A blog about patent, copyright and trademark law in the U.S. District Court
for the Southern District of New York

Court Dismissed Patent and Trademark Infringement Claims on Exhaustion and First Sale Grounds

In an April 23, 2014 ruling, Judge Paul A. Engelmayer dismissed the plaintiff’s patent infringement claims on the grounds of exhaustion and dismissed the trademark infringement claims because the goods at issue were genuine even if they had been sold in unauthorized markets. With regard to patent exhaustion, there was no dispute that the patented goods had been purchased from the patent owner exhausting the patent protection, although the plaintiff contended that they had been sold in violation of contractual restrictions. Relying on the Supreme Court’s decision in Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008), Judge Engelmayer ruled that the patent protection was exhausted despite the contractual breach, writing that “Quanta precludes the argument that any failure by a party to abide by any contractual condition in an agreement involving a patented device will revive an otherwise exhausted patent so as to permit the patentholder to sue for infringement, as opposed to, e.g., breach of contract.”

The Court dismissed the plaintiff’s trademark-related claims on analogous grounds of the “first sale doctrine.” Judge Engelmayer wrote that there can be no trademark infringement if genuine goods are at issue even if those goods are sold in violation of contractual restrictions.

In a follow up May 7, 2014 ruling, Judge Engelmayer declined to exercise supplemental jurisdiction over the remaining state law claims, and dismissed the entire action.
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