September 03, 2015 Articles

International Patent Exhaustion and Postsale Restrictions

Federal Circuit en banc will soon address whether foreign sale exhausts patent owner's rights and whether limits on patented items are enforceable

By Joshua D. Curry

The "first sale" or patent exhaustion doctrine is a defense to patent infringement that arises when a patent owner (or its licensee) sells a patented item. After the initial, authorized sale of the patented item, the patent owner's rights with respect to the specific item sold are exhausted and the patent owner cannot sue parties down the stream of commerce for infringement with respect to that specific item.

Two high-profile exhaustion issues are set to be decided by the Federal Circuit sitting en banc in a decision that will likely issue in late 2015 or early 2016 in Lexmark International, Inc. v. Impression Products, Inc., 785 F.3d 565, 566 (Fed. Cir. 2015) (order setting en banc briefing). The issues are: (1) whether a foreign sale of a patented item by the patent owner can exhaust the patent owner's rights in the item sold, and (2) whether a patent owner can use patent law to enforce postsale restrictions on the use of a patented item after its initial sale in the United States.

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