Patent exhaustion is a doctrine that excuses infringement where the patent holder has either authorized the sale of a patented item or licensed its use or sale. Absent an effective contractual restriction, the patent holder's rights in the patented item are exhausted and the patent holder cannot sue for infringement based on further use or resale of the item. This Article explores the question of whether patent exhaustion adheres in the patented device or if it is a defensive doctrine that only adheres to the benefit of particular parties. Traditionally courts have articulated the doctrine as liberating the accused product from patent rights, allowing it to pass through the stream of commerce to subsequent users with all rights exhausted. With respect to actual holdings, however, the Federal Circuit recently concluded that exhaustion has only excused infringement in the case law where the claim of infringement was against an "authorized acquirer" of the device, or against a party accused of inducing or contributing to the infringement of such an authorized acquirer. Apparently a third party can be liable for infringement by unwittingly taking action that facilitates the end user's use of the device for its intended purpose, even if the device is licensed to perform that function.
This Article argues that the exhaustion doctrine should not be limited to shielding authorized acquirers of a patented device or any other particular classes of persons. The Supreme Court has never pronounced such a limitation on the doctrine. Rather, the Court has consistently characterized exhaustion as adhering in the patented device itself, allowing it to pass unimpeded through the stream of commerce to be used for its intended purpose.
93 Denv. L. Rev. 897 (2016)