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les Nouvelles - September 2008


The U.S. Supreme Court Clarifies Patent Exhaustion

John C. Paul

Partner, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, D.C., USA

Kia L. Freeman

Attorney, Henderson, Farabow, Garrett & Dunner, LLP, Washington, D.C., USA

Bart A. Gerstenblish

Attorney, Henderson, Farabow, Garrett & Dunner, LLP, Washington, D.C., USA

Jessica R. Underwood

Attorney, Henderson, Farabow, Garrett & Dunner, LLP, Washington, D.C., USA

In the United States, the doctrine of patent exhaustion cuts off a patent owner’s rights to enjoin, control or extract royalties from a patented product after an initial authorized sale of that product in the U.S. While the basic policy of preventing a patent owner from repeatedly extracting compensation for the same product seems straightforward, the law developed by the courts over the past two centuries in response to efforts by patent owners to preserve and control their rights is more complex. For example, patent owners have tried to avoid exhausting their rights in a patented product by characterizing their disposition of the patented product as a license rather than a sale, only to see that courts have uniformly concluded that patent rights are exhausted in such instances. Patent owners have also sold or licensed patented products with various restrictions on their subsequent use by companies at various levels in the supply chain. It is in those situations where the courts have most frequently discussed the exhaustion doctrine.

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