When Do Patent Rights Expire? Patent Rights and the First Sale Doctrine

It is established law that ordinarily a patent holder’s patent rights to a product end, or exhaust, upon sale of the patented product to another party. For example, if a patent holder holds a patent for a jewelry item, once the patent holder sells the product to a consumer, that consumer is free to re-sell the same jewelry item without any infringement by the consumer or the new purchaser. But what if (1) the first sale had conditions regarding resale on it or (2) the first sale happened outside the United States, where U.S. patent law may not apply? In a recent Supreme Court case, Impressions Products, Inc. v. Lexmark International, Inc., the Court held that patent rights fully exhaust in both cases.

In the first part of the case, Lexmark sold toner cartridges in the U.S., but required its buyers to return the product to Lexmark for refilling.  Even though third parties (like refilling shops) could physically re-fill, thereby possibly impacting Lexmark’s rights, Lexmark asserted its patent rights in stopping such action. For that set of circumstances, a unanimous Court held that, notwithstanding that there might be a valid contract between Lexmark and the purchaser, all, not some, of Lexmark’s patent rights exhaust at the time of the initial sale.

As for foreign sale, the Court also held that Lexmark’s authorized foreign sale exhausts all of its U.S. patent rights relative to the product. Lexmark had argued, at least in part, that the patent statute is territorial, however the Court importantly held that there is no territorial limitation to the patent statute. The lone dissenter in this portion of the case, Justice Ginsburg, pointed out that “a sale abroad operates independently of the U.S. patent system”, but her fellow Justices disagreed.

As a result, it appears that ANY authorized sale, in the U.S. or otherwise, ends the patent holder’s patent rights in the product. For example, if you have a patent for a jewelry item and you sell the jewelry item to a consumer, from a patent perspective, that consumer is free to modify or refurbish the jewelry.