E-mail Newsletter

  • Enter your e-mail address below to receive the "Patent Docs" e-mail newsletter.

Enter your email address:

Delivered by FeedBurner

Contact the Docs

Docs on Twitter


About the Authors

  • The Authors and Contributors of "Patent Docs" are patent attorneys and agents, many of whom hold doctorates in a diverse array of disciplines.

Disclaimer

  • "Patent Docs" does not contain any legal advice whatsoever. This weblog is for informational purposes only, and its publication does not create an attorney-client relationship. In addition, nothing on "Patent Docs" constitutes a solicitation for business. This weblog is intended primarily for other attorneys. Moreover, "Patent Docs" is the personal weblog of the Authors; it is not edited by the Authors' employers or clients and, as such, no part of this weblog may be so attributed. All posts on "Patent Docs" should be double-checked for their accuracy and current applicability.

Pharma-50-transparent_216px_red

Become a Fan

« Alternative Facts on Patent-Eligibility from the Electronic Frontier Foundation | Main | First Quarter Venture Funding Bounces Back from Fourth Quarter Low »

May 30, 2017

Comments

Hey Kevin,

I felt the domestic sale restriction portion of this case didn’t stand a chance in view of prior SCOTUS precedent but I was hopeful that SCOTUS might listen to the DOJ’s view that international sales were a very different matter in terms of exhaustion of U.S. patent right. But as you see, only one Justice (Ginsburg) saw the distinction. Also, how SCOTUS can make this ruling consistent with the earlier one in Monsanto is about on par with Breyer in Mayo and Thomas in Alice trying to reconcile those two decisions with Diehr.

This is now the second time that SCOTUS has ignored DOJ’s recommendation in a patent case, the other being Mayo, an abysmal ruling that flouts the express language in the statute (35 USC 101). It simply reflects, again, the anti-patent bias of SCOTUS generally, and Breyer in particular. May be it might get Congress’ attention about how out step SCOTUS is on the express patent law, especially in the international trade context, if one of the USTR 301 List countries filed a complaint in the International Court in the Hague that the Mayo/Alice framework puts the U.S. in violation of one of its international treaty obligations (TRIPS)-one can only hope! If something doesn’t happen soon to reverse what is now a decade long trend of generally patent owner adverse decisions by SCOTUS, innovation by the Davids is going to completely crater in America.

As to the first question, the panel decision in Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992) was never trustworthy law to begin with. It was widely criticized at the time for inconsistency with prior Sup. Ct. decisions. Also being a unique fact situation of enforcing single use of a medical device for health reasons.
Conservatives should note which justice was the only pro-patent-owner supporter on the second question.

One additional consequence for the U.S. pharmaceutical industry has been discussed here before:

http://www.patentdocs.org/2014/11/how-the-kirtsaeng-decision-could-ruin-the-us-branded-drug-industry.html

The Lexmark decision only exacerbates the possibility for mischief in this regard.

SCOTUS fumbles on international exhaustion. What a surprise.

Mr. Morgan,

The thought that Ginsburg was the lone voice against international exhaustion is "pro-patent-owner" is indeed amusing.

Of course, one simply can realize that her choice was far less "pro-patent-owner" and far more "let the US people subsidize the lower costs of good in 'poor' countries," and thus the "magnanimous nature" loses a bit of its shine.

Hey Kevin,

Another possibility for "mischief" caused by this decision in terms of drug innovation is it may move off-shore, where drug development is (or is perceived to be) less expensive, regulatory or otherwise. In other words, R&D jobs in America in the drug arena could likewise head off-shore-that may be happening anyway, but this decision could accelerate that process.

Dear Atari: they had little choice, in view of Kirtsaeng.

Kevin, I disagree. Copyright and patent, while sharing some similarities, are different. Patents remain territorial, but copyright protection is essentially international (due to treaties governing copyright). If they can find differences between the early computer patent cases and Alice in support of the latter decision, they could surely have found sufficient differences here to distinguish over Kirstsaeng.

Hey Kevin,

I agree with Atari Man-SCOTUS did have a choice (as reflected by Ginsburg's dissenting opinion) to distinguish Kirtsaeng, but chose not to do so. In Kirtsaeng, the first sale doctrine is expressly written into the copyright law-but there is no corresponding first sale expressly written into the patent law. Once again, SCOTUS is legislating from the bench, and is once again putting the US at serious risk of being held in violation of TRIPS-how do you think a company outside the U.S. is going react when it's told its U.S. patent rights are exhausted by sales it makes outside the U.S.?

Atari Man,

You may disagree, but there exists no "One World Order" sense of law and even for treaties, law - even copyright law - remains a sovereign-centric item.

You also seem to think (without providing a basis for such) that distinguishing over Kirstsaeng is something that SHOULD have been done.

I don't see why (other than a particularly desired End - I see that).

"R&D jobs in America in the drug arena could likewise head off-shore-that may be happening anyway, but this decision could accelerate that process."

Do you care to expand on this point, because I am not following the argument here. If, as you say, R&D is less expensive in some other place than the U.S., I can understand why a rational and self-interested company might move the R&D to that other jurisdiction. I cannot understand, however, why exhaustion law would play any part of that decision. Exhaustion attaches when the product is *sold*, not when the R&D is done.

"If they can find differences between the early computer patent cases and Alice in support of the latter decision, they could surely have found sufficient differences here to distinguish over Kirstsaeng."

Like EG, I have to agree with Atari Man here and disagree with our distinguished host. The SCotUS was not *compelled* to reach this result by their Kirtsaeng decision. They could easily have said that Kirtsaeng was a statutory interpretation case, and that there is no statutory language here to compel the same outcome.

They chose to make a mistake in Kirtsaeng, and then they chose to make a second mistake in Lexmark. Do not let them off the hook easy by saying it was all just one mistake. They deserve double opprobrium for a twice-made error.

GrzezDel,

Unless of course, one does not think that EITHER were mistakes...

Maybe the opprobrium should be directed elsewhere...

This decision bothers me in many ways, not the least of which is that it strikes me as inconsistent with SCOTUS' general trend over the last several years to limit the extent to which US patent law applies beyond US borders. If your US patent isn't enforceable in the US against acts done outside the US, why should acts done outside the US exhaust a patentee's rights in the US?

But I have a different question. If a foreign *sale* exhausts a US patentee's rights, what would be the effects of a foreign *gift*? I suppose that per the CAFC's Lifescan v Shasta decision, the answer to that would be "yes", but perhaps I've overlooked something.

Hey GrzeszDeL,

Point well-taken, let me try a different aspect where "mischief" will likely occur: drug sales/distribution in "poorer" regions, e.g., Africa. If sales/distribution in such regions could cause exhaustion of U.S. patent rights, why would anyone want to do drug sales/distribution in those regions where prices would need to be even lower than in those regions (e.g., Canada, Europe, etc.) where drug price controls already lower drug pricing?

"If sales/distribution in such regions could cause exhaustion of U.S. patent rights, why would anyone want to do drug sales/distribution in those regions where prices would need to be even lower than in those regions (e.g., Canada, Europe, etc.) where drug price controls already lower drug pricing?"

Definitely. This is one of the problems of an international exhaustion regime. It was bad enough with copyright, but the effect of curtailing book sales, or DVD sales in poor nations is limited. Now that the rot has spread to patents, it will affect drug sales and heavy equipment sales, and this will have much more of a deleterious effect on the world's poorest.

"If a foreign *sale* exhausts a US patentee's rights, what would be the effects of a foreign *gift*?"

As you say, I think we have to expect that *any* release of a patented article into the stream of commerce, anywhere in the world will exhaust the patent rights. We talk casually of "first sale," but the CAFC confirmed in Lifescan that a sale is not actually necessary.

Truth be told, I find this aspect the least worrisome part of the business. It really is unreasonable to expect downstream buyers to know whether they are purchasing an item that was sold to their seller or gifted to their seller.

Where is this "poor nations deserve that which they cannot afford" mindset coming from?

Sorry if this is callous, actually, not sorry at all, but the scheme in place that creates an artificial arbitrage and prevents the natural emergence of secondary markets comes at a FORCED price to those of us in the US.

Such forced "altruism" in the (thin) hopes that some of the effects of Big Corp playing this game may result in the poor countries obtaining things that they otherwise would not is a form of world socialism at its worst - an Ends (even as noble as "helping the poor") that comes at the illicit Means that serve the benefits of the Big Corp, at the expense of the US Citizen, is something that is simply wrong.


Let me repeat this:
Maybe the opprobrium should be directed elsewhere...

The comments to this entry are closed.

October 2017

Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31