A patentee loses patent rights in a product when it sells the patented product, even if the sale contract restricts the buyer’s use or resale of the product; contract law, not patent law, provides the remedy for any breach of those restrictions.
Under the patent exhaustion doctrine, a patentee loses its patent rights in a product upon its first authorized sale of that product to a buyer. This is true even if the sale is made under a contract that restricts the buyer’s use or reuse of the product. While the patentee may retain contract rights against the buyer if the buyer violates the agreed restrictions, the patentee loses its patent rights in the product upon the first sale despite those contractual restrictions. The same rule applies to the patentee’s sales of its products outside the United States. The buyer can send the sold product back into the United States for reuse, and the patentee again lacks any patent rights in the product, though it may have contract rights against the foreign buyer. Thus, Lexmark, as patentee, could not sue Impression for patent infringement for its refilling and reselling Lexmark toner cartridges that Impression bought from users who bought the cartridges new from Lexmark either in the United States or abroad. Some of the users who sold to Impression had received the cartridges at a reduced price from Lexmark in exchange for a promise to use the cartridge only once and then return it to Lexmark. Lexmark could sue those users for breaching their agreement, but could not sue Impression for patent infringement.
United States Supreme Court (Roberts, C.J.; Ginsburg, J., concurring in part & dissenting in part); May 30, 2017; 2017 WL 2322830