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Federal Circuit adheres to Mallinckrodt and Jazz Photo holding, in favor of Lexmark

Posted Date 02/16/16
A breaking news from Actionable Intelligence alerted me this morning regarding the Federal Circuit ruling on its adhere to both Mallinckrodt and Jazz Photo's holding, and this ruling is in favor of Lexmark. 
 
Below are excerpts from the court ruling: 
 
"First, we adhere to the holding of Mallinckrodt, Inc. v.  Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992), that a patentee, when selling a patented article subject to a single-use/no-resale restriction that is lawful and clearly communicated to the purchaser, does not by that sale give the buyer, or downstream buyers, the resale/reuse authority that has been expressly denied." 
 
"Second, we adhere to the holding of Jazz Photo Corp.v. International Trade Comm’n, 264 F.3d 1094 (Fed. Cir.2001), that a U.S. patentee, merely by selling or authorizing the sale of a U.S.-patented article abroad, does not authorize the buyer to import the article and sell and use it in the United States, which are infringing acts in the absence of patentee-conferred authority. .
 
"More specifically, the infringement allegations are limited to two groups of cartridges. One group consists of Return Program cartridges that Lexmark sold in the United States under the restriction denying authority for resale and reuse. As it later made clear, Lexmark did not allege infringement by Impression’s actions involving Regular cartridges Lexmark had first sold domestically. J.A. 1895–97, 2557. The second group consists of all cartridges that Lexmark sold abroad, including Return Program and Regular cartridges. It is undisputed that Lexmark never granted anyone permission to import." 
 
We hold that, when a patentee sells a patented article under otherwise-proper restrictions on resale and reuse communicated to the buyer at the time of sale, the patentee does not confer authority on the buyer to engage in the prohibited resale or reuse. The patentee does not exhaust its § 271 rights to charge the buyer who engages in those acts—or downstream buyers having knowledge of the restrictions—with infringement. 
 
We also hold that a foreign sale of a U.S.-patented article, when made by or with the approval of the U.S. patentee, does not exhaust the patentee’s U.S. patent rights in the article sold, even when no reservation of rights accompanies the sale. Loss of U.S. patent rights based on a foreign sale remains a matter of express or implied license. 
 
Under our first holding, we reverse the district court’s judgment of non-infringement as to the Return Cartridges first sold in the United States. 
 
Under our second holding,we affirm the district court’s judgment of infringement as Case: 14-1617 Document: 338-2 Page: 98 Filed: 02/12/2016 (101 of 134) LEXMARK INT’L, INC. v. IMPRESSION PRODS., INC. 99 to the cartridges first sold abroad. The case is remanded for entry of a judgment of infringement for Lexmark and for any further proceedings necessary upon entry of such judgment.
 
Charles Brewer from the Actionable Intelligence states "The Federal Circuit’s decision in Mallinckrodt will in fact change how remanufacturers do business in the United States, at least when remanufacturing Lexmark’s cartridges. Two lower courts have found that Lexmark exhausted its rights in Prebate/Return Program cartridges, but in patent law cases the Federal Circuit sets binding precedent for the entire United States. Now, the Federal Circuit has indicated that firms that remanufacture Return Program cartridges do indeed infringe."
 

 

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