Court Opinion

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Date Created: 2017-05-30 15:04:30.249444+00
Date Added: 2024-06-11T14:39:26.641027
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(Slip Opinion)              OCTOBER TERM, 2016                                       1

                                       Syllabus

         NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
       being done in connection with this case, at the time the opinion is issued.
       The syllabus constitutes no part of the opinion of the Court but has been
       prepared by the Reporter of Decisions for the convenience of the reader.
       See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.

SUPREME COURT OF THE UNITED STATES

                                       Syllabus

        IMPRESSION PRODUCTS, INC. v. LEXMARK 

                INTERNATIONAL, INC. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
                THE FEDERAL CIRCUIT

     No. 15–1189. Argued March 21, 2017—Decided May 30, 2017
A United States patent entitles the patent holder to “exclude others
  from making, using, offering for sale, or selling [its] invention
  throughout the United States or importing the invention into the
  United States.” 35 U.S. C. §154(a). Whoever engages in one of these
  acts “without authority” from the patentee may face liability for pa-
  tent infringement. §271(a). When a patentee sells one of its prod-
  ucts, however, the patentee can no longer control that item through
  the patent laws—its patent rights are said to “exhaust.”
     Respondent Lexmark International, Inc. designs, manufactures,
  and sells toner cartridges to consumers in the United States and
  abroad. It owns a number of patents that cover components of those
  cartridges and the manner in which they are used. When Lexmark
  sells toner cartridges, it gives consumers two options: One option is to
  buy a toner cartridge at full price, with no restrictions. The other op-
  tion is to buy a cartridge at a discount through Lexmark’s “Return
  Program.” In exchange for the lower price, customers who buy
  through the Return Program must sign a contract agreeing to use the
  cartridge only once and to refrain from transferring the cartridge to
  anyone but Lexmark.
     Companies known as remanufacturers acquire empty Lexmark
  toner cartridges—including Return Program cartridges—from pur-
  chasers in the United States, refill them with toner, and then resell
  them. They do the same with Lexmark cartridges that they acquire
  from purchasers overseas and import into the United States.
  Lexmark sued a number of these remanufacturers, including peti-
  tioner Impression Products, Inc., for patent infringement with re-
  spect to two groups of cartridges. The first group consists of Return
2    IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                                Syllabus

 Program cartridges that Lexmark had sold within the United States.
 Lexmark argued that, because it expressly prohibited reuse and re-
 sale of these cartridges, Impression Products infringed the Lexmark
 patents when it refurbished and resold them. The second group con-
 sists of all toner cartridges that Lexmark had sold abroad and that
 Impression Products imported into the country. Lexmark claimed
 that it never gave anyone authority to import these cartridges, so
 Impression Products infringed its patent rights by doing just that.
    Impression Products moved to dismiss on the grounds that
 Lexmark’s sales, both in the United States and abroad, exhausted its
 patent rights in the cartridges, so Impression Products was free to re-
 furbish and resell them, and to import them if acquired overseas.
 The District Court granted the motion to dismiss as to the domestic
 Return Program cartridges, but denied the motion as to the cartridg-
 es sold abroad. The Federal Circuit then ruled for Lexmark with re-
 spect to both groups of cartridges. Beginning with the Return Pro-
 gram cartridges that Lexmark sold domestically, the Federal Circuit
 held that a patentee may sell an item and retain the right to enforce,
 through patent infringement lawsuits, clearly communicated, lawful
 restrictions on post-sale use or resale. Because Impression Products
 knew about Lexmark’s restrictions and those restrictions did not vio-
 late any laws, Lexmark’s sales did not exhaust its patent rights, and
 it could sue Impression Products for infringement. As for the car-
 tridges that Lexmark sold abroad, the Federal Circuit held that,
 when a patentee sells a product overseas, it does not exhaust its pa-
 tent rights over that item. Lexmark was therefore free to sue for in-
 fringement when Impression Products imported cartridges that
 Lexmark had sold abroad. Judge Dyk, joined by Judge Hughes, dis-
 sented.
Held:
    1. Lexmark exhausted its patent rights in the Return Program car-
 tridges that it sold in the United States. A 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. As a result, even if
 the restrictions in Lexmark’s contracts with its customers were clear
 and enforceable under contract law, they do not entitle Lexmark to
 retain patent rights in an item that it has elected to sell. Pp. 5–13.
       (a) The Patent Act grants patentees the “right to exclude others
 from making, using, offering for sale, or selling [their] invention[s].”
 35 U.S. C. §154(a). For over 160 years, the doctrine of patent ex-
 haustion has imposed a limit on that right to exclude: When a pa-
 tentee sells an item, that product “is no longer within the limits of
 the [patent] monopoly” and instead becomes the “private, individual
 property” of the purchaser. Bloomer v. McQuewan, 14 How. 539,
                   Cite as: 581 U. S. ____ (2017)                      3

                              Syllabus

549–550. If the patentee negotiates a contract restricting the pur-
chaser’s right to use or resell the item, it may be able to enforce that
restriction as a matter of contract law, but may not do so through a
patent infringement lawsuit.
   The exhaustion rule marks the point where patent rights yield to
the common law principle against restraints on alienation. The Pa-
tent Act promotes innovation by allowing inventors to secure the fi-
nancial rewards for their inventions. Once a patentee sells an item,
it has secured that reward, and the patent laws provide no basis for
restraining the use and enjoyment of the product. Allowing further
restrictions would run afoul of the “common law’s refusal to permit
restraints on the alienation of chattels.” Kirtsaeng v. John Wiley &
Sons, Inc., 568 U.S. 519, 538. As Lord Coke put it in the 17th centu-
ry, if an owner restricts the resale or use of an item after selling it,
that restriction “is voide, because . . . it is against Trade and
Traffique, and bargaining and contracting betweene man and man.”
1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628).
Congress enacted and has repeatedly revised the Patent Act against
the backdrop of this hostility toward restraints on alienation, which
is reflected in the exhaustion doctrine.
   This Court accordingly has long held that, even when a patentee
sells an item under an express, otherwise lawful restriction, the pa-
tentee does not retain patent rights in that product. See, e.g., Quanta
Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617. And that well-
settled line of precedent allows for only one answer in this case:
Lexmark cannot bring a patent infringement suit against Impression
Products with respect to the Return Program cartridges sold in the
United States because, once Lexmark sold those cartridges, it ex-
hausted its right to control them through the patent laws. Pp. 5–9.
     (b) The Federal Circuit reached a different result because it
started from the premise that the exhaustion doctrine is an interpre-
tation of the patent infringement statute, which prohibits anyone
from using or selling a patented article “without authority” from the
patentee. According to the Federal Circuit, exhaustion reflects a de-
fault rule that selling an item “presumptively grant[s] ‘authority’ for
the purchaser to use it and resell it.” 816 F.3d 721, 742. But if a pa-
tentee withholds some authority by expressly limiting the purchas-
er’s rights, the patentee may enforce that restriction through patent
infringement lawsuits. See id., at 741.
   The problem with the Federal Circuit’s logic is that the exhaustion
doctrine is not a presumption about the authority that comes along
with a sale; it is a limit on the scope of the patentee’s rights. The Pa-
tent Act gives patentees a limited exclusionary power, and exhaus-
tion extinguishes that power. A purchaser has the right to use, sell,
4      IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                                   Syllabus

    or import an item because those are the rights that come along with
    ownership, not because it purchased authority to engage in those
    practices from the patentee. Pp. 9–13.
       2. Lexmark also sold toner cartridges abroad, which Impression
    Products acquired from purchasers and imported into the United
    States. Lexmark cannot sue Impression Products for infringement
    with respect to these cartridges. An authorized sale outside the
    United States, just as one within the United States, exhausts all
    rights under the Patent Act.
       The question about international exhaustion of intellectual proper-
    ty rights has arisen in the context of copyright law. Under the first
    sale doctrine, when a copyright owner sells a lawfully made copy of
    its work, it loses the power to restrict the purchaser’s right “to sell or
    otherwise dispose of . . . that copy.” 17 U.S. C. §109(a). In Kirtsaeng
    v. John Wiley & Sons, Inc., 568 U.S. 519, this Court held that the
    first sale doctrine applies to copies of works made and sold abroad.
    Central to that decision was the fact that the first sale doctrine has
    its roots in the common law principle against restraints on aliena-
    tion. Because that principle makes no geographical distinctions and
    the text of the Copyright Act did not provide such a distinction, a
    straightforward application of the first sale doctrine required con-
    cluding that it applies overseas.
       Applying patent exhaustion to foreign sales is just as straightfor-
    ward. Patent exhaustion, too, has its roots in the antipathy toward
    restraints on alienation, and nothing in the Patent Act shows that
    Congress intended to confine that principle to domestic sales. Differ-
    entiating between the patent exhaustion and copyright first sale doc-
    trines would also make little theoretical or practical sense: The two
    share a “strong similarity . . . and identity of purpose,” Bauer & Cie v.
    O’Donnell, 229 U.S. 1, 13, and many everyday products are subject to
    both patent and copyright protections.
       Lexmark contends that a foreign sale does not exhaust patent
    rights because the Patent Act limits a patentee’s power to exclude
    others from making, using, selling, or importing its products to acts
    that occur in the United States. Because those exclusionary powers
    do not apply abroad, the patentee may not be able to sell its products
    overseas for the same price as it could in the United States, and
    therefore is not sure to receive the reward guaranteed by American
    patent laws. Without that reward, says Lexmark, there should be no
    exhaustion.
       The territorial limit on patent rights is no basis for distinguishing
    copyright protections; those do not have extraterritorial effect either.
    Nor does the territorial limit support Lexmark’s argument. Exhaus-
    tion is a distinct limit on the patent grant, which is triggered by the
                     Cite as: 581 U. S. ____ (2017)                      5

                                Syllabus

  patentee’s decision to give a patented item up for whatever fee it de-
  cides is appropriate. The patentee may not be able to command the
  same amount for its products abroad as it does in the United States.
  But the Patent Act does not guarantee a particular price. Instead,
  the Patent Act just ensures that the patentee receives one reward—of
  whatever it deems to be satisfactory compensation—for every item
  that passes outside the scope of its patent monopoly.
     This Court’s decision in Boesch v. Gräff, 133 U.S. 697, is not to the
  contrary. That decision did not, as Lexmark contends, exempt all
  foreign sales from patent exhaustion. Instead, it held that a sale
  abroad does not exhaust a patentee’s rights when the patentee had
  nothing to do with the transaction. That just reaffirms the basic
  premise that only the patentee can decide whether to make a sale
  that exhausts its patent rights in an item.
     Finally, the United States advocates what it views as a middle-
  ground position: that a foreign sale exhausts patent rights unless the
  patentee expressly reserves those rights. This express-reservation
  rule is based on the idea that overseas buyers expect to be able to use
  and resell items freely, so exhaustion should be the presumption.
  But, at the same time, lower courts have long allowed patentees to
  expressly reserve their rights, so that option should remain open to
  patentees. The sparse and inconsistent decisions the Government
  cites, however, provide no basis for any expectation, let alone a set-
  tled one, that patentees can reserve rights when they sell abroad.
  The theory behind the express-reservation rule also wrongly focuses
  on the expectations of the patentee and purchaser during a sale.
  More is at stake when it comes to patent exhaustion than the deal-
  ings between the parties, which can be addressed through contracts.
  Instead, exhaustion occurs because allowing patent rights to stick to
  an already-sold item as it travels through the market would violate
  the principle against restraints on alienation. As a result, re-
  strictions and location are irrelevant for patent exhaustion; what
  matters is the patentee’s decision to make a sale. Pp. 13–18.
816 F.3d 721, reversed and remanded.

  ROBERTS, C. J., delivered the opinion of the Court, in which KENNEDY,
THOMAS, BREYER, ALITO, SOTOMAYOR, and KAGAN, JJ., joined. GINS-
BURG, J., filed an opinion concurring in part and dissenting in part.
GORSUCH, J., took no part in the consideration or decision of the case.
                        Cite as: 581 U. S. ____ (2017)                              1

                             Opinion of the Court

     NOTICE: This opinion is subject to formal revision before publication in the
     preliminary print of the United States Reports. Readers are requested to
     notify the Reporter of Decisions, Supreme Court of the United States, Wash-
     ington, D. C. 20543, of any typographical or other formal errors, in order
     that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
                                   _________________

                                   No. 15–1189
                                   _________________

   IMPRESSION PRODUCTS, INC., PETITIONER v. 

        LEXMARK INTERNATIONAL, INC. 

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

           APPEALS FOR THE FEDERAL CIRCUIT

                                 [May 30, 2017] 

   CHIEF JUSTICE ROBERTS delivered the opinion of the
Court.
   A United States patent entitles the patent holder (the
“patentee”), for a period of 20 years, to “exclude others
from making, using, offering for sale, or selling [its] inven-
tion throughout the United States or importing the inven-
tion into the United States.” 35 U.S. C. §154(a). Whoever
engages in one of these acts “without authority” from the
patentee may face liability for patent infringement.
§271(a).
   When a patentee sells one of its products, however, the
patentee can no longer control that item through the
patent laws—its patent rights are said to “exhaust.” The
purchaser and all subsequent owners are free to use or
resell the product just like any other item of personal
property, without fear of an infringement lawsuit.
   This case presents two questions about the scope of the
patent exhaustion doctrine: First, whether a patentee that
sells an item under an express restriction on the purchas-
er’s right to reuse or resell the product may enforce that
restriction through an infringement lawsuit. And second,
2   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                     Opinion of the Court

whether a patentee exhausts its patent rights by selling
its product outside the United States, where American
patent laws do not apply. We conclude that a 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 or the location of the sale.
                              I
   The underlying dispute in this case is about laser print-
ers—or, more specifically, the cartridges that contain the
powdery substance, known as toner, that laser printers
use to make an image appear on paper. Respondent
Lexmark International, Inc. designs, manufactures, and
sells toner cartridges to consumers in the United States
and around the globe. It owns a number of patents that
cover components of those cartridges and the manner in
which they are used.
   When toner cartridges run out of toner they can be
refilled and used again. This creates an opportunity for
other companies—known as remanufacturers—to acquire
empty Lexmark cartridges from purchasers in the United
States and abroad, refill them with toner, and then resell
them at a lower price than the new ones Lexmark puts on
the shelves.
   Not blind to this business problem, Lexmark structures
its sales in a way that encourages customers to return
spent cartridges. It gives purchasers two options: One is
to buy a toner cartridge at full price, with no strings at-
tached. The other is to buy a cartridge at roughly 20-
percent off through Lexmark’s “Return Program.” A cus-
tomer who buys through the Return Program still owns
the cartridge but, in exchange for the lower price, signs a
contract agreeing to use it only once and to refrain from
transferring the empty cartridge to anyone but Lexmark.
To enforce this single-use/no-resale restriction, Lexmark
installs a microchip on each Return Program cartridge
                 Cite as: 581 U. S. ____ (2017)           3

                     Opinion of the Court

that prevents reuse once the toner in the cartridge runs
out.
   Lexmark’s strategy just spurred remanufacturers to
get more creative. Many kept acquiring empty Return
Program cartridges and developed methods to counteract
the effect of the microchips. With that technological
obstacle out of the way, there was little to prevent the re-
manufacturers from using the Return Program cartridges
in their resale business. After all, Lexmark’s contractual
single-use/no-resale agreements were with the initial
customers, not with downstream purchasers like the
remanufacturers.
   Lexmark, however, was not so ready to concede that its
plan had been foiled. In 2010, it sued a number of reman-
ufacturers, including petitioner Impression Products, Inc.,
for patent infringement with respect to two groups of
cartridges. One group consists of Return Program car-
tridges that Lexmark sold within the United States.
Lexmark argued that, because it expressly prohibited
reuse and resale of these cartridges, the remanufacturers
infringed the Lexmark patents when they refurbished and
resold them. The other group consists of all toner car-
tridges that Lexmark sold abroad and that remanufactur-
ers imported into the country. Lexmark claimed that it
never gave anyone authority to import these cartridges, so
the remanufacturers ran afoul of its patent rights by doing
just that.
   Eventually, the lawsuit was whittled down to one de-
fendant, Impression Products, and one defense: that
Lexmark’s sales, both in the United States and abroad,
exhausted its patent rights in the cartridges, so Impres-
sion Products was free to refurbish and resell them, and to
import them if acquired abroad. Impression Products filed
separate motions to dismiss with respect to both groups of
cartridges. The District Court granted the motion as to
the domestic Return Program cartridges, but denied the
4    IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                      Opinion of the Court

motion as to the cartridges Lexmark sold abroad. Both
parties appealed.
  The Federal Circuit considered the appeals en banc and
ruled for Lexmark with respect to both groups of cartridges.
The court began with the Return Program cartridges
that Lexmark sold in the United States. Relying on its
decision in Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d
700 (1992), the Federal Circuit held that a patentee may
sell an item and retain the right to enforce, through patent
infringement lawsuits, “clearly communicated, . . . lawful
restriction[s] as to post-sale use or resale.” 816 F.3d 721,
735 (2016). The exhaustion doctrine, the court reasoned,
derives from the prohibition on making, using, selling, or
importing items “without authority.” Id., at 734 (quoting
35 U.S. C. §271(a)). When you purchase an item you
presumptively also acquire the authority to use or resell
the item freely, but that is just a presumption; the same
authority does not run with the item when the seller
restricts post-sale use or resale. 816 F.3d, at 742. Be-
cause the parties agreed that Impression Products knew
about Lexmark’s restrictions and that those restrictions
did not violate any laws, the Federal Circuit concluded
that Lexmark’s sales had not exhausted all of its patent
rights, and that the company could sue for infringement
when Impression Products refurbished and resold Return
Program cartridges.
  As for the cartridges that Lexmark sold abroad, the
Federal Circuit once again looked to its precedent. In Jazz
Photo Corp. v. International Trade Commission, 264 F.3d
1094 (2001), the court had held that a patentee’s decision
to sell a product abroad did not terminate its ability to
bring an infringement suit against a buyer that “im-
port[ed] the article and [sold] . . . it in the United States.”
816 F.3d, at 726–727. That rule, the court concluded,
makes good sense: Exhaustion is justified when a patentee
receives “the reward available from [selling in] American
                 Cite as: 581 U. S. ____ (2017)           5

                     Opinion of the Court

markets,” which does not occur when the patentee sells
overseas, where the American patent offers no protection
and therefore cannot bolster the price of the patentee’s
goods. Id., at 760–761. As a result, Lexmark was free to
exercise its patent rights to sue Impression Products for
bringing the foreign-sold cartridges to market in the United
States.
  Judge Dyk, joined by Judge Hughes, dissented. In their
view, selling the Return Program cartridges in the United
States exhausted Lexmark’s patent rights in those items
because any “authorized sale of a patented article . . .
free[s] the article from any restrictions on use or sale
based on the patent laws.” Id., at 775–776. As for the
foreign cartridges, the dissenters would have held that a
sale abroad also results in exhaustion, unless the seller
“explicitly reserve[s] [its] United States patent rights” at
the time of sale. Id., at 774, 788. Because Lexmark failed
to make such an express reservation, its foreign sales
exhausted its patent rights.
  We granted certiorari to consider the Federal Circuit’s
decisions with respect to both domestic and international
exhaustion, 580 U. S. ___ (2016), and now reverse.
                              II

                              A

   First up are the Return Program cartridges that
Lexmark sold in the United States. We conclude that
Lexmark exhausted its patent rights in these cartridges
the moment it sold them. The single-use/no-resale re-
strictions in Lexmark’s contracts with customers may
have been clear and enforceable under contract law, but
they do not entitle Lexmark to retain patent rights in an
item that it has elected to sell.
   The Patent Act grants patentees the “right to exclude
others from making, using, offering for sale, or selling
[their] invention[s].” 35 U.S. C. §154(a). For over 160
6    IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                      Opinion of the Court

years, the doctrine of patent exhaustion has imposed a
limit on that right to exclude. See Bloomer v. McQuewan,
14 How. 539 (1853). The limit functions automatically:
When a patentee chooses to sell an item, that product “is
no longer within the limits of the monopoly” and instead
becomes the “private, individual property” of the purchaser,
with the rights and benefits that come along with owner-
ship. Id., at 549–550. A patentee is free to set the price
and negotiate contracts with purchasers, but may not, “by
virtue of his patent, control the use or disposition” of the
product after ownership passes to the purchaser. United
States v. Univis Lens Co., 316 U.S. 241, 250 (1942) (em-
phasis added). The sale “terminates all patent rights to
that item.” Quanta Computer, Inc. v. LG Electronics, Inc.,
553 U.S. 617, 625 (2008).
   This well-established exhaustion rule marks the point
where patent rights yield to the common law principle
against restraints on alienation. The Patent Act “pro-
mote[s] the progress of science and the useful arts by
granting to [inventors] a limited monopoly” that allows
them to “secure the financial rewards” for their inventions.
Univis, 316 U.S., at 250. But once a patentee sells an
item, it has “enjoyed all the rights secured” by that limited
monopoly. Keeler v. Standard Folding Bed Co., 157 U.S.
659, 661 (1895). Because “the purpose of the patent law is
fulfilled . . . when the patentee has received his reward for
the use of his invention,” that law furnishes “no basis for
restraining the use and enjoyment of the thing sold.”
Univis, 316 U.S., at 251.
   We have explained in the context of copyright law that
exhaustion has “an impeccable historic pedigree,” tracing
its lineage back to the “common law’s refusal to permit
restraints on the alienation of chattels.” Kirtsaeng v. John
Wiley & Sons, Inc., 568 U.S. 519, 538 (2013). As Lord
Coke put it in the 17th century, if an owner restricts the
resale or use of an item after selling it, that restriction “is
                  Cite as: 581 U. S. ____ (2017)            7

                      Opinion of the Court

voide, because . . . it is against Trade and Traffique, and
bargaining and contracting betweene man and man.” 1 E.
Coke, Institutes of the Laws of England §360, p. 223
(1628); see J. Gray, Restraints on the Alienation of Prop-
erty §27, p. 18 (2d ed. 1895) (“A condition or conditional
limitation on alienation attached to a transfer of the entire
interest in personalty is as void as if attached to a fee
simple in land”).
   This venerable principle is not, as the Federal Circuit
dismissively viewed it, merely “one common-law jurisdic-
tion’s general judicial policy at one time toward anti-
alienation restrictions.” 816 F.3d, at 750. Congress
enacted and has repeatedly revised the Patent Act against
the backdrop of the hostility toward restraints on aliena-
tion. That enmity is reflected in the exhaustion doctrine.
The patent laws do not include the right to “restrain[ ] . . .
further alienation” after an initial sale; such conditions
have been “hateful to the law from Lord Coke’s day to
ours” and are “obnoxious to the public interest.” Straus v.
Victor Talking Machine Co., 243 U.S. 490, 501 (1917).
“The inconvenience and annoyance to the public that an
opposite conclusion would occasion are too obvious to
require illustration.” Keeler, 157 U.S., at 667.
   But an illustration never hurts. Take a shop that re-
stores and sells used cars. The business works because
the shop can rest assured that, so long as those bringing in
the cars own them, the shop is free to repair and resell
those vehicles. That smooth flow of commerce would
sputter if companies that make the thousands of parts
that go into a vehicle could keep their patent rights after
the first sale. Those companies might, for instance, re-
strict resale rights and sue the shop owner for patent
infringement. And even if they refrained from imposing
such restrictions, the very threat of patent liability would
force the shop to invest in efforts to protect itself from
hidden lawsuits. Either way, extending the patent rights
8    IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                      Opinion of the Court

beyond the first sale would clog the channels of commerce,
with little benefit from the extra control that the patent-
ees retain. And advances in technology, along with in-
creasingly complex supply chains, magnify the problem.
See Brief for Costco Wholesale Corp. et al. as Amici Curiae
7–9; Brief for Intel Corp. et al. as Amici Curiae 17, n. 5 (“A
generic smartphone assembled from various high-tech
components could practice an estimated 250,000 patents”).
   This Court accordingly has long held that, even when a
patentee sells an item under an express restriction, the
patentee does not retain patent rights in that product. In
Boston Store of Chicago v. American Graphophone Co., for
example, a manufacturer sold graphophones—one of the
earliest devices for recording and reproducing sounds—to
retailers under contracts requiring those stores to resell at
a specific price. 246 U.S. 8, 17–18 (1918). When the
manufacturer brought a patent infringement suit against
a retailer who sold for less, we concluded that there was
“no room for controversy” about the result: By selling the
item, the manufacturer placed it “beyond the confines of
the patent law, [and] could not, by qualifying restrictions
as to use, keep [it] under the patent monopoly.” Id., at 20,
25.
   Two decades later, we confronted a similar arrangement
in United States v. Univis Lens Co. There, a company that
made eyeglass lenses authorized an agent to sell its prod-
ucts to wholesalers and retailers only if they promised to
market the lenses at fixed prices. The Government filed
an antitrust lawsuit, and the company defended its ar-
rangement on the ground that it was exercising authority
under the Patent Act. We held that the initial sales “re-
linquish[ed] . . . the patent monopoly with respect to the
article[s] sold,” so the “stipulation . . . fixing resale prices
derive[d] no support from the patent and must stand on
the same footing” as restrictions on unpatented goods. 316
U.S., at 249–251.
                  Cite as: 581 U. S. ____ (2017)            9

                      Opinion of the Court

   It is true that Boston Store and Univis involved resale
price restrictions that, at the time of those decisions,
violated the antitrust laws. But in both cases it was the
sale of the items, rather than the illegality of the re-
strictions, that prevented the patentees from enforcing
those resale price agreements through patent infringe-
ment suits. And if there were any lingering doubt that
patent exhaustion applies even when a sale is subject to
an express, otherwise lawful restriction, our recent deci-
sion in Quanta Computer, Inc. v. LG Electronics, Inc.
settled the matter. In that case, a technology company—
with authorization from the patentee—sold microproces-
sors under contracts requiring purchasers to use those
processors with other parts that the company manufac-
tured. One buyer disregarded the restriction, and the
patentee sued for infringement. Without so much as
mentioning the lawfulness of the contract, we held that
the patentee could not bring an infringement suit because
the “authorized sale . . . took its products outside the scope
of the patent monopoly.” 553 U.S., at 638.
   Turning to the case at hand, we conclude that this well-
settled line of precedent allows for only one answer:
Lexmark cannot bring a patent infringement suit against
Impression Products to enforce the single-use/no-resale
provision accompanying its Return Program cartridges.
Once sold, the Return Program cartridges passed outside
of the patent monopoly, and whatever rights Lexmark
retained are a matter of the contracts with its purchasers,
not the patent law.
                              B
   The Federal Circuit reached a different result largely
because it got off on the wrong foot. The “exhaustion
doctrine,” the court believed, “must be understood as an
interpretation of ” the infringement statute, which prohib-
its anyone from using or selling a patented article “with-
10   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                      Opinion of the Court

out authority” from the patentee. 816 F.3d, at 734 (quot-
ing 35 U.S. C. §271(a)). Exhaustion reflects a default rule
that a patentee’s decision to sell an item “presumptively
grant[s] ‘authority’ to the purchaser to use it and resell it.”
816 F.3d, at 742. But, the Federal Circuit explained, the
patentee does not have to hand over the full “bundle of
rights” every time. Id., at 741 (internal quotation marks
omitted). If the patentee expressly withholds a stick from
the bundle—perhaps by restricting the purchaser’s resale
rights—the buyer never acquires that withheld authority,
and the patentee may continue to enforce its right to
exclude that practice under the patent laws.
   The misstep in this logic is that the exhaustion doctrine
is not a presumption about the authority that comes along
with a sale; it is instead a limit on “the scope of the patent­
ee’s rights.” United States v. General Elec. Co., 272 U.S.
476, 489 (1926) (emphasis added). The right to use, sell,
or import an item exists independently of the Patent Act.
What a patent adds—and grants exclusively to the pat-
entee—is a limited right to prevent others from engaging in
those practices. See Crown Die & Tool Co. v. Nye Tool &
Machine Works, 261 U.S. 24, 35 (1923). Exhaustion
extinguishes that exclusionary power. See Bloomer, 14
How., at 549 (the purchaser “exercises no rights created by
the act of Congress, nor does he derive title to [the item]
by virtue of the . . . exclusive privilege granted to the
patentee”). As a result, the sale transfers the right to use,
sell, or import because those are the rights that come
along with ownership, and the buyer is free and clear of an
infringement lawsuit because there is no exclusionary
right left to enforce.
   The Federal Circuit also expressed concern that pre-
venting patentees from reserving patent rights when they
sell goods would create an artificial distinction between
such sales and sales by licensees. Patentees, the court
explained, often license others to make and sell their
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                     Opinion of the Court

products, and may place restrictions on those licenses. A
computer developer could, for instance, license a manufac-
turer to make its patented devices and sell them only for
non-commercial use by individuals. If a licensee breaches
the license by selling a computer for commercial use, the
patentee can sue the licensee for infringement. And, in
the Federal Circuit’s view, our decision in General Talking
Pictures Corp. v. Western Elec. Co., 304 U.S. 175, aff ’d on
reh’g, 305 U.S. 124 (1938), established that—when a
patentee grants a license “under clearly stated restrictions
on post-sale activities” of those who purchase products
from the licensee—the patentee can also sue for infringe-
ment those purchasers who knowingly violate the re-
strictions. 816 F.3d, at 743–744. If patentees can employ
licenses to impose post-sale restrictions on purchasers that
are enforceable through infringement suits, the court
concluded, it would make little sense to prevent patentees
from doing so when they sell directly to consumers.
   The Federal Circuit’s concern is misplaced. A patentee
can impose restrictions on licensees because a license does
not implicate the same concerns about restraints on alien-
ation as a sale. Patent exhaustion reflects the principle
that, when an item passes into commerce, it should not be
shaded by a legal cloud on title as it moves through the
marketplace. But a license is not about passing title to a
product, it is about changing the contours of the patentee’s
monopoly: The patentee agrees not to exclude a licensee
from making or selling the patented invention, expanding
the club of authorized producers and sellers. See General
Elec. Co., 272 U.S., at 489–490. Because the patentee is
exchanging rights, not goods, it is free to relinquish only a
portion of its bundle of patent protections.
   A patentee’s authority to limit licensees does not, as the
Federal Circuit thought, mean that patentees can use
licenses to impose post-sale restrictions on purchasers that
are enforceable through the patent laws. So long as a
12   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                       Opinion of the Court

licensee complies with the license when selling an item,
the patentee has, in effect, authorized the sale. That
licensee’s sale is treated, for purposes of patent exhaus-
tion, as if the patentee made the sale itself. The result:
The sale exhausts the patentee’s rights in that item. See
Hobbie v. Jennison, 149 U.S. 355, 362–363 (1893). A
license may require the licensee to impose a restriction on
purchasers, like the license limiting the computer manu-
facturer to selling for non-commercial use by individuals.
But if the licensee does so—by, perhaps, having each
customer sign a contract promising not to use the comput-
ers in business—the sale nonetheless exhausts all patent
rights in the item sold. See Motion Picture Patents Co. v.
Universal Film Mfg. Co., 243 U.S. 502, 506–507, 516
(1917). The purchasers might not comply with the re-
striction, but the only recourse for the licensee is through
contract law, just as if the patentee itself sold the item
with a restriction.
    General Talking Pictures involved a fundamentally
different situation: There, a licensee “knowingly ma[de]
. . . sales . . . outside the scope of its license.” 304 U.S., at
181–182 (emphasis added). We treated the sale “as if no
license whatsoever had been granted” by the patentee,
which meant that the patentee could sue both the licensee
and the purchaser—who knew about the breach—for
infringement. General Talking Pictures Corp. v. Western
Elec. Co., 305 U.S. 124, 127 (1938). This does not mean
that patentees can use licenses to impose post-sale re-
straints on purchasers. Quite the contrary: The licensee
infringed the patentee’s rights because it did not comply
with the terms of its license, and the patentee could bring
a patent suit against the purchaser only because the
purchaser participated in the licensee’s infringement.
General Talking Pictures, then, stands for the modest
principle that, if a patentee has not given authority for a
licensee to make a sale, that sale cannot exhaust the
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                      Opinion of the Court

patentee’s rights.
  In sum, patent exhaustion is uniform and automatic.
Once a patentee decides to sell—whether on its own or
through a licensee—that sale exhausts its patent rights,
regardless of any post-sale restrictions the patentee pur-
ports to impose, either directly or through a license.
                               III
   Our conclusion that Lexmark exhausted its patent
rights when it sold the domestic Return Program cartridges
goes only halfway to resolving this case. Lexmark also
sold toner cartridges abroad and sued Impression Prod-
ucts for patent infringement for “importing [Lexmark’s]
invention into the United States.” 35 U.S. C. §154(a).
Lexmark contends that it may sue for infringement with
respect to all of the imported cartridges—not just those in
the Return Program—because a foreign sale does not
trigger patent exhaustion unless the patentee “expressly
or implicitly transfer[s] or license[s]” its rights. Brief for
Respondent 36–37. The Federal Circuit agreed, but we do
not. An authorized sale outside the United States, just as
one within the United States, exhausts all rights under
the Patent Act.
   This question about international exhaustion of intellec-
tual property rights has also arisen in the context of copy-
right law. Under the “first sale doctrine,” which is codified
at 17 U.S. C. §109(a), when a copyright owner sells a
lawfully made copy of its work, it loses the power to re-
strict the purchaser’s freedom “to sell or otherwise dispose
of . . . that copy.” In Kirtsaeng v. John Wiley & Sons, Inc.,
we held that this “ ‘first sale’ [rule] applies to copies of a
copyrighted work lawfully made [and sold] abroad.” 568
U.S., at 525. We began with the text of §109(a), but it
was not decisive: The language neither “restrict[s] the
scope of [the] ‘first sale’ doctrine geographically,” nor
clearly embraces international exhaustion. Id., at 528–
14   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                     Opinion of the Court

533. What helped tip the scales for global exhaustion was
the fact that the first sale doctrine originated in “the
common law’s refusal to permit restraints on the aliena-
tion of chattels.” Id., at 538. That “common-law doctrine
makes no geographical distinctions.” Id., at 539. The lack
of any textual basis for distinguishing between domestic
and international sales meant that “a straightforward
application” of the first sale doctrine required the conclu-
sion that it applies overseas. Id., at 540 (internal quota-
tion marks omitted).
   Applying patent exhaustion to foreign sales is just as
straightforward. Patent exhaustion, too, has its roots in
the antipathy toward restraints on alienation, see supra,
at 6–8, and nothing in the text or history of the Patent Act
shows that Congress intended to confine that borderless
common law principle to domestic sales. In fact, Congress
has not altered patent exhaustion at all; it remains an
unwritten limit on the scope of the patentee’s monopoly.
See Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S.
104, 108 (1991) (“[W]here a common-law principle is well
established, . . . courts may take it as given that Congress
has legislated with an expectation that the principle will
apply except when a statutory purpose to the contrary is
evident” (internal quotation marks omitted)). And differ-
entiating the patent exhaustion and copyright first sale
doctrines would make little theoretical or practical sense:
The two share a “strong similarity . . . and identity of
purpose,” Bauer & Cie v. O’Donnell, 229 U.S. 1, 13 (1913),
and many everyday products—“automobiles, microwaves,
calculators, mobile phones, tablets, and personal comput-
ers”—are subject to both patent and copyright protections,
see Kirtsaeng, 568 U.S., at 545; Brief for Costco Wholesale
Corp. et al. as Amici Curiae 14–15. There is a “historic
kinship between patent law and copyright law,” Sony
Corp. of America v. Universal City Studios, Inc., 464 U.S.
417, 439 (1984), and the bond between the two leaves no
                 Cite as: 581 U. S. ____ (2017)          15

                     Opinion of the Court

room for a rift on the question of international exhaustion.
   Lexmark sees the matter differently. The Patent Act, it
points out, limits the patentee’s “right to exclude others”
from making, using, selling, or importing its products to
acts that occur in the United States. 35 U.S. C. §154(a).
A domestic sale, it argues, triggers exhaustion because the
sale compensates the patentee for “surrendering [those]
U. S. rights.” Brief for Respondent 38. A foreign sale is
different: The Patent Act does not give patentees exclu-
sionary powers abroad. Without those powers, a patentee
selling in a foreign market may not be able to sell its
product for the same price that it could in the United
States, and therefore is not sure to receive “the reward
guaranteed by U. S. patent law.” Id., at 39 (internal quo-
tation marks omitted).         Absent that reward, says
Lexmark, there should be no exhaustion. In short, there is
no patent exhaustion from sales abroad because there are
no patent rights abroad to exhaust.
   The territorial limit on patent rights is, however, no
basis for distinguishing copyright protections; those pro-
tections “do not have any extraterritorial operation” ei-
ther. 5 M. Nimmer & D. Nimmer, Copyright §17.02, p.
17–26 (2017). Nor does the territorial limit support the
premise of Lexmark’s argument. Exhaustion is a separate
limit on the patent grant, and does not depend on the
patentee receiving some undefined premium for selling the
right to access the American market. A purchaser buys an
item, not patent rights. And exhaustion is triggered by
the patentee’s decision to give that item up and receive
whatever fee it decides is appropriate “for the article and
the invention which it embodies.” Univis, 316 U.S., at
251. The patentee may not be able to command the same
amount for its products abroad as it does in the United
States. But the Patent Act does not guarantee a particu-
lar price, much less the price from selling to American
consumers. Instead, the right to exclude just ensures that
16   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                    Opinion of the Court

the patentee receives one reward—of whatever amount
the patentee deems to be “satisfactory compensation,”
Keeler, 157 U.S., at 661—for every item that passes out-
side the scope of the patent monopoly.
   This Court has addressed international patent exhaus-
tion in only one case, Boesch v. Gräff, decided over 125
years ago. All that case illustrates is that a sale abroad
does not exhaust a patentee’s rights when the patentee
had nothing to do with the transaction. Boesch—from the
days before the widespread adoption of electrical light-
ing—involved a retailer who purchased lamp burners from
a manufacturer in Germany, with plans to sell them in the
United States. The manufacturer had authority to make
the burners under German law, but there was a hitch:
Two individuals with no ties to the German manufacturer
held the American patent to that invention. These patent-
ees sued the retailer for infringement when the retailer
imported the lamp burners into the United States, and we
rejected the argument that the German manufacturer’s
sale had exhausted the American patentees’ rights. The
German manufacturer had no permission to sell in the
United States from the American patentees, and the
American patentees had not exhausted their patent rights
in the products because they had not sold them to anyone,
so “purchasers from [the German manufacturer] could not
be thereby authorized to sell the articles in the United
States.” 133 U.S. 697, 703 (1890).
   Our decision did not, as Lexmark contends, exempt all
foreign sales from patent exhaustion. See Brief for Re-
spondent 44–45. Rather, it reaffirmed the basic premise
that only the patentee can decide whether to make a sale
that exhausts its patent rights in an item. The American
patentees did not do so with respect to the German prod-
ucts, so the German sales did not exhaust their rights.
   Finally, the United States, as an amicus, advocates
what it views as a middle-ground position: that “a foreign
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                      Opinion of the Court

sale authorized by the U. S. patentee exhausts U. S. pat-
ent rights unless those rights are expressly reserved.”
Brief for United States 7–8. Its position is largely based
on policy rather than principle. The Government thinks
that an overseas “buyer’s legitimate expectation” is that a
“sale conveys all of the seller’s interest in the patented
article,” so the presumption should be that a foreign sale
triggers exhaustion. Id., at 32–33. But, at the same time,
“lower courts long ago coalesced around” the rule that “a
patentee’s express reservation of U. S. patent rights at the
time of a foreign sale will be given effect,” so that option
should remain open to the patentee. Id., at 22 (emphasis
deleted).
   The Government has little more than “long ago” on its
side. In the 1890s, two circuit courts—in cases involving
the same company—did hold that patentees may use
express restrictions to reserve their patent rights in con-
nection with foreign sales. See Dickerson v. Tinling, 84 F.
192, 194–195 (CA8 1897); Dickerson v. Matheson, 57 F.
524, 527 (CA2 1893). But no “coalesc[ing]” ever took place:
Over the following hundred-plus years, only a smattering
of lower court decisions mentioned this express-
reservation rule for foreign sales. See, e.g., Sanofi, S. A. v.
Med-Tech Veterinarian Prods., Inc., 565 F. Supp. 931, 938
(NJ 1983). And in 2001, the Federal Circuit adopted its
blanket rule that foreign sales do not trigger exhaustion,
even if the patentee fails to expressly reserve its rights.
Jazz Photo, 264 F.3d, at 1105. These sparse and incon-
sistent decisions provide no basis for any expectation, let
alone a settled one, that patentees can reserve patent
rights when they sell abroad.
   The theory behind the Government’s express-
reservation rule also wrongly focuses on the likely expec-
tations of the patentee and purchaser during a sale.
Exhaustion does not arise because of the parties’ expecta-
tions about how sales transfer patent rights. More is at
18   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                     Opinion of the Court

stake when it comes to patents than simply the dealings
between the parties, which can be addressed through
contract law. Instead, exhaustion occurs because, in a
sale, the patentee elects to give up title to an item in
exchange for payment. Allowing patent rights to stick
remora-like to that item as it flows through the market
would violate the principle against restraints on aliena-
tion. Exhaustion does not depend on whether the patentee
receives a premium for selling in the United States, or
the type of rights that buyers expect to receive. As a
result, restrictions and location are irrelevant; what mat-
ters is the patentee’s decision to make a sale.
                        *    *     *
  The judgment of the United States Court of Appeals for
the Federal Circuit is reversed, and the case is remanded
for further proceedings consistent with this opinion.

                                            It is so ordered.

  JUSTICE GORSUCH took no part in the consideration or
decision of this case.
                  Cite as: 581 U. S. ____ (2017)                 1

      GINSBURG, J., concurring
                      Opinion ofinGpart and,dissenting
                                   INSBURG  J.         in part

SUPREME COURT OF THE UNITED STATES
                           _________________

                           No. 15–1189
                           _________________

   IMPRESSION PRODUCTS, INC., PETITIONER v. 

        LEXMARK INTERNATIONAL, INC. 

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

           APPEALS FOR THE FEDERAL CIRCUIT

                          [May 30, 2017] 

  JUSTICE GINSBURG, concurring in part and dissenting in
part.
  I concur in the Court’s holding regarding domestic ex-
haustion—a patentee who sells a product with an express
restriction on reuse or resale may not enforce that re-
striction through an infringement lawsuit, because the
U. S. sale exhausts the U. S. patent rights in the product
sold. See ante, at 5–13. I dissent, however, from the
Court’s holding on international exhaustion. A foreign
sale, I would hold, does not exhaust a U. S. inventor’s
U. S. patent rights.
  Patent law is territorial. When an inventor receives a
U. S. patent, that patent provides no protection abroad.
See Deepsouth Packing Co. v. Laitram Corp., 406 U.S.
518, 531 (1972) (“Our patent system makes no claim to
extraterritorial effect.”). See also 35 U.S. C. §271(a)
(establishing liability for acts of patent infringement
“within the United States” and for “import[ation] into the
United States [of] any patented invention”). A U. S. pat-
entee must apply to each country in which she seeks the
exclusive right to sell her invention. Microsoft Corp. v.
AT&T Corp., 550 U.S. 437, 456 (2007) (“[F]oreign law
alone, not United States law, currently governs the manu-
facture and sale of components of patented inventions in
foreign countries.”). See also Convention at Brussels, An
2   IMPRESSION PRODUCTS, INC. v. LEXMARK INT’L, INC.

                    Opinion of GINSBURG, J.

Additional Act Modifying the Paris Convention for the
Protection of Industrial Property of Mar. 20, 1883, Dec. 14,
1900, Art. I, 32 Stat. 1940 (“Patents applied for in the
different contracting States . . . shall be independent of the
patents obtained for the same invention in the other
States.”). And patent laws vary by country; each country’s
laws “may embody different policy judgments about the
relative rights of inventors, competitors, and the public in
patented inventions.” Microsoft, 550 U.S., at 455 (inter-
nal quotation marks omitted).
   Because a sale abroad operates independently of the
U. S. patent system, it makes little sense to say that such
a sale exhausts an inventor’s U. S. patent rights. U. S.
patent protection accompanies none of a U. S. patentee’s
sales abroad—a competitor could sell the same patented
product abroad with no U. S.-patent-law consequence.
Accordingly, the foreign sale should not diminish the
protections of U. S. law in the United States.
   The majority disagrees, in part because this Court
decided, in Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S.
519, 525 (2013), that a foreign sale exhausts U. S. copy-
right protections. Copyright and patent exhaustion, the
majority states, “share a strong similarity.” Ante, at 14
(internal quotation marks omitted). I dissented from our
decision in Kirtsaeng and adhere to the view that a foreign
sale should not exhaust U. S. copyright protections. See
568 U.S., at 557.
   But even if I subscribed to Kirtsaeng’s reasoning with
respect to copyright, that decision should bear little weight
in the patent context. Although there may be a “historical
kinship” between patent law and copyright law, Sony
Corp. of America v. Universal City Studios, Inc., 464 U.S.
417, 439 (1984), the two “are not identical twins,” id, at
439, n. 19. The Patent Act contains no analogue to 17
U.S. C. §109(a), the Copyright Act first-sale provision
analyzed in Kirtsaeng. See ante, at 13–14. More im-
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                      Opinion of GINSBURG, J.

portantly, copyright protections, unlike patent protections,
are harmonized across countries. Under the Berne Con-
vention, which 174 countries have joined,* members
“agree to treat authors from other member countries as
well as they treat their own.” Golan v. Holder, 565 U.S.
302, 308 (2012) (citing Berne Convention for the Protec-
tion of Literary and Artistic Works, Sept. 9, 1886, as re-
vised at Stockholm on July 14, 1967, Arts. 1, 5(1), 828
U. N. T. S. 225, 231–233). The copyright protections one
receives abroad are thus likely to be similar to those re-
ceived at home, even if provided under each country’s
separate copyright regime.
   For these reasons, I would affirm the Federal Circuit’s
judgment with respect to foreign exhaustion.

——————
  * See WIPO-Administered Treaties: Contracting Parties: Berne
Convention, www.wipo.int/treaties/en/ShowResults.jsp?lang=en&treaty_
id=5 (as last visited May 25, 2017).