Impression Products, Inc. v. Lexmark Int'l, Inc.
198 L. Ed. 2d 1
| SCOTUS | 2017Background
- Lexmark manufactured toner cartridges and sold them in two ways: full-price unrestricted sales and discounted "Return Program" sales where customers agreed (by contract) to single‑use/no‑resale; Return Program cartridges included a microchip to enforce single use.
- Remanufacturers (including Impression Products) acquired empty cartridges (both U.S. Return Program cartridges and cartridges Lexmark sold abroad), refilled them, and resold them in the U.S.
- Lexmark sued remanufacturers for patent infringement: (1) for refurbishing and reselling Return Program cartridges sold in the U.S. (violating Lexmark's contractual restriction) and (2) for importing and selling cartridges Lexmark sold abroad.
- District Court dismissed claims as to domestic Return Program cartridges (exhaustion) but allowed foreign‑sale claims to proceed; Federal Circuit reversed and held that (a) lawful, clearly communicated post‑sale restrictions can be enforced via patent law (relying on Mallinckrodt), and (b) foreign sales do not exhaust U.S. patent rights (relying on Jazz Photo).
- Supreme Court granted certiorari and reversed the Federal Circuit: held that an authorized sale exhausts U.S. patent rights regardless of (a) express post‑sale restrictions and (b) the location of the authorized sale (domestic or foreign).
Issues
| Issue | Plaintiff's Argument (Lexmark) | Defendant's Argument (Impression) | Held |
|---|---|---|---|
| Whether a patentee may enforce an express single‑use/no‑resale restriction attached to a sale through a patent‑infringement suit | Sale with clear contract reservation preserves patent rights; exhaustion is only a presumption that can be withheld | An authorized sale exhausts patent rights; patent law cannot be used to enforce post‑sale use or resale restrictions (contract remedies only) | Sale exhausts patent rights; post‑sale restrictions, even if lawful and known, cannot be enforced via patent infringement claims; remedy is contract law |
| Whether an authorized sale made abroad exhausts U.S. patent rights (international exhaustion) | Foreign sales do not exhaust U.S. patents because U.S. patent rights are territorial and a foreign sale may not compensate the U.S. patentee for U.S. rights | Foreign authorized sales exhaust U.S. patent rights just as domestic sales do; exhaustion stems from anti‑restraints on alienation, not geography | Authorized foreign sales exhaust U.S. patent rights; location of the sale is irrelevant to exhaustion |
| Whether licensee sales with downstream restrictions differ from patentee sales for exhaustion purposes | Licenses routinely limit downstream uses; treating sales differently from licenses would create inconsistency and allow patentees to achieve via sale what licenses permit to restrict | A sale (even by a licensee in compliance with its license) transfers title and exhausts rights; licenses are different because they do not transfer title | Sale by licensee that complies with license also exhausts patent rights in the item sold; exhaustion is uniform whether sale is by patentee or authorized licensee |
Key Cases Cited
- Quanta Computer, Inc. v. LG Elecs., 553 U.S. 617 (sale of patented article by authorized party exhausts patent rights)
- Univis Lens Co., 316 U.S. 241 (initial sale relinquishes patent monopoly and precludes patent‑based post‑sale restraints)
- Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (copyright first‑sale doctrine applies to copies lawfully made and sold abroad; used analogously for international exhaustion)
- Boesch v. Graff, 133 U.S. 697 (foreign manufacturer's sale did not exhaust U.S. patentee's rights where patentee did not authorize foreign sale)
- Boston Store of Chicago v. Am. Graphophone Co., 246 U.S. 8 (sale places article beyond the patent law; cannot enforce post‑sale restrictions via patent)
- Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (sale by licensee that complies with license exhausts patent rights in the sold article)
- General Talking Pictures Corp. v. Western Elec. Co., 304 U.S. 175 (patentee may sue where licensee knowingly makes sales outside license scope)
- Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir.) (held that lawful, clearly communicated post‑sale restrictions can be enforced via patent law — relied on by Federal Circuit but rejected by Court)
- Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094 (Fed. Cir.) (held that foreign sales do not exhaust U.S. patent rights — overruled for exhaustion rule)