The Supreme Court’s ruling last week in Impression Products, Inc. v. Lexmark Int’l, Inc. dramatically extended the reach of patent exhaustion – the principle that a patentee’s sale of a product “exhausts” its patent rights, leaving the purchaser and subsequent owners free to use or resell the product free from infringement claims.
In doing so the Court reversed Federal Circuit precedent that enabled patentees to enforce post-sale restrictions through infringement suits and to avoid exhaustion when selling their products overseas. While the key driver of the Supreme Court’s opinion is simple – the common law rule against restraints on alienation – less simple are the market consequences of the Court’s ruling. This alert memo focuses on those consequences, as well as strategies for patent owners going forward.