SCOTUS to Rule on International Exhaustion in Lexmark Case

On December 9, 2016, the U.S. Supreme Court agreed to grant certiorari in Impression Products v. Lexmark. The case revolves around patent exhaustion and international sales. Impression Products purchased and refurbished Lexmark printer cartridges and resold them at a lower rate—the Lexmark cartridges have labels prohibiting reuse. Lexmark argues that its U.S. patents were not exhausted by sale outside of the United States, while Impression argues that a sale inside or outside of the United States triggers patent exhaustion. The case was granted cert based on two questions: Whether or not U.S. patent rights are exhausted by sales of the patented products outside of the U.S., and whether patent holders can condition sales of their products in such a way that would make downstream customers liable for infringement if they violated the terms of those conditions. Managing Intellectual Property contacted Finnegan attorney D. Brian Kacedon for his thoughts on the case.

Kacedon said, "Realistically, downstream customers are not all that likely to read, much less abide by, these conditions, which would be hard for the patent holder to enforce . . . The idea is that patent rights are territorial in nature. U.S. patent rights only give you the right to control what happens in the U.S., so the fact that I sell a product outside this country, arguably, doesn’t mean that I’ve given up my rights to enforce that patent in this country for that product." He added, "The government’s opinion that patents should be exhausted by international sales unless the patent holder has placed a restriction on them could reflect a desire to reach the most internationally harmonious decision, since there is no international rule, or even consistency between various countries."