For example, if the doctrine is based on an “affirmative policy” of federal patent law favoring “the free movement of all patented goods” (as some of Petitioner’s amici allege), then the doctrine should not only be mandatory but might also render post-sale restrictions on use and resale unenforceable more generally, not merely unenforceable through infringement actions. On the other hand, the opposite result—a merely optional or “presumptive” doctrine (escapable through clear contractual language)—could be supported if the Justices agree with some of Respondent’s amici that the exhaustion doctrine serves “multiple policy objectives” including the policy of permitting patentees to “craft customized usage terms for downstream partners in the commercialization process” and to enforce those terms through infringement actions. Or policy factors might point to the Solicitor General’s position, with a mandatory doctrine applied to U. sales but an optional or presumptive approach applied to foreign sales.
Modern scholarly discussions of the doctrine have tended to provide substantive policy reasons as the basis for the doctrine, with the assumption that federal judges can fabricate legal doctrine from substantive policies as a supplement to statutory law. As the Federal Circuit recognized, that assumption seems wrong because, once Congress has legislated in an area, the task of the federal courts is generally “to interpret and apply statutory law, not to create common law.” That general reluctance to fabricate judge-made common law in an area controlled by statute is based ultimately on separation-of-powers considerations. Such a fundamental jurisprudential commitment should not be cavalierly disregarded, and patent law—an area comprehensively controlled by an entire title of the U. Code (Title 35)—seems like an exceptionally poor place for federal courts to begin asserting a new-found power to supplement (or even supplant) federal statutory law with judge-made common law. Thus, in the highly important case of , the Court clearly identified the statutory basis for its decision by quoting, in the first sentence of the opinion, Revised Statutes § 4884—the predecessor statute of modern § 154. attached to it, or impressed upon it, by , the Court began its legal analysis by stating that the case: requires that we shall determine the meaning of Congress when in Rev. a grant to the patentee, his heirs or assigns, for the term of seventeen years, Court repeatedly referred to its task as identifying the proper “meaning” of the statute granting exclusive patent rights. Despite this criticism of the Federal Circuit’s opinion, we have to commend the court for attempting to ground the exhaustion doctrine in statutory law, for the court’s effort will hopefully spur the Supreme Court into clarifying the exact statutory basis of the doctrine.  Brief of Respondent at 14, Impression Prods., Inc.
That’s our compliment to the Federal Circuit—now some criticism. The Court’s holding was also directly based on the limited scope of the rights granted by § 4884, with the Court embracing the view that a patented product, once sold by the patentee, is “discharged of all the rights . Stats., § 4884, it provided that “Every patent shall contain . As demonstrated by the briefing in the case, there is currently massive uncertainty on this point. at 661 (emphasis added) (internal quotation marks omitted).
Part II addresses a response to our article written by Professors Katz, Perzanowski, and Rub (“the KPR essay”); Part III replies to a separate response by Professor Hovenkamp. I. 23, 2017) [hereinafter Law, Economics and Business Amici]. Prior scholarship, however, has set forth reasons why Qualcomm’s contracts may serve positive economic functions by controlling each step in the productive “value chain.” See Sean M.
highlights an astounding degree of uncertainty about the legal foundation for patent exhaustion, the specific legal issues and facts of the case are quite straightforward. O’Connor, IP Transactions as Facilitators of the Globalized Innovation Economy, Working Within the Boundaries of Intellectual Property: Innovation Policy for the Knowledge Society 203, 212–28 (Rochelle C. eds., 2010) (describing Qualcomm’s contracts as desirable “value chain licensing”).
As we stated in the introduction to our article, our thesis is that “[t]he legal doctrine in the area pursues not common law policies disfavoring encumbrances or restraints on alienation, but instead the more nuanced goal of limiting the scope or domain of IP statutes to avoid displacing the law in other fields, such as general contract, property, and antitrust law.” The exhaustion doctrine is not itself common law and does not itself pursue substantive common law policies.
But that does not mean that the common law played no role in the development of exhaustion. As we said, the “nuanced goal” of the exhaustion doctrine is to protect other areas of law, including “general contract, property, and antitrust law.” And surely, the general law of contracts and property encompasses a great deal of common law.
In other words, the exhaustion doctrine would be just a default rule meaning almost nothing if patentees want it so.
Alternatively, if the doctrine (in whole or in part) is based on inferred limits on the scope of patent rights granted under § 154(a)(1), then it would be quite easy to hold (as the Supreme Court did in ) that the enforcement of restrictions imposed during sales of patented goods is simply “outside” patent law.
The essay also replies to two prior responses to our original article and concludes with a modest hope for what we think is a first necessary step toward clarity in this area: we hope that the Supreme Court will identify the legal basis for the exhaustion doctrine. Yet despite the significance of those questions, the most noteworthy feature of the litigation is that the parties, the amici, the government, and even the judges of the court below cannot agree on the most fundamental question about the doctrine: where does patent exhaustion come from?
Introduction The pending Supreme Court case, (set for argument on March 21, 2017), poses two very important questions about the patent exhaustion doctrine: (1) whether the exhaustion doctrine is a mandatory restriction on patent rights that bars resort to infringement suits to enforce restrictions on use or resale imposed through a “conditional sale” of patented goods, and (2) whether foreign sales exhaust U. More specifically, is the doctrine a common law rule based on judicial assessments of good public policy, or is it based on an interpretation of a particular statute?