137 S. Ct. 1523 (2017)
Lexmark International, Inc. designs, manufactures, and sells toner cartridges for laser printers in the United States and abroad.1 It holds patents covering components of those cartridges and their manner of use.2 When cartridges run out of toner, they can be refilled and reused, creating a market for remanufacturers who acquire empty cartridges, refill them, and resell them at lower prices.3
Lexmark offers purchasers two options.4 One is to buy a cartridge at full price with no restrictions.5 The other is to buy through its Return Program at a roughly 20-percent discount.6 Customers who choose the Return Program sign a contract agreeing to use the cartridge only once and to return the empty cartridge only to Lexmark.7 Lexmark installs a microchip on Return Program cartridges that prevents reuse after the toner runs out.8
Impression Products, Inc. and other remanufacturers acquire empty Lexmark cartridges, including Return Program cartridges, from purchasers in the United States.9 They refill the cartridges with toner and resell them.10 They also acquire Lexmark cartridges from purchasers overseas and import those cartridges into the United States for resale.11 In 2010 Lexmark sued several remanufacturers, including Impression Products, for patent infringement.12 The suit concerned two groups of cartridges: Return Program cartridges that Lexmark sold within the United States and all toner cartridges that Lexmark sold abroad and that remanufacturers imported into the country. Lexmark alleged that the restrictions on Return Program cartridges and the lack of authority to import the foreign-sold cartridges supported its infringement claims.13
Impression Products moved to dismiss both sets of claims.14 The District Court granted the motion as to the domestic Return Program cartridges but denied it as to the cartridges sold abroad.15 Both parties appealed.16 The Federal Circuit heard the appeals en banc and ruled for Lexmark on both groups of cartridges.17 The Supreme Court granted certiorari.18
Whether a patentee that sells an item under an express restriction on the purchaser’s right to reuse or resell the product may enforce that restriction through an infringement lawsuit?19
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.20
No. The rule applies directly to the facts here because Lexmark sold the Return Program cartridges in the United States to customers who agreed to the single-use and no-resale restrictions in exchange for a discount.21 Impression Products acquired those cartridges from the purchasers, refilled them, and resold them.22 Because the sale by Lexmark exhausted its patent rights, the restrictions cannot be enforced through an infringement lawsuit against Impression Products.23
Lexmark exhausted its patent rights in the domestic Return Program cartridges upon sale, so it cannot sue Impression Products for patent infringement based on the contractual restrictions.24
Whether a patentee exhausts its patent rights by selling its product outside the United States?25
An authorized sale outside the United States, just as one within the United States, exhausts all rights under the Patent Act.26
Yes. Lexmark sold toner cartridges abroad to purchasers, and Impression Products acquired those cartridges from the overseas purchasers and imported them into the United States.27 The authorized foreign sale by Lexmark exhausted its patent rights in those cartridges, so Lexmark cannot sue Impression Products for infringement based on the importation.28
Lexmark exhausted its patent rights in the cartridges sold abroad, precluding an infringement claim against Impression Products for importing them.29
Related opinions on this issue
Justice Ginsburg concurred in the Court’s holding regarding domestic exhaustion but dissented from the holding on international exhaustion.30 She would hold that a foreign sale does not exhaust a U.S. inventor’s U.S. patent rights.31 Patent law is territorial, and a U.S. patent provides no protection abroad.32
A sale abroad operates independently of the U.S. patent system, so it should not diminish the protections of U.S. law in the United States.33 Although copyright and patent share a historical kinship, they are not identical twins, and the Patent Act contains no analogue to the copyright first-sale provision.34