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Lexmark Patent Exhaustion

Posted Tuesday, April 18, 2017 by Kyle Straughan

On March 21, 2017 the Supreme Court heard oral arguments in Impression Products, Inc. v. Lexmark Int’l, Inc., a case that will have a large impact on patent exhaustion. In brief, patent exhaustion is the doctrine which holds that a patentholder’s right to enforce its patent on something is exhausted the moment the patentholder sells the thing. In the present case, Lexmark owns patents to refillable print cartridges, and thus under the exhaustion doctrine its rights would be exhausted when it sells them to retail buyers. The primary issue facing the Court is whether Lexmark may condition sales on the promise that the buyer will not refill the cartridge. Currently Lexmark sells the cartridges at a discount, but the buyer agrees not to refill the cartridge. Impression Products is in the business of refilling Lexmark’s cartridges, which Lexmark argues is in violation of the agreements it has with buyers.

During oral argument, the Justices revealed little about their opinion, with Chief Justice John Roberts and Justice Stephen Breyer questioning as to why Lexmark’s desired arrangement could not be handled purely with contract law. Additionally, the Justices questioned why they should read an exhaustion doctrine into the existing law when Congress clearly did not include it. The Justices noted that the Patent Act, unlike the Copyright Act, does not codify exhaustion. Noteworthy is that in a recent copyright case, Kirtsaeng v. John Wiley & Sons, Inc., the court adopted a broad rule of copyright exhaustion, even on international sales. Although it is currently unclear based on the Justices’ questions which direction they are leaning, the decision in this case will go lengths in clarifying a patentee’s rights both domestically and internationally.

Ruttler Mills PLLC
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