High Court to Decide Whether Patent Rights Extend Abroad

(CN) – The Supreme Court has agreed to hear a closely watched patent case that will determine whether someone can import into the United States and resell a U.S.-patented article purchased abroad.

Generally, the buyer of a patented product has the right to resell that product to a third party, but the case here stems from printer cartridges that Lexmark International sold on the condition that they not be resold.

Lexmark brought a federal complaint in Ohio several years ago, saying Impression Products had acquired its spent cartridges abroad, refilled them and resold them.

For those cartridges that Impression imported into the United States, the products were priced more cheaply than Lexmark charged.

Ruling on an appeal of the case this past February, the en banc Federal Circuit upheld Lexmark’s sale conditions and said that the foreign sale of a U.S.-patented product does not exhaust patent rights.

“A U.S. patentee, merely by selling or authorizing the sale of a U.S.-patented article abroad, does not authorize the buyer to import the article and sell and use it in the United States, which are infringing acts in the absence of patentee-conferred authority,” the 99-page lead opinion says.

Divided on this issue 10-2, the court said its ruling does not conflict with the recent Supreme Court ruling in Kirtsaeng v. John Wiley & Sons Inc., due to the existence of an exemption in copyright law that is not mirrored in the Patent Act.

In Kirtsaeng, the high court ruled that there is an exemption of copyright law for the import and sale of foreign-edition textbooks in the United States.

Kirtsaeng is a copyright case holding that 17 U.S.C. § 109(a) entitles owners of copyrighted articles to take certain acts ‘without the authority’ of the copyright holder,” U.S. Circuit Judge Richard Taranto had said, writing for the Federal Circuit majority. “There is no counterpart to that provision in the Patent Act, under which a foreign sale is properly treated as neither conclusively nor even presumptively exhausting the U.S. patentee’s rights in the United States.”

The Obama administration urged the Supreme Court to review the ruling saying it was a mistake.

“For more than 150 years, this court has held that, once a particular patented article has been sold in the United States by the patentee or with his authorization, the patent laws do not constrain the subsequent use or resale of that article,” the Justice Department told the high court.

The administration was joined by advocacy groups Public Knowledge and the Electronic Frontier Foundation, which characterized Lexmark’s suit as an “attempt[] to expand their rights under intellectual property law to restrict the spread of information.”

Technology firm Intel also filed an amicus brief expressing concern that, under the Federal Circuit’s ruling, “a U.S. patent owner could sell its technology for use in such a component, and then turn around and sue the end-user for infringement when the finished product is sold in the United States.”

Per its custom, the Supreme Court did not issue any comment along with its Dec. 2 order granting Impression a writ of certiorari.

The court will review both whether Lexmark’s sale of printer cartridges with attached conditions permits it to assert patent rights over the cartridges’ resale and whether the reasoning in Kirtsaeng applies to patent doctrine.