21 June 2017

Exhaustion of patent right when patentee sells patented product

The US Supreme Court has held that patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. It was also held that an authorized sale outside the United States, just as one within the United States, exhausts all rights under the US Patent Act. The court in this regard in its decision dates 30-05-2017 rejected the contention that there is no patent exhaustion from sales abroad because there are no patent rights abroad to exhaust.

The patentee sold cartridges at discounted price under a scheme wherein the customers signed a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone else. However, some manufacturers acquired such empty cartridges from purchasers in the US or overseas, refilled them with toner, and then resold/imported them. It was held that even if the restrictions in contracts with the customers were clear and enforceable under contract law, they do not entitle the patentee to retain patent rights in an item that it had elected to sell.


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