theresa stadheim-schwegman lundberg & woessner, pa sharon israel – mayer brown llp june 2015...
TRANSCRIPT
Theresa Stadheim-Schwegman Lundberg & Woessner, PA
Sharon Israel – Mayer Brown LLP
June 2015
Lexmark v. Impression Products -patent exhaustion issues
1© AIPLA 2015
Disclaimer: The purpose of this presentation is to
provide educational and informational content and is
not intended to provide legal services or advice. The
opinions, views and other statements expressed by
the presenters are solely those of the presenter and
do not necessarily represent those of AIPLA or of AIPPI-
US or of the presenters’ firms or their clients.
Lexmark v. Impression Products – Patent Exhaustion Issues
© AIPLA 20152
Patent exhaustion background Patent exhaustion restricts patent owners from
asserting patent rights against a patented article after the initial sale of the article by or on behalf of the patentee
U.S. common law doctrine
Lexmark v. Impression Products – Patent Exhaustion Issues
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Facts of caseU.S. District Court for the Southern District of Ohio.Lexmark manufactures printers and toner cartridges Lexmark sued Impression Products for patent infringement for acquiring, refilling, and selling used cartridges. Cartridges were sold outside the United States and were also sold under Lexmark’s “Return Program.”
Lexmark v. Impression Products – Patent Exhaustion Issues
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District court stipulated judgments•first judgment based on order denying a motion to dismiss Lexmark’s complaint for alleging patent infringement of products initially sold overseas•second judgment based on order granting a motion to dismiss Lexmark’s complaint for alleging infringement of certain products sold subject to a single-use contractual restriction. •On appeal to Federal Circuit
Lexmark v. Impression Products – Patent Exhaustion Issues
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First judgment (regarding extraterritorial sales)•District court cited 2001 Federal Circuit decision, Jazz Photo Corp. v. United States International Trade Commission.•In Jazz Photo Federal Circuit held that an authorized first sale must have occurred within the United States for exhaustion to apply.
Lexmark v. Impression Products – Patent Exhaustion Issues
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First judgment (cont’d)Impression argued that Jazz Photo was overruled by Kirtsaeng v. John Wiley & Sons, Inc., (Supreme Court, 2012) which determined that the Copyright Act’s parallel “first sale” doctrine did not have such a geographical limitation. *** note Kirtsaeng was copyright case
Lexmark v. Impression Products – Patent Exhaustion Issues
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Second judgment (contractual restriction)District court granted Impression’s motion to dismiss relating to the cartridges sold under the Return Program. Quanta Computer, Inc. v. LG Electronics, Inc., held that authorized sales of patented products can still exhaust patent rights, even if those sales are subject to restrictions.
Lexmark v. Impression Products – Patent Exhaustion Issues
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Second judgement (cont’d)Lexmark argued that Quanta Computer did not create a blanket rule against all post-sale restrictions Lexmark cited 1992 Federal Circuit decision, Mallinckrodt, Inc. v. Medipart, Inc.
A sale of medical equipment under a single-use restriction did not exhaust the seller’s patent rights in that product.
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Second judgement (cont’d) According to district court, Lexmark had not
established that the distributors of the Return Program cartridges were restricted or conditioned, and therefore the sale of the cartridges exhausted Lexmark’s patent rights.
Lexmark v. Impression Products – Patent Exhaustion Issues
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April 14, 2015 – Lexmark International v. Impression Products, Inc. - Federal Circuit ordered an en banc hearing on two issues
Lexmark v. Impression Products – Patent Exhaustion Issues
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Lexmark v. Impression Products – Patent Exhaustion Issues
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FIRST ISSUE
Does sale outside of U.S. give rise to patent exhaustion in U.S.?
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Lexmark v. Impression Products – Patent Exhaustion Issues
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SECOND ISSUE
Do sales of a patented article under a restrictive contract exhaust the patent owner’s
rights to control the sale and use of the patented article?
Thanks for your attention! Questions?Sharon Israel
Partner, Mayer Brown LLP700 Louisiana Street, Suite
3400, Houston, TX 77002-2730+1-713-238-2630
Theresa StadheimAttorney, Schwegman Lundberg & Woessner
121 South 8th Street, Minneapolis, MN 55402