REASONABLE PATENT EXHAUSTION

Abstract

A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended with Impression Products v. Lexmark. The Supreme Court held that the sale of a patented thing exhausts the patentee seller's rights to enforce restrictions on that thing through patent infringement suits. Further, the parties cannot bargain around this rule through the seller's specification of conditions, no matter how clear. No inquiry need be made into the patentee's market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is socially costly or valuable, or whether the condition has a positive or negative impact on innovation. None of this is relevant.