Page:Impression Products, Inc. v. Lexmark Int’l, Inc. Decision.pdf/9

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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. Because 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 “import[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