I would like to continue to cover Supreme Court decisions in intellectual property (IP) from the last term now that my series on IP issues in additive manufacturing is complete. Specifically, I would like to discuss Impression Prods. v. Lexmark Int'l, Inc., 137 S. Ct. 1523, 198 L. Ed. 2d. (May 30, 2017), a case that concerns the exhaustion doctrine, as applied to patent rights.
The exhaustion doctrine is a principle of IP law that restricts the ability of an IP holder to put post-sale restrictions on the use of products that are the subject of the IP (the holder’s IP rights). For example, the exhaustion doctrine can prevent the holder of a copyright from preventing someone who purchased a copyrighted book from reselling the book.
The exhaustion doctrine can be an issue in patent law when a patent owner tries to restrict the ability of a person who purchases a patented product from certain uses or repairs to the product. The syllabus of the Impression Products decision describes the facts of that case, as follows:
Lexmark International, Inc. designs, manufactures, and sells toner cartridges to consumers in the United States and abroad. It owns a number of patents that cover components of those cartridges and the manner in which they are used. When Lexmark sells toner cartridges, it gives consumers two options: One option is to buy a toner cartridge at full price, with no restrictions. The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark.
The Supreme Court had to determine whether the restrictions in Lexmark’s “Return Program” could be enforced using patent law in two situations: sales that occurred in the U.S. and foreign sales.
The Supreme Court held that the post-sale restrictions in Lexmark’s “Return Program” could not be enforced after either domestic sales or foreign sales. The sale would extinguish the patent owner’s rights under patent law. However, the Supreme Court also indicated that it might be possible to use contract law to enforce such restrictions.