Companies have historically used their patent rights to restrict the unauthorized resale of products in secondary markets. Manufacturers and distributors were able to control downstream sales of their products to third parties by enforcement of their patent rights. The patent rights were particularly useful in restricting unauthorized U.S. resale of products that were originally sold overseas at reduced prices. However, a recent decision by the U.S. Supreme Court found that the sale of a patented product in the United States or abroad exhausted all patent rights in the product and thus, eliminated patent rights as a tool to control downstream resale of the product.

Background

In Impression Products v. Lexmark Int'l, 137 S. Ct. 1523 (2017), the U.S. Supreme Court considered whether Lexmark's sale, both in the United States and abroad, of printer cartridges exhausted its patents rights in the cartridges such that Impression Products could freely refurbish, resell and/or import the Lexmark cartridges.

Lexmark designs, manufactures and sells toner cartridges to consumers in the United States and around the world. Lexmark owns several patents that cover both the toner cartridges and methods of using the toner cartridges. The toner cartridges can be refilled and reused after the toner runs out. Other companies can also procure empty Lexmark cartridges from purchasers in the United States and abroad, refill them with the toner, and then resell them at a lower price than the Lexmark sale price.