Lexmark International, Inc. v. Ink Technologies Printer Supplies, LLC et al DC CAFC

The US Supreme Court has overruled the Federal Circuit and expanded the reach of the patent exhaustion doctrine. In Impression Products v. Lexmark (2015-1189), the Court reversed the Federal Circuit’s holding that a patentee’s rights are not exhausted when patented goods are sold domestically with a post-sale restriction or outside the United States. Applying its holding from Kirtsaeng v. John Wiley & Sons (2015-0375), which addressed the common-law origins of copyright exhaustion, the Court held in an opinion issued on May 30 (authored by Chief Justice John Roberts, with Justice Neil Gorsuch not participating) that exhaustion is a limit on the rights of patentees based on the common-law rule against restraints on alienation, rather than a presumptive grant of authority to the purchaser to use or resell a patented item. As a result, the Court ruled that a patentee’s rights are exhausted in both of the scenarios at issue.

The US Supreme Court has agreed to review the limits of the patent exhaustion doctrine, granting certiorari in Impression Products v. Lexmark (2015-1189) on December 2. Petitioner Impression Products, a reseller of refurbished printer ink cartridges, argues that a patentee cannot sidestep patent exhaustion through restrictions on re-sale and re-use, on the basis that the Supreme Court’s decision in Quanta v. LG Electronics overruled the Federal Circuit’s holding in Mallinckrodt v. Medipart. In addition, Impression has asserted that patent exhaustion also applies to foreign sales, claiming that the Supreme Court’s holding in Kirtsaeng v. John Wiley & Sons as to copyright exhaustion is also controlling in the patent context.

Last week, the Federal Circuit upheld two of its long-standing rules on patent exhaustion in an en banc decision in Lexmark Int’l, Inc. v. Impression Prods., Inc. (14-1617, 14-1619). The decision reaffirms the appeal court’s 1992 holding in Mallinckrodt, ruling that if a patentee sells a patented article with restrictions on resale and reuse that are conveyed to a buyer at the time of sale, the patentee may sue for infringement when the buyer violates these restrictions. The en banc panel also found that the US Supreme Court’s 2013 Kirtsaeng decision on copyright exhaustion does not apply to patent law, upholding the Federal Circuit’s 2001 decision in Jazz Photo that the sale of a patented item in a foreign country does not exhaust a patentee’s US patent rights on that item.