Impression Products, Inc. v. Lexmark International, Inc.

If a patent holder sells its patented item, then it has exhausted its patent rights as it relates to that item, whether or not the terms of the sale of the item placed restrictions on the item’s use after the sale.

Respondent, a company that manufactures toner cartridges, sued Petitioner, a company that remanufactures Respondents used toner cartridges, for patent infringement. The federal district court dismissed the claim as it related to cartridges sold in the United States. The Federal Circuit Court of Appeals agreed, holding that Respondent retained its rights to protect its patent after the cartridges were sold in the United States, because a buyer’s presumption of authority over resell of the item does not apply if there is a condition on that authority at the point of the initial sale by the patent holder. The U.S. Supreme Court held that the patent holder exhausted its patent rights in the product at the point of sale, because the purchaser becomes the owner of the item. The Court reasoned that the purchaser acquires ownership and control of the item, while the patent holder simultaneously loses its patent rights to the item; otherwise the patent holder could place a restriction on the free marketability of its product, in violation of the long held doctrine of “restraint of alienation.” REVERSED and REMANDED.