Exhaustion refers to the doctrine that states once a product is sold by a patent owner, the patent owner can’t sue the purchaser for having an authorized copy of the patented product. The patent owner’s exclusive rights of the patented product have been exhausted once a sale has been made. Therefore, the purchaser can use the product and resell the product without restriction. An example of this would be someone purchasing a laptop from a brand like Apple. With the sale, Apple has lost exclusive rights to that laptop and the person can use the laptop, lend the laptop to another party, or sell it without risk of a lawsuit.
There are some exceptions to this rule, such as when a patent owner attaches certain conditions on the use of the patented product when it’s sold. The patent owner is then able to sue the purchaser for breach of contract.
This doctrine was reaffirmed in the case Quanta Computer, Inc. v. LG Electronics, Inc., with the Supreme Court also implying that a patent owner can explicitly exclude the purchaser’s right to sell the product to a customer who would alter their product.
[Last updated in August of 2021 by the Wex Definitions Team]