On February 12, 2016, in Lexmark International, Inc. v. Impression Products, Inc., the US Court of Appeals for the Federal Circuit ruled in an en banc decision that a patentee's sale of a patented article subject to a lawful and clearly communicated restriction on the article's resale does not give the article's buyer or downstream buyers with knowledge of the restriction authority to resell the article. The court also ruled that a patentee that sells or authorizes the sale of a patented article abroad does not implicitly authorize the article's buyer to import the article for sale and use in the US ( (Fed. Cir. Feb. 12, 2016)).

Lexmark International, Inc. owns patents related to printer toner cartridges, and manufactures and sells such cartridges in the US and abroad. All of the relevant domestic sales, and some of the foreign sales, involved single-use cartridges that were subject to an express no-resale restriction. Impression Products, Inc. acquired the cartridges from a third party and then refilled and modified them for US resale. Lexmark sued for patent infringement. In response, Impression argued that it did not infringe under the doctrine of patent exhaustion because Lexmark's US and foreign sales implicitly granted resale authority regardless of any no-resale restrictions. The parties did not dispute the determinative facts. The district court:

On appeal, the Federal Circuit ruled that:

The Mallinckrodt court held that a patentee's sale of its own patented article, subject to a clearly communicated restriction, does not:

In Quanta, the Supreme Court held that a patentee's rights are exhausted when an authorized licensee manufactures and sells the patented product. The district court ruled for Impression as to Lexmark's US single-use cartridge sales because it found that Quanta overruled Mallinckrodt. However, the Federal Circuit held that Quanta is distinguishable from Mallinckrodt because:

Therefore, based on its conclusion that Mallinckrodt remains good law, the Federal Circuit ruled that Lexmark's right to sue Impression for patent infringement was not exhausted by Lexmark's US sales of single-use cartridges.

The Federal Circuit also held, based on Jazz Photo Corp. v. Int'l Trade Commission, that a patentee's rights are not exhausted by its foreign sales of patented articles, regardless of whether the articles were subject to a resale restriction (264 F.3d 1094 (Fed. Cir. 2001)). The Federal Circuit found that Jazz Photo was still sound following the Supreme Court's decision in Kirtsaeng v. John Wiley & Sons, Inc. (133 S. Ct. 1351 (2013)).

In Jazz Photo, the Federal Circuit held that the foreign sale of an US-patented article by the patentee or an authorized party does not, by itself, allow the article's buyer to import, sell, or use the item in the US. In Kirtsaeng, the Supreme Court ruled that the owner of a copy of a copyrighted work can sell that copy without the copyright owner's consent. Impression argued that Kirtsaeng overruled Jazz Photo.

Affirming the district court's decision, the Federal Circuit ruled that Kirtsaeng is inapplicable because it:

Therefore, based on Jazz Photo, the Federal Circuit ruled that a sale in a foreign market alone does not exhaust the patentee's rights against a party that imports the patented articles back into the US.

In a dissenting opinion, Judge Dyk argued that:

The Lexmark decision indicates that a patent owner and manufacturer can restrict resales and uses of its patented products. For more information on such restrictions, see Practice Note: Patent License Agreements.