Supreme Court Expands Doctrine Of Patent Exhaustion

In a decision overturning longstanding Federal Circuit law, the Supreme Court in Impression Prods., Inc. v. Lexmark Int'l, Inc., 581 U.S. __ (May 30, 2017) held that a patent owner's sale of a patented product anywhere in the world exhausts all of its U.S. patent rights in that product, regardless of post-sale restrictions the patent owner may have imposed on the purchaser. Such exhaustion also occurs upon sale by a licensee acting in compliance with a valid license.

The decision leaves open several questions regarding the enforceability of post-sale restrictions under contract law, which the Court did not address. Accordingly, patentees seeking to impose post-sale restrictions in contracts for sale or in patent license agreements would be wise to seek advice of counsel.