Navigating Patent 'Exhaustion' In Component Sales

Companies purchasing components that go into larger systems must carefully assess the scope of their rights, particularly when those components are protected by patents. A common but legally flawed assumption is that the lawful purchase of a component necessarily conveys full rights to use, resell or modify it. In practice, patent rights may survive beyond the sale unless they are deemed exhausted.

The patent exhaustion doctrine, also known as the first sale doctrine, provides that when a patented item is sold with the authorization of the patent holder, the patent holder's rights in that item are exhausted. As a result, the purchaser is free to use, resell or repair the item without further permission or risk of infringement.