Can state law contracts limit the right to repair even when patent protection has expired?
“The right to repair is not a statutorily granted right, and thus, the question remains as to whether contracts altering the right to repair are preempted by the patent exhaustion doctrine, which is judicially created.”
U.S. The U.S. courts have long held that the owner of an item protected by a U.S. Patent has the right to repair it under the patent exhaustion theory (also known as the first-sale doctrine). The first-sale principle, which is a broad interpretation of the right to repair under U.S. law, allows for a wide range of repairs. The purchaser of a patented product might face some restrictions, such as preventing reconstructions of the item that go beyond simple wear and tear repairs. However, courts have determined that most modifications fall into the category of repair. This right to repair also includes the right to choose who repairs the product. But what happens when the product is purchased under a contract that includes a limitation on the right to repair, such as requiring the purchaser to use only the patent owner for repairs or prohibiting repair altogether?
Case Law, State Law, Preemption
In 2017, the Supreme Court ruled in Impression Prods., Inc. v. Lexmark Int’l, Inc., 581 U.S. 360, 137 S. Ct. 1523, 198 L. Ed. 2d 1 (2017), contracts that restrict the right to repair cannot be enforced based on a theory based on patent infringement. Since then, courts have continued to confirm that repair rights are extensive. For instance, in Karl Storz Endoscopy-Am., Inc. v. STERIS Instrument Mgmt. Servs., Inc., 603 F. Supp. A district court ruled in 3d 1111, (N.D. Ala. 2022) that the right to repairs was protected from companies who replaced the glass lenses on patented surgical endoscopes. Over the last three-year period, several states have passed laws protecting the right of repair. This shift may have been beneficial for purchasers, but it could also have a negative impact on complex technologies with high upfront costs, such as medical devices. Federal law has established that contracts that limit the right to repair will not be enforced under federal law theory. State law, which is typically used to govern breach of contract claims and contractual right-to-repair restrictions, has yet to be determined. Often, state law contracts limiting the right to repair can help strike a competitive balance by ensuring that the scope of the patent monopoly stays well defined and limited while also preventing competitors from unfairly profiting from the inventive efforts of others under the guise of simple repairs.
It is well settled that a contract that would extend the statutorily granted period of a patent is unenforceable due to the preemption of federal patent law. Brulotte v. Thys Co. 379 U.S. 29 85 S. Ct. 176 13 L. Ed. 2d 99 (1964). The right to repair, however, is not a statutory right. Therefore, it remains to be seen whether contracts that alter the right of repair are preempted under the patent exhaustion theory, which was created by a court. Preemption is a question of whether it would apply to contracts governed by state law. When determining whether preemption applies, it is important to consider whether a product was sold under contract or only licensed by a contract which limits the right to repairs. In Mallinckrodt, Inc., v. Medipart, Inc., (976 F.2d 701) (Fed. Cir. 1992) and further cases, the court indicated that in at least some circumstances, contracts could apply restrictions to patented articles.
Thus, on the one hand, a court might be more likely to determine that federal case law governing the right to repair preempts state law contract rights on the grounds that federal law specifically addresses the “sale” of a product. Federal law makes it clear that when a patented item is sold, it is no longer covered by the patent monopoly. Federal law would govern instances where a patent product is sold, and would preempt state contract law attempts to claw back the patent rights that were given up by the sale of the product. Preemption, on the other hand stems from the idea that state law is preempted by federal law when it interferes with the objectives of Congress. The right to repair, unlike the patent itself, is not a Congressionally-granted right. As such, the preemption of state contract law would not apply, and thus, it would be reasonable to conclude that in the sale of a patented product, a patent owner could limit the right to repair by contract and enforce that limitation through a breach of contract cause of action.
Private Contracts and Patents
One line of cases focuses on patent law issues other than repair rights, but the cases do help provide additional clarity. These cases provide a test to determine whether patent law preemption applies to a private contract. Courts have, in limited cases, ruled private contracts may restrict patented products. Patent law preempts private contract only when the contract extends the patent’s monopoly beyond its statutory grant. Brulotte v. Thys Co. 379 U.S. 29 85 S. Ct. 176 13 L. Ed. 2d 99 (1964). This is based on the idea that “the question whether federal law preempts state laws ‘involves an examination of whether that law stands as an obstruction to the accomplishment and implementation of the full goals and objectives of Congress” in relation to the patent system. Aronson v. Quick Point Pencil Co., 440 U.S. 257, 99 S. Ct. 1096, 59 L. Ed. In Impression Products, however, the Supreme Court did not address the issue directly. The Court ruled the patentee could not bring a patent infringement action against the seller of a patented item who attempted to contractually limit repair rights. The Court only briefly addressed state law issues of breach of contract, since patent infringement was the only cause of action. The Court’s opinion contains a number of dicta that seem to acknowledge that, even in a case involving a patent, certain rights can be addressed by contracts and “enforceable under contract laws.” These dicta indicate that a contract action could exist and could be enforced. Impression Products made several references to contract law and the enforceability of restrictions. The stronger interpretation of Impression Products is that it leads to a contract prohibition on the right to repair that is enforceable under contract laws, even though a patentee wouldn’t have a cause under patent law. All of the above is based on the sale of a particular product. If the product was licensed, a patent holder would be better positioned to assert breach of contract.
Mark A. Tidwell, a partner at Haynes Boone’s Houston office, is part of the Intellectual Property Practice Group. He focuses on prosecution, acquisitions, licensing, divestiture, and enforcement
Dirk Berhardt
Dirk Bernhardt works as an associate in Haynes Boone Dallas-North’s Intellectual Property Practice Group. His practice is focused on Patent Prosecution. Dirk holds a degree in mechanical and
