Written by Mark Lehberg
With the pace of the world around us these days, more and more of us are simply exhausted. And, now with the United States Supreme Court decisions over the past couple years, your copyrights and patents are as exhausted as you. Here is a quick review:
In 2013, the United States Supreme Court held that the sale of a work of authorship outside the United States exhausted the copyright owner’s rights under copyright law. That is, the copyright owner may not enforce his/her copyrights in a copy of a work of authorship that was sold abroad.
This decision arguably “opened the door” for the Federal Circuit and the United States Supreme Court to revisit prior decisions with respect to international exhaustion with respect to patents and the Supreme Court walked through that door with its decision in Impression Products Inc. v. Lexmark International Inc.
In Lexmark, the Federal Circuit, consistent with prior decisions, held that the sale of products outside the United States does not exhaust U.S. patent rights with respect to the products that were sold. The Supreme Court disagreed and held that, like copyrights, the authorized sale of a product, regardless of where the sale occurs, exhausts the patent owner’s rights in the products that were sold. The authorized sale might be by the patent owner or it might be a sale by a licensee.
However, Lexmark gave the Supreme Court the opportunity to deal with another controversial patent exhaustion issue. Specifically, whether a patent owner can avoid patent exhaustion by imposing lawful, post-sale restrictions on a product at the time the product is sold. In Lexmark the Federal Circuit, consistent with prior decisions, held that a patent owner may avoid patent exhaustion by imposing post-sale restrictions on an a product. Here too the Supreme Court disagreed and held that post-sale restrictions will not prevent exhaustion. Another blow to patent owners.
Over the last 10-12 years it seems as though patent owners have taken-it-on-the-chin when it comes to patent exhaustion. In the Lexmark decision the U.S. Supreme Court, citing another Supreme Court decision, note that “the sale terminates all patent rights to that item.” (emphasis added) It will be interesting to see where the phrase “all patent rights” takes us in the next 10 years. I am exhausted just thinking about it.