The Courts' Interpretations of Legitimate Business Purposes, with Applications to Lexmark, 16 J. Marshall Rev. Intell. Prop. L. 411 (2017)

Authors

W. Lesser

Abstract

Courts frequently must assess 'intent'. This article applies to the interpretation the intent of "legitimate business purposes" as a justification for restrictive use licensing agreements for patented products. Generally, the 'first sale' doctrine terminates the use rights of the patent holder. However, if the sale is conditioned on some use limitations and violators of those terms are liable for infringement. The courts, suggested in Mitchell v. Hawley (1872) and formalized in Mallinckrodt v. Medipart (1992), have allowed use restrictions based on license terms. Restrictions are disallowed under the affirmative defense of patent invalidity, such as from an antitrust violation. This article is concerned with use restrictions based on the claimed legitimate business purpose of Two particular cases are evaluated, the lease-only terms for rotary oil drills and single-use laser toner cartridges under the recent Lexmark cases. In both cases the leasebased restrictions on repair is justified as needed for protecting and/or enhancing the quality and reputation of the products, justifications accepted by the respective appeals courts. The evaluations presented here argue that, while the stated justifications are legitimate, there are less restrictive approaches to achieving those goals, and further that the courts by unquestionably accepting the It is further argued that the patents as licensed are invalid, and hence the terms unenforceable, as they violate antitrust law by using the licenses to extend illegally the scope of the patent rights. The statute is Section 5 of the Federal Trade Commission Act (1914), which allows more anticipatory latitude than the monopolization clause (Section II) of the Sherman Act (1890), the only applicable statute.

Recommended Citation

W. Lesser, The Courts' Interpretations of Legitimate Business Purposes, with Applications to Lexmark, 16 J. Marshall Rev. Intell. Prop. L. 411 (2017)