A. Supreme Court Precedent

The doctrine of patent exhaustion provides that an authorized

sale of a patented article exhausts the patent monopoly as to that

article insofar as the article embodies the invention and thus precludes

any further royalty or restriction on the article.

[W]hen the patentee, or the person having his rights, sells a

machine or instrument whose sole value is in its use, he receivesthe consideration for its use and he parts with the right to restrict

that use. . . .That is to say, the patentee or his assignee having in

the act of sale received all the royalty or consideration which heclaims for the use of his invention

in that particular machine or

instrument, it is open to the use of the purchaser without further

restriction. . . .3

2. Id.

3. Adams v. Burke, 84 U.S. 453, 456 (1873) (emphasis added).

648 SANTA CLARA COMPUTER & HIGH TECH. L.J. [Vol. 20

In general, for the doctrine to apply, the authorized sale of the

article must be made in the United States.4

The Supreme Court firmly established the patent exhaustion

doctrine in its Univis Lens decision:

The declared purpose of the patent law is to promote the progress

of science and the useful arts by granting to the inventor a limited

monopoly, the exercise of which will enable him to secure the

financial rewards for his invention. Constitution of the United

States, Art. I, § 8, Cl. 8; 35 U.S.C.A. §§ 31, 40. The full extent of

the monopoly is the patentee’s “exclusive right to make, use, and

vend the invention or discovery.” The patentee may surrender his

monopoly in whole by the sale of his patent or in part by the saleof an article embodying the invention. His monopoly remains so

long as he retains the ownership of the patented article. But sale of

it exhausts the monopoly in that article and the patentee may not

thereafter, by virtue of his patent, control the use or disposition of

the article.