Supreme Court Clarifies That Even Conditional or Foreign Sales Result in Patent Exhaustion
On May 30, 2017, in Impression Products, Inc. v. Lexmark International, Inc., No. 15-1189, the Supreme Court held that the initial authorized sale of a patented item exhausts all downstream rights, even if the sale is expressly conditional or takes place outside of the United States. In doing so, the Supreme Court overruled two longstanding Federal Circuit decisions that had reached a contrary result, Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (1992) (conditional domestic sales), and Jazz Photo Corp. v. International Trade Commission, 264 F.3d 1094 (2001) (extraterritorial sales). The key holdings in the Court’s opinion are summarized in this memorandum, followed by a more detailed discussion of the decision and its potentially far-reaching implications.