(Cross-posted on PatentlyO.)
On May 30, the Supreme Court surprised many of us by ruling that exhaustion of U.S. patent rights occurs even when sale of the item takes place in a foreign country. There is a great deal more to the ruling, and there are now very interesting questions about the characterization of transactions as something other than “sales” and about the use of contractual provisions to prevent resale into the United States following first sale of patented products elsewhere. But for now, let’s stop with the bare bones description: U.S. patent rights are exhausted when an item is sold overseas. This means that shipping an already-sold product into the United States for subsequent-sale to a U.S. consumer will not infringe the patents in question. Depending on how patent owners structure their transactions overseas going forward, this ruling could give U.S. consumers access to products that are intended for foreign markets and that are priced for those markets — lower, for instance.
One of the many topics circulating now: what are the implications for pharmaceutical companies and for U.S. consumers of pharmaceuticals?