United States: Supreme Court Bolsters Patent Exhaustion: A Patentee's Sale Of An Item Automatically Exhausts All Patent Rights In The Item

This week, in Impression Products, Inc. v. Lexmark International, Inc., 15-1189, the Supreme Court reversed the Federal Circuit and strengthened the Doctrine of Patent Exhaustion. Under the bright-line rule set forth by the Court, the sale of an item by a patentee automatically exhausts all U.S. patent rights in the item, precluding downstream purchasers from being sued for patent infringement. Importantly, this is true regardless of where the sale occurred—in the United States or abroad—or whether express contractual restrictions were placed on the sale by the patentee, even if the downstream purchasers knew of the restrictions and willfully ignored them. The Court noted that contractual restrictions could give rise, however, to relief under contract law.

Impression Products involved the resale of printer cartridges. Lexmark designed and sold printer cartridges in two manners: purchasers could pay a lower price, subject to a restriction against recharging toner and a requirement that the purchaser return spent cartridges to Lexmark; or purchasers could pay a higher price with no restrictions. It also included technological protections in the cartridges that were not to be recharged in an attempt to enforce the restrictions by technical means. Impression Products was in the business of obtaining used cartridges, refilling them with toner, and then selling them in competition with Lexmark. It conceded that it knew of the restrictions and that it circumvented the technological protections in order to resell the cartridges. Lexmark sued Impression Products for patent infringement with respect to cartridges that it obtained in the United States in violation of the restrictions, and also with respect to cartridges that it purchased abroad and imported into the United States without Lexmark's permission. The Federal Circuit, in an en banc decision, held that patent exhaustion did not preclude either allegation of infringement.

On appeal to the Supreme Court, the Court was thus called upon to address two questions: (1) whether a "conditional sale"—where title passes to a patented item subject to post-sale restrictions on use or resale—overcomes the patent-exhaustion doctrine and allows infringement actions to be maintained for use or resale outside the scope of the restrictions; and (2) whether a sale of a patented article authorized by the patentee outside the United States exhausts the U.S. patent rights in that article, so as to allow the import of that patented article into the United States.

The Supreme Court reversed the Federal Circuit on both questions, clearly holding:

[P]atent exhaustion is uniform and automatic. Once a patentee decides to sell—whether on its own or through a licensee—that sale exhausts its patent rights, regardless of any post-sale restrictions the patentee purports to impose, either directly or through a license.

Slip op. at 13. With respect to sales abroad, the Court was equally clear: "An authorized sale outside the United States, just as one within the United States, exhausts all rights under the Patent Act." Id. The Court's decision was 8-0 on the first question, and 7-1 on the second, with only Justice Ginsberg dissenting in part.

The Court based its conclusions on the long-standing common-law principle disfavoring restraints on alienation, which it held directly curtailed patent rights. The Federal Circuit, in contrast, had viewed patent exhaustion as being derived from Section 271(a) of the Patent Act, which defines patent infringement as various acts (use, sale, etc.) undertaken "without authority." Thus, in determining whether patent exhaustion applied, the Federal Circuit considered whether the patent owner had authorized the accused activity. It viewed a restriction on use known to the purchaser as clearly withholding authority. The Supreme Court fundamentally disagreed with this approach, ruling that the centuries-old rule against restraints on alienation provided an inherent limit to the patent right itself, such that an authorized sale by the patentee—albeit one burdened by restrictions—automatically extinguishes that right. In short, after an authorized sale "there is no exclusionary right left to enforce." Slip op. at 10. This is true regardless of whether the sale was made directly by the patentee, or instead by a patent licensee, or was made in the United States or abroad.

The Court did note that resellers or users who have violated post-sale restrictions to which they had agreed could still possibly be sued for breach of contract. Further, the Court noted that its ruling applied only to authorized sales. Thus, for instance, were a patent licensee to make a sale that was not authorized by the license, there would be no patent exhaustion for the simple reason that the patentee had never authorized the sale in the first instance.

This ruling will have an immediate impact. Patentees can no longer rely on U.S. patent laws to enforce post-sale restrictions on patented goods. Although patentees may be able to bring breach of contract or tort actions in certain instances to enforce those restrictions, these actions may be more limited than a patent infringement action with respect to who may be sued or with respect to the remedies that may be obtained. It is difficult to bring a breach of contract action against parties with whom one has never contracted. So, for instance, following Impression Products, Lexmark may have straightforward breach of contract claims against the individual purchasers who failed to return cartridges to Lexmark, but not against Impression Products, who never entered into any agreements with Lexmark. Lexmark might have tort causes of action for interference and the like, but these may be less satisfactory than a patent action and interference claims can be difficult to maintain, especially as to downstream purchasers.

Another important effect of this ruling is with respect to international sales. The Federal Circuit had held that sales abroad did not implicate patent exhaustion, and patentees thus have had an expectation that unauthorized importation could be stopped with a patent infringement action, either at the District Court or the International Trade Commission. Now, the ability to restrict unauthorized importation following an authorized sale abroad could be greatly limited. This may require patentees to rethink fundamentally their pricing strategies for products sold abroad that are susceptible to importation following resale. It also could lead to greater efforts on the part of manufacturers to arrive at more advanced technical solutions that would prevent goods sold abroad from working in the United States following an unauthorized importation, for example.

The Supreme Court's ruling in Impression Products has definitely changed the playing field for patentees relying on distribution chains, especially extended ones and relying on market segmentation strategies. It will be interesting to see how quickly they can adapt.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.