First Sale and a Patentee's Right to Prohibit Imports

Paul (another SIMS PhD) and I had been discussing the interaction between first sale and a patentee's right to prohibit importation of his previously-sold art. That is, if the patentee sells products that practice his patent to someone in a foreign country, can that patentee subsequently exclude importation of the same goods? (This is relevant to TRIPs' parallel importation provisions.)

Well, I did a little digging and it seems that this area of patent law is a little ambiguous at the moment... Read on for more.

Follow up:

Specifically see this snippet (below) from a document, "Legal and Policy Issues Concerning Parallel Trade (aka Re-Importation) Of Pharmaceutical Drugs in the United States", presented at this year's HHS Task Force on Drug Importation public meeting by James Love of the Consumer Project on Technology.

The gist is that US jurisprudence had recognized "international exhaustion" of patent rights before a recent case, Jazz v ITC (264 F.3d 1094 (Fed. Cir. 2001)):

2. International exhaustion of patent rights: The Jazz Camera case

To authorize parallel importation of medicines, legislation should make it clear that U.S. patent rights are exhausted by the first sale of the patented product by the patent owner, or by a party who is authorized to use the patent. Specifically, it needs to be clear that the United States has elected the rule of international exhaustion of patent rights.

Prior to Jazz Camera Photo v. International Trade Commission, 264 F.3d 1094 (Fed. Cir. 2001), and in some cases in other circuits following that decision, the general rule in the U.S. was perceived by many to be an international exhaustion rule. See Curtiss Aeroplane v. United Aircraft, 266 F. 71 (2d. Cir. 1920) (holding that U.S. patent holder, in consenting to the use of its patent for manufacture of airplanes in Canada, had exhausted its right to control the importation of the resulting aircraft into the United States). In Jazz Camera, the Federal Circuit held that the sale of products by a patent holder in another country did not exhaust U.S. patent rights, stating:

United States patent rights are not exhausted by products of foreign provenance. To invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent. See Boesch v. Graff, 133 U.S. 697, 701-703 (1890) (a lawful foreign purchase does not obviate the need for license from the United States patentee before importation into and sale in the United States).

The holding of the Federal Circuit has been questioned by legal experts. Nevertheless, it promotes legal uncertainty around parallel importation. If Jazz Camera is not clearly overturned by statute, a patent holder could claim that importation into the U.S. of a patented product first sold by the patent holder in another country is a violation of U.S. patent law.