Source: https://www.iniplaw.org/category/import/
Timestamp: 2019-04-20 16:12:39+00:00

Document:
Washington, D.C. – The Federal Circuit, sitting en banc, reaffirmed its rules of patent exhaustion in a 10-2 decision. It concluded that the Supreme Court decisions in Quanta Computer, Inc. v. LG Electronics, Inc., and Kirtsaeng v. John Wiley & Sons, Inc., did not require any change in the law of patent exhaustion. The 99-page decision was consistent with the position argued in the amicus brief filed by the American Intellectual Property Law Association.
Such resale or reuse, when contrary to the known, lawful limits on the authority conferred at the time of the original sale, remains unauthorized and therefore remains infringing conduct under the terms of § 271. Under Supreme Court precedent, a patentee may preserve its § 271 rights through such restrictions when licensing others to make and sell patented articles; Mallinckrodt held that there is no sound legal basis for denying the same ability to the patentee that makes and sells the articles itself. We find Mallinckrodt’s principle to remain sound after the Supreme Court’s decision in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), in which the Court did not have before it or address a patentee sale at all, let alone one made subject to a restriction, but a sale made by a separate manufacturer under a patentee-granted license conferring unrestricted authority to sell.
Jazz Photo’s no exhaustion ruling recognizes that foreign markets under foreign sovereign control are not equivalent to the U.S. markets under U.S. control in which a U.S. patentee’s sale presumptively exhausts its rights in the article sold. A buyer may still rely on a foreign sale as a defense to infringement, but only by establishing an express or implied license–a defense separate from exhaustion, as Quanta holds–based on patentee communications or other circumstances of the sale. We conclude that Jazz Photo’s no-exhaustion principle remains sound after the Supreme Court’s decision in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013), in which the Court did not address patent law or whether a foreign sale should be viewed as conferring authority to engage in otherwise infringing domestic acts. 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. 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.
Judge Dyk filed a dissenting opinion, which was joined by Judge Hughes, that generally agreed with the position argued in the government’s amicus brief.
With respect to Mallinckrodt, Judge Dyk maintained that the decision was wrong from the outset and cannot now be reconciled with the Supreme Court’s Quanta decision. “We exceed our role as a subordinate court by declining to follow the explicit domestic exhaustion rule announced by the Supreme Court,” he added. With respect to Jazz Photo, he wrote that he would retain the ruling if read to say that a foreign sale does not always exhaust U.S. patent rights, but it may if the authorized seller failed to explicitly reserve those rights.
Lexmark makes and sells patented ink cartridges for its printers. It sells cartridges under one plan that permits buyers to use them as they wish, and at a discounted price under a “Return Program” plan that limits buyers to a single use of the cartridge and requires the cartridges to be returned to Lexmark for recycling.

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