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Exhaustion Doctrine

A Brief History of the Exhaustion Doctrine

A Brief History of the Exhaustion Doctrine

The so-called exhaustion doctrine pertains to the scope of intellectual property rights after the item in which they are embodied is sold. Intellectual property right-holders may attempt to place limitations in a product, such as pertains to its resale by the purchaser or its utilization for some unforeseen purpose. The term “exhaustion doctrine” is usually applied specifically to patent protection issues. It refers to the subject of “first sale,” which is also used in regard to copyright. 
The historic case of Bauer & Cie. v. O’Donnell had provided for the wider understanding of the first sale doctrine and limitation of patent protection rights , by a 1913 decision by the Supreme Court that the patent holder could not enforce requirements on the rates of sale for which a patented product was further and permissibly offered. In 2007, however, the Supreme Court found that the lowest allowable price for resale could be required by patent holders. This decision may have further impact on the application of the first sale doctrine.

What Implications Does the Exhaustion Doctrine Have?

What Implications Does the Exhaustion Doctrine Have?

Patent ownership in the United States is often defined in language which adopts a primarily negative sense of the rights given for the purposes of patent protection
 
In contrast to this argument, advocates for stronger patent protection have argued that the sale of copies or other specific examples of the patented product do not wholly hand over the rights, as are provided for in patent protection, in these products. Going by this understanding, exhaustion of the patent ownership does not take place in a commercial transaction. 
Instead, the patent holder offers the consumer the benefits that may be gained from the use of an individual product’s use while continuing to hold intellectual property rights in the product as a whole. By this argument, intellectual property rights trump the rights of physical ownership. This reasoning is used by patent holders to justify warnings on mechanical devices, for instance, against their modification.

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