Amster Rothstein and Ebenstein, LLP - Intellectual Property Law

Patent Law Alert:
SUPREME COURT REVERSES FEDERAL CIRCUIT’S PRECEDENT ON PATENT EXHAUSTION

May 31, 2017
Author(s): Charles R. Macedo, Marion P. Metelski

(May 29, 2017)  In Impression Products, Inc., v. Lexmark International, Inc., 581 U. S. ___ (2017) (“Impression Products”), the U.S. Supreme Court was asked to address two important questions regarding the scope of the doctrine of patent exhaustion:

1.         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.

2.         Whether a patentee exhausts its patent rights by selling its products outside the U.S., where American patent laws do not apply.

In contrast to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”), the Court concluded “that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.”  (Slip op. at 2).

In arriving at this conclusion, the Court (per Ch. J. Roberts) observed that while its decision does not preclude a patentee (or its licensee) from imposing lawful restrictions on the use of patented items, the only recourse for the patentee or a licensee for violation of those restrictions is through contract law rather than a patent infringement lawsuit. 

Justice Ginsburg issued her own opinion, in which she concurred “in the Court’s holding regarding domestic exhaustion” but dissented “from the Court’s holding on international exhaustion.”  According to Justice Ginsburg, “[a] foreign sale ... does not exhaust a U. S. inventor’s U. S. patent rights.”  (J. Ginsburg slip op. at 1).   Justice Ginsburg’s dissent is consistent with her dissent in Kirstaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), in which she was also of the view that foreign sales of a copyrighted book should not exhaust a U.S. copyright.

Justice Gorsuch did not participate in this decision, which was argued before he joined the Court.

We will continue to monitor developments in the law on patent exhaustion.  In the meantime, please feel free to contact one our attorneys regarding issues raised by this case.
 
*Charles R. Macedo is a Partner and Marion P. Metelski is a Senior Counsel at Amster, Rothstein & Ebenstein LLP.  Their practice specializes in intellectual property issues.  Messrs. Macedo and Metelski may be reached at [email protected] and [email protected].

Mr. Macedo and David Goldberg represented amicus curiae New York Intellectual Property Law Association at the Supreme Court in Impression Products



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