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Supreme Court Squeezes Patents: TC Heartland v. Kraft Foods & Impression Products v. Lexmark



In a pair of important decisions over the last week, the Supreme Court again changed the patent protection landscape (and again overruled the Federal Circuit). In TC Heartland LLC v. Kraft Foods Group Brands, LLC, the Supreme Court took on the issue of venue for patent infringement litigation. Under previous interpretations of the Patent Act’s venue provisions, defendants were often hailed into far-away jurisdictions that had little connection to them or the infringement. After last week’s decision, defendants can only be sued where (1) the defendant is incorporated or (2) where it committed acts of infringement and has a regular and established place of business. As a result, the district court judges in the Eastern District of Texas will find themselves with many fewer patent cases, and the judges in the District of Delaware will find themselves becoming more knowledgeable about patent law than the Federal Circuit itself.

In Impression Products, Inc. v. Lexmark International, Inc., the Supreme Court took on the issue of patent rights exhaustion. This litigation arises out of Lexmark’s continued battle to control use of its ink jet printer cartridges, which we’ve covered before. Lexmark sued Impression Products for patent infringement, claiming that Impression Products’ reselling of (re-filled) Lexmark printer cartridges constituted patent infringement. In today’s decision, the Court held that once a patent owner (or its authorized licensee) sells a product embodying the patented technology, all patent rights are immediately exhausted, and the patent owner can no longer sue for infringement. Moreover, that exhaustion applies to foreign sales as well, so an importer that imports products that were legitimately produced by the patent holder or its licensee cannot be sued for infringement. However, the Supreme Court decided only whether a patent infringement case could be brought; it did not say that no claim (such as breach of contract) remained, but only that after a first sale, no patent infringement claim could lie against subsequent purchasers.

Expect to see patent holders insist on even more imaginative licensing provisions going forward.

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