Study On Post-sales Restraints Of Exhaustion Of Patent Right

When the patented product has been sold,rights conflicts arise because the patentee and product owner are not the same one.In order to resolve this problem,the‘Patent Exhaustion Doctrine’has been proposed.‘Patent Exhaustion Doctrine’means that a when the patented product is sold,the patentee cannot control the subsequent transfer and use of the specific product anymore because patentee has already obtained the corresponding benefits from the sale.This doctrine has played an important role in limiting the abuse of patent rights and protecting the consumersbenefits.With the wide application of the principle of patent exhaustion,a new problem has emerged: Based on the Patent ExhaustionDoctrine,could patentee control the sold patented product by post-sale restraints? And how the post-sale restraints work? Whether it is in theoretical research or judicial practice,there is a great deal of controversy among countries over the validity of the post-sale restraints.Our country applies the‘Patent ExhaustionDoctrine’,but the provisions concerning that are too principle and can only solve common ‘First-time Sales’ problems.There is no solution to the problem of the effectiveness ofpost-sales restraints.In fact,there are few cases concerning the exhaustion of patent rights in judicial practice in China.And patent infringement lawsuits that have been filed for breach of post-sales restrictions have not yet emerged.Few scholars have studied thisissue.It can be said that China’s research on the post-sales restraintsis still in blank.In contrast to this,in Western countries where the patent system is more developed,such cases have already emerged,and the study of this issue is also comprehensive,but the views are still in argue.For example,the United Kingdom and Germany in early adopted the model of relative exhaustion of patent rights.It is believed that the exhaustion of patent rights is applied on unconditional sales of patented products,and the express post-sale restrictions can prevent patent rights from being used up.Recently,Germany and the European Union adopts the model of absolute exhaustion of patent rights,which does not allow post-sales restrictions to exclude the exhaustion of patent rights.In the United States,where the patent system is more developed,there has been considerable controversy over the effectiveness of the post-sale restrictions,and the court’s opinon is unresolved.For example,in May 2017,the U.S.Supreme Court overturned the appellate court’s decision that post-sales restrictions could prevent patent rights from being used up.It believed that after the product’s sales,the patent rights had been exhausted and the post-sale restrictions would not have an impact.From this we can see that the effectiveness of post-sale restrictions is a major problem that needs to be resolved.With the continuous development of China’s economy and the continuous improvement of the awareness of national intellectual property,such post-sale restrictions are also increasing,and whether the restrictions are effective or not have an important impact on market competition.Therefore,the issue of the validity of the exhaustion limit of patent rights has important research value.This article studies the validity of the limitation of the exhaustion of patent rights.In addition to the introduction,thearticle is divided into four chapters.The specific content is as followed:The first chapter analyzes the controversy of the controversial clauses,the causes of the disputes,and the application of the Patent Exhaustion Doctrine in China.The chapter first analyzes the disputes over the validity of restrictions and the causes of the disputes.The reason for the controversy over the validity of the restriction clause is that the pattern of exhaustion of patent rights used by different countries is different.In the absolute exhaustion model,the limitation clause cannot exclude the exhaustion of patent rights,and there is room for limitation clauses in the relative exhaustion model.After analyzing the causes of the dispute,the chapter also analyzes the current status of the exhaustion of patent rights in China.As early as 1984,first Chinese Patent Law made relevant provisions on the principle of exhaustion of patent rights and added them in subsequent amendments.However,the exhaustion of patent rights in Chinese Patent Lawis still principled,and it may easily cause disputes when it is applied.Moreover,there is less cases concerningPatent Exhaustion Doctrine in judicial practice,and there is controversy on the applicable model.Because Chinese Patent Law does not directly stipulate the application of post-sales restrictions,nor does it explicitly apply the absolute exhaustion of patent rights or relative exhaustion.Therefore,the vadility of post-sales restraints is still not resolved in China.The second chapter analyzes whether the exhaustion of patent rights should be explained as the absolute exhaustion mode or the relative exhaustion mode.The Patent Exhaustion Doctrineis the basic principle for resolving the conflict between patent rights and ownership rights of sold patented products.Its purpose is to balance the contradiction between patent monopoly and free circulation of goods.According to the ‘remuneration theory’,the value of the patent right must be realized through market transactions.After the patentee puts the patented product into the market in exchange for the benefits that is in line with the economic value of the patent,the patentee exhausts the patent right of the patented product,and hecannot control the product circulation anymore.With the widespread application of the principle of exhaustion of patent rights,various countries have diverged from their specific rules of application,which has evolved two modes of absolute exhaustion and relative exhaustion of patent rights.Absolute exhaustion of patent rights is based on the theory of internal limitations,which focuses on the protection of the public goods that are free to circulate;relative exhaustion is based on the theory of tacit permission,which focuses on protecting the interests of the patentee.The fundamental reason for Germany’s absolute use of patent rights is that it believes that relative exhaustion of permitted conditional sales would be detrimental to the free circulation of patentedproducts and would be detrimental to the public interest.Absolute exhaustiondoesn’t take into account the relationship between licensing and sales,and doesn’t fully consider the impact ofPatent Exhaustion Doctrine on social benefits.Therefore,there are major drawbacks to absolute exhaustion of only self-owned trade.In fact,the relative exhaustion model does not necessarily result in the abuse of patent rights.The restriction clauses that hinder the freedom of market competition are misunderstandings of implied licensing theory.Moreover,from the point of view of economics,the use of relative exhaustion of patent rights is more conducive to the maximization of social and economic benefits.The third chapter analyzes the specific conditions that need to be satisfied for the limitation clause to be effective.The post-sale restriction has its value and necessity,but that does not mean that any restriction can achieve the legal effect of excluding patent rightexhaustion.Post-sale restrictions effectively meet two basic conditions.First,the restrictions should be clear and known to the buyer.When the patented product has been resold many times,the problem of how to fully inform buyers is particularly prominent.Second,the restrictionshould not cause abuse of the patent right.The contents of the restriction are diverse.Based onthe specific contents,restrictions can be divided into disciplinary prohibition types and disciplinary restriction types.The former one is a direct prohibition of follow-up disciplinary actions,while the latter one is a limitation of follow-up disciplinary actions,in which the effectiveness of disciplinary restrictions is more complex.The type of disciplinary restriction exists between the patentee and the downstream buyer,which belongs to vertical restrictions.Vertical restraints are usually classified as in-product limits and inter-product limits.To analyze whether a certain restriction will lead to the abuse of patent rights,it can be examinedby Reasonable Rule.In addition,when the patented product is sold by the licensee,if the patentee intends to set a restriction on the sold patented product,the patentee should require licensee to enter into a post-salesrestriction agreement with the buyer in license agreement.The license agreement between the patentee and the licensee may also affect the validity of the restriction.The patentee should set restrictions carefully when signing the licenseagreement,which should not only explicitly excluding the exhausted content of the patent right,but also requiring that the licensee informed the buyer of the restrictions.The fourth chapter analyzes how to applies the rules of determining the effectiveness of restrictions in China.According to Patent Law and related judicial interpretations,Patent Exhaustion Doctrine has been applied in China.However,the provisions Doctrine are too principled to solve complex issues,such as limiting the validity of articles.How to judge the validity of post-sale restriction is a hard problem.Therefore,it is necessary to make the solution to such problems from the legislative level: First,we should improve the patent exhaustion system in China from the legislative perspective and allow the relative exhaustion of patent rights.Article69 of Chinese Patent Law is the only direct provision about Patent Exhaustion Doctrine,but the provision is too principled and it needs to explain further.The ‘sales’ in Article 69 can be interpreted as unconditional sales of patented products,so that the relative mode of exhaustion could be certainly applied in China.In addition,Article11 of the Patent Law is about the basic provisions of patent infringement.If the violation of post-sale restrictionsconstitutes patent infringement,the ‘license’ in this article should be interpreted as an express or implicit license.These laws provide a legal basis for post-sale restrictions in patent law.In addition,we should also improve China’s relevant regulations for regulating the abuse of patent rights,and give the judge discretion when determining whether specific restrictions will cause abuse of power,so as to prevent post-sale restrictions from becoming patentees’ method to expand their patents right.