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Keywords

contractpatentcommon law
lawsuitpatentrespondent

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Impression Products, Inc. v. Lexmark Intern., Inc., 581 U.S. 360, 137 S.Ct. 1523, 198 L.Ed.2d 1, 85 USLW 4279, 122 U.S.P.Q.2d 1605, 17 Cal. Daily Op. Serv. 4867, 2017 Daily Journal D.A.R. 4923, 26 Fla. L. Weekly Fed. S 599

Facts

Lexmark International, Inc. sued Impression Products, Inc. for patent infringement regarding toner cartridges. Lexmark sold cartridges under two programs: one with no restrictions and another, the 'Return Program,' which required customers to use the cartridge only once and return it to Lexmark. Impression Products acquired these cartridges, refurbished them, and resold them. Lexmark claimed that this constituted infringement, while Impression Products argued that Lexmark's sales exhausted its patent rights, allowing them to refurbish and resell the cartridges.

Respondent Lexmark International, Inc. designs, manufactures, and sells toner cartridges to consumers in the United States and abroad. 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.'

Issue

Whether a patentee exhausts its patent rights by selling its product, both domestically and internationally, regardless of any restrictions imposed on the purchaser.

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.

Rule

The doctrine of patent exhaustion states that once a patentee sells a product, it exhausts all patent rights in that item, regardless of any restrictions the patentee may impose. This principle is rooted in the common law's refusal to permit restraints on the alienation of property. The Patent Act grants patentees the right to exclude others from making, using, or selling their inventions, but this right is limited by the exhaustion doctrine once a sale occurs.

Analysis

In applying the exhaustion doctrine, the court reasoned that Lexmark's sale of the cartridges, regardless of the restrictions imposed through the Return Program, exhausted its patent rights. The court emphasized that the rights of ownership transferred to the purchaser upon sale, and any post-sale restrictions could only be enforced through contract law, not patent law. This principle was applied equally to both domestic and international sales, affirming that an authorized sale abroad also exhausts patent rights.

Conclusion

The Supreme Court held that Lexmark exhausted its patent rights with respect to both domestically and internationally sold cartridges, thereby barring it from bringing infringement actions against Impression Products.

Lexmark exhausted its patent rights in the Return Program cartridges that it sold in the United States. 816 F.3d 721, 742.

Who won?

Impression Products prevailed in this case as the Supreme Court ruled that Lexmark's patent rights were exhausted upon the sale of its toner cartridges, both domestically and internationally. The court's decision emphasized that once a patentee sells a product, it cannot impose restrictions on the use or resale of that product through patent law. This ruling effectively allowed Impression Products to continue refurbishing and reselling the cartridges without fear of infringement claims from Lexmark.

Impression Products moved to dismiss on the grounds that Lexmark's sales, both in the United States and abroad, exhausted its patent rights in the cartridges, so Impression Products was free to refurbish and resell them, and to import them if acquired overseas.

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