“Supreme Court Limits Use of Patents to Enforce Post-Sale Restrictions”

May 30, 2017
Marshall Gerstein Alert

On May 30, 2017, the Supreme Court issued an almost unanimous decision in Impression Products v. Lexmark determining that a sale of product by a patent owner prevents the patent owner from using patent law to: enforce restrictions it placed on use of that product; and prevent import of that product into the US when the sale was made abroad.

Lexmark sells printer toner cartridges accompanied by an agreement that the purchaser will not reuse or resell them. Lexmark sued Impression Products for patent infringement because it purchased those cartridges, refilled and resold them. Lexmark also argued that its sales outside the US allowed it to sue for importation of the refilled cartridges even where it had no agreement with the purchaser. The Supreme Court disagreed, finding that while Lexmark may be able to enforce certain post-sale restrictions as a matter of contract law, it may not do so through a patent infringement lawsuit.

While businesses that have previously relied on post-sale or import restrictions will find that some techniques are no longer viable for this purpose, the Supreme Court appears to have left open the possibility of using complex structures, including licensing and even transferring patents to related parties, as a way to limit the effect of the decision. Case law in the coming years will have to sort out which strategies will actually have their desired effect. It is also important to note that Impression Products only limits the use of patent law, so many companies may consider reviewing their agreements with customers and distributors, particularly those outside the US, if they want to limit use or importation of their patented products.

For more information, please contact Robert Gerstein or another attorney at Marshall Gerstein. 

The information contained in this alert is for informational purposes only. Under applicable rules of professional conduct, this communication may constitute Attorney Advertising. © 2017 Marshall, Gerstein & Borun LLP. All rights reserved.

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