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Abstract

The exclusive rights of a patent owner to exclude others from making, using, or selling patented inventions are limited by the doctrine of patent exhaustion. This doctrine, also known as the first sale doctrine, states that upon the first authorized sale of a patented article in the United States, the article is removed from the patent monopoly, thus losing its patent protection. As a result of this first sale, any subsequent use or sale of the patented article is not an infringement of its corresponding patent. The Federal Circuit further established the conditional sale doctrine in Mallinckrodt, Inc. v. Medipart, Inc., stating that patent owners could impose conditions in a patent license and enforce such provisions with patent infringement claims. The Supreme Court however, held in Quanta Computer, Inc. v. LG Elecs., Inc., that LG Electronics’ patent rights were exhausted due to an unconditional license. The Court’s opinion left the conditional sale doctrine unaddressed. In failing to mention the Mallinckrodt case in its Quanta opinion, the Supreme Court left the status of the conditional sale doctrine unclear. The most efficient legal framework for reconciling the Quanta ruling with the conditional sale doctrine, leaves the scope of the conditional sale doctrine intact and serves the core purposes of patent law, while helping to “promote the Progress of Science and the useful Arts.”

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