The Supreme Court has ruled against Lexmark in a contentious case regarding where patent rights end. In a 7-1 decision, the court ruled that once an item has been sold, the rights of the patent holder have been “exhausted”. “The purchaser and all subsequent owners are free to use or resell the product just like any other item of personal property, without fear of an infringement lawsuit.”
Lexmark had sued a company called Impression Products, which had been selling refilled and remanufactured ink cartridges. Lexmark had taken technical measures to prevent third parties from providing ink cartridges, with a chip that would refuse to print if it was altered. Impression had circumvented this measure, refilled the cartridges, and sold them. In some cases, the cartridges were purchased in foreign markets and then imported into the US. Many of these cartridges came from Lexmark’s return program, where users would agree to send ink cartridges back to Lexmark in return for a discounted rate. Lexmark alleged that this was an infringement on their patents.
The court explicitly rejected that allegation on the basis that the third party manufacturers had no agreement with Lexmark, and that Lexmark could not enforce its patent rights after a product had been sold. “We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them,” wrote Chief Justice John Roberts. Roberts cited that the court had ruled in 2013 in Kirtsaeng v John Wiley & Sons that books printed in foreign markets and imported in the US had their copyrights exhausted due to the first sale doctrine, citing that this was a similar situation. “Applying patent exhaustion to foreign sales is just as straightforward. Patent exhaustion, too, has its roots in the antipathy toward restraints on alienation, see supra, at 6–8, and nothing in the text or history of the Patent Act shows that Congress intended to confine that borderless common law principle to domestic sales”, he wrote.
The lone dissenting vote came from Justice Ruth Bader Ginsberg (Justice Neil Gorsuch did not take part in the decision). She concurred with the court’s decision that Lexmark had exhausted its rights when cartridges were sold in the US, but not when they were sold in foreign markets. She disagreed on the basis that “Because a sale abroad operates independently of the U. S. patent system, it makes little sense to say that such a sale exhausts an inventor’s U. S. patent rights.”, and noted her dissent in Kirtsaeng on whether copyrights should also be exhausted under the first sale doctrine. She also noted that while copyrights are generally similar internationally due to the Berne Convention and other treaties, similar laws do not exist for patents.