policy (UDRP) – What it
is and When to Use It
PAGE 6
Protecting Cannabis
– Are Plant Patents
Cool Now?
PAGE 8
Register Early and
Often or at Least Try to:
Preparing for Copyright
Enforcement
PAGE 12
Reaction Videos
and Fair Use
