SCOTUS to hear oral arguments in patent exhaustion case


SCOTUS to hear oral arguments in patent exhaustion case

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The US Supreme Court is due to hear oral arguments tomorrow in the Impression Products v Lexmark dispute, which centres on patent exhaustion. 

In December last year, the Supreme Court agreed to hear the case.

It will provide guidance on “whether a ‘conditional sale’ that transfers title to the patented item while specifying post-sale restrictions on the article’s use or re-sale avoids application of the patent exhaustion doctrine and therefore permits the enforcement of such post-sale restrictions through the patent law’s infringement remedy”.

The dispute began when Lexmark, a seller of printers and cartridges, sued Impression at the US District Court for the Southern District of Ohio for patent infringement over the sale of modified products that were obtained abroad before being imported to and sold in the US. 

Lexmark had sold refillable printer cartridges both in the US and internationally. 

Some of the foreign cartridges, and all of the domestic cartridges, were sold at a discount, subject to an express single-use/no-resale restriction.

Impression acquired the restricted cartridges from a third party that had modified them to enable re-use in violation of the single-use/no-resale restriction. 

In a counterclaim, Impression said Lexmark’s patent rights had been exhausted, arguing that Lexmark’s original sale of the cartridges made Impression’s resale and importation non-infringing under the doctrine of exhaustion.

The Ohio court handed down a mixed ruling, prompting both parties to appeal to the US Court of Appeals for the Federal Circuit.

In a 10-2 en banc decision in February 2016, the court sided with Lexmark by ruling that the sale of a patented product abroad does not exhaust a party’s rights.

Impression filed a petition for a writ of certiorari in March last year. 

Soon after, the Electronic Frontier Foundation filed an amicus brief in the lawsuit, urging the Supreme Court to hear and overturn the “troubling decision”. 

Christopher Loh, partner at Fitzpatrick, Cella, Harper & Scinto, explained that Impression’s position “appears to ignore a long line of precedent upholding the rights of patentees to sue downstream purchasers for unauthorised uses”.

He added that the case reflects a “continued interest” by the Supreme Court in questions on what types of extra-territorial activity might affect US patent rights. 

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Lexmark, Impression Products, US Supreme Court, patent, patent exhaustion, US Court of Appeals for the Federal Circuit