CAFC Takes Up International Exhaustion En Banc in Light of Ruling in Kirtsaeng

Bloomberg BNA’s Patent Trademark & Copyright Law Daily™is the IP industry’s premier news service, offering objective, timely,and reliable daily news coverage and commentary from leading IP law...

By Tamlin Bason

April 15 — The U.S. Court of Appeals for the Federal Circuit on April 14 sua sponte ordered an en banc hearing on whether the Supreme Court's 2012 Kirtsaeng ruling should cause the appeals court to revisit its own precedent “that a sale of a patented item outside the United States never gives rise to United States patent exhaustion”.

In Kirtsaeng, a 6-3 majority held that the Copyright Act's first sale doctrine, as codified at 17 U.S.C. § 109(a), applies to copies of works legally made overseas and imported into the United States without the permission of the copyright holder.

Thus the importer—a college student in that case—could not be liable for copyright infringement for reselling in the United States textbooks that he had purchased, at reduced prices, in Asia, the court held.

On March 6, a Federal Circuit panel heard arguments in a suit where Lexmark has alleged that Impression has resold remanufactured patented toner cartridges in the United States that were first sold outside of the country.

Following the argument, a poll was taken and a majority of judges in active service voted for sua sponte en banc consideration.

In addition to assessing Kirtsaeng's impact on the international exhaustion doctrine, the appeals court will also consider whether it should overrule its “conditional” sales precedent in light of the Supreme Court's 2008 ruling in Quanta.

Two Issues to be Briefed

The parties were asked to file new briefs to address:

(a) The case involves certain sales, made abroad, of articles patented in the United States. In light of Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2012), should this court overrule Jazz Photo Corp. v. International Trade Commission, 264 F.3d 1094 (Fed. Cir. 2001), to the extent it ruled that a sale of a patented item outside the United States never gives rise to United States patent exhaustion.

(b) The case involves (i) sales of patented articles to end users under a restriction that they use the articles once and then return them and (ii) sales of the same patented articles to resellers under a restriction that resales take place under the single-use-and-return restriction. Do any of those sales give rise to patent exhaustion? In light of Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), should this court overrule Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992), to the extent it ruled that a sale of a patented article, when the sale is made under a restriction that is otherwise lawful and within the scope of the patent grant, does not give rise to patent exhaustion?

 

Impression's brief is due within 45 days of the Federal Circuit's order. Lexmark's brief is due 30 days after that. The Federal Circuit specifically invited the Department of Justice to brief the issues, and said other interested parties could filed amici curiae briefs without consent of the court.

Lexmark is represented by Timothy Colin Meece of Banner & Witcoff, Ltd., Chicago. Impression is represented by Edward F. O'Connor I of Avyno Law P.C., Encino, Calif.

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Anandashankar Mazumdar at amazumdar@bna.com

Full text at http://www.bloomberglaw.com/public/document/Lexmark_International_Inc_v_Impression_Products_Inc_Docket_No_140.