The patent holder acquires a 20-year monopoly on the manufacture, use, sale and import of the covered product. But does patent law allow the patent holder to control use of the product even after selling it? It’s a surprisingly durable legal question. Patent holders never stop trying to extend their monopoly control past the first sale.
A century ago, the corporate predecessor to Columbia Records sold its patented, cylinder-spinning Graphophones to a dealer with the condition that the dealer would retail them at a fixed price. When the dealer offered the machines at a discount, the corporation sued. But it didn’t sue for the broken contract (which was then illegal under antitrust law). Rather, it claimed that its patent-protected monopoly on the sale of Graphophones allowed it to place conditions on their resale, too.
The retailer’s low price, the company complained, was a form of patent infringement. In 1918, a divided Supreme Court disagreed. It held that a patent provides an exclusive right to sell a product, but only once. As soon as the right to sell is exercised, it is “exhausted.”