By Richard Stobbe

“Patent exhaustion” is something we’ve reviewed before. To recycle an old line, the term “patent exhaustion” does not refer to the feeling you get when a patent agent talks for 3 hours about the process of a patentee traversing a rejection in reexamination proceedings.

Nope, this is the patent law concept that the first authorized, unrestricted sale of a patented item ends, or “exhausts,” the patent-holder’s right to ongoing control of that item, leaving the buyer free to use or resell the patented item without restriction. For example, if you buy a patented widget from the patent owner, you can resell that widget to your neighbour without fear of infringing the patent.

What if the widget is sold by the U.S. patent holder in Canada? Does this exhaust the patent rights in the U.S.?

The US Supreme Court has recently confirmed that when the holder of a U.S. patent sells an item in an unrestricted sale, the patent holder does not retain patent rights in that product, even where that sale takes place outside the US. Thus, an authorized sale of the patented article in Canada by the U.S. patent holder would trigger exhaustion of the U.S. patent rights. The U.S. Supreme Court has confirmed that “An authorized sale outside the United States, just as one within the United States, exhausts all rights under the [U.S.] Patent Act.”

See: IMPRESSION PRODUCTS, INC. v. LEXMARK INTERNATIONAL, INC. (Decided May 30, 2017)

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