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IP Litigation

Lexmark Creates Problems for Licensors and Sellers of Patented Products

October 2, 2017

IP Litigation

Lexmark Creates Problems for Licensors and Sellers of Patented Products

October 2, 2017

Back to Fish's Litigation Blog

 

The most important patent-antitrust case in recent years is not an antitrust case but is the United States Supreme Court’s May 2017 decision in Impression Products Inc. v. Lexmark Int’l., Inc., 583 U.S. ___ (2017).  Impression Products held the first authorized sale exhausted the patent right, so that any restrictions on the buyer are contractual only.

This means that restrictions on further use or distribution are not justifiable as limitations on the rights transferred with the sale, but rather can only be justified as contract terms.  This decision clearly overruled Mallinckrodt v. Medipart, 976 F.2d 700, 701 (1992), and effectively gutted the most important Federal Circuit antitrust decision immunizing a patent owner from antitrust claims, In re Independent Service Organizations Antitrust Litigation (CSU et al. v. Xerox Corp.), 203 F.3d 1322 (Fed. Cir. 2000).

The net effect of Lexmark on patent antitrust law is that post-sale restrictions are now subject to attack as violation of antitrust and unfair competition laws, and not immunized from scrutiny under the rule that protects exercise of the patent grant.  Moreover, post-sale restrictions that violate Section 1 of the Sherman Act’s prohibition on contracts that are unreasonable restraints on trade, or that violate Section 2’s bar against anticompetitive acts that maintain or promote monopolies, are potentially patent misuse, rendering the patent unenforceable.  Patent owners that have put post-sale limitations on reuse, resale, resale pricing or distribution, should look at these contracts to evaluate whether they raise potential issues in light of Lexmark.


The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This post is for general information purposes only and is not intended to be and should not be taken as legal advice. No attorney-client relationship is formed.

Related Tags

Antitrust
Patents
SCOTUS

Blog Authors

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DJ Healey | Senior Principal

Danielle (DJ) Healey has been litigating complex cases in federal, state courts, and agencies, and handling licensing, antitrust, mediation and arbitration matters for over 34 years. She has focused on patent litigation and related antitrust and tort claims since 1994. ...

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