Sale of a product exhausts patent rights

On 12 November 2020, the High Court of Australia handed down the much anticipated decision in the Calidad v Seiko dispute.

In a majority decision, the High Court has held that in Australia all rights of the patentee (use, sell, dispose of, repair etc) except the right to make the patented article are exhausted, in respect of the particular item sold and at the point of sale. This means a purchaser’s use of a product that embodies the invention, the subject of the patent, are not limited by the patentee’s monopoly. Importantly, similar to the position under the implied licence approach, only the patentee has the right to make the patented article.

This landmark decision overturns over 100 years of law and puts Australia in line with the US, where there is well established law on patent exhaustion.

We will provide you with a complete overview of the decision shortly, but there is no doubt that the decision will have huge impact on how patentees sell their products in Australia to maintain their rights, and the conduct of those wishing to use patented products.

Our comments on the Full Federal Court decision can be found here.

View our new article for a complete overview on this decision here.