Impression Asks Court to Overrule Mallinckrodt and Jazz Photo; In Amicus Brief, United States Urges Nuanced International Exhaustion Framework

In April, the Federal Circuit sua sponte ordered hearing en banc and additional briefing on two questions related to patent exhaustion in Lexmark International, Inc. v. Impression Products, Inc., Nos. 14-1617, -1619. Recently, the court also set the oral hearing date for October 2, 2015. Briefing from Impression Products and its supporting amicus has been filed. At the invitation of the court, the United States also filed an amicus brief.

Impression Products’ opening brief requests that the Federal Circuit overrule both Mallinckrodt, Inc. v. Medi-part, Inc. and Jazz Photo Corp. v. ITC because, according to Impression, these decisions conflict with the Supreme Court’s recent rulings in Quanta Computer, Inc. v. LG Electronics, Inc. and Kirtsaeng v. John Wiley & Sons, Inc., respectively. In its first argument for overturning Mallinckrodt, Impression argues that it was “incorrectly decided in the first instance” because the precedent underpinning the Federal Circuit’s ruling was misunderstood and misapplied. Impression quotes at length from both the Mallinckrodt opinion and from prior Supreme Court opinions—General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938), and Bloomer v. McQuewan, 55 U.S. 539 (1853)—arguing that the passages relied on by the Mallinckrodt panel refute, rather than support, Mallinckrodt’s conclusion. As a second argument, Impression asserts that Quanta and Mallinckrodt decided “essentially the same” issue of whether a patentee can enforce post-sale restrictions. Because these cases reached opposite outcomes, Impression argues that Quanta overruled Mallinckrodt. Impression, however, focuses the majority of its brief on Jazz Photo, asserting that Kirtsaeng effectively overturned Jazz Photo, when it held that the sale of copyrighted material internationally exhausted copyrights in the United States. Impression argues that the common law exhaustion principles discussed by the Supreme Court apply equally to both copyright law and patent law.

The United States government, as amicus, presents a more nuanced approach. Although the government agreed with Impression that Quanta overruled Mallinckrodt, it advocates an international exhaustion structure in which a patentee could expressly reserve U.S. patent rights in foreign transactions, thereby preventing exhaustion. According to the government, this approach was the law before Jazz Photo. The government’s position appears to raise an interesting dichotomy in which it advocates against all post-sale restrictions when discussing Mallinckrodt, but expressly allows a post-sale restriction in foreign transactions to prevent those goods from being imported into the United States where the patentee has retained U.S. patent rights when discussing Jazz Photo.