Edited by Irene Calboli and Edward Lee
Chapter 15: Patent exhaustion rules and self-replicating technologies
The theories on patent exhaustion, be it the theory of implied license1 or the theory of first marketing,2 are unanimous in that exhaustion applies to a specific product that has been put into the market. These theories apply to a given product that has been put on the market by its lawful owner or with his consent, yet cannot have an effect on the marketing of other products that fall under the claims of the same patent. Under the theories supporting patent exhaustion, it is not the “patent right” that exhausts, but the right to use the patent to prohibit the further commercial use of the specific product that has been first marketed. In other words, the exhaustion of the patent right to exclude others from making, marketing, or further selling the patented products applies only, and is limited to, the specific product at issue. One may wonder, however, what should happen in the cases where the product for which the patent right has exhausted is capable of self-replicating, i.e., of multiplying itself, thereby producing progeny that also falls under the patent claim. This issue is of particular relevancy for patents over genetically modified seeds or animals. If, say, a claim reads “[a] glyphosate-tolerant plant cell comprising a DNA-molecule [with the following specifications],”3 or “[a] transgenic human animal that carries in the genome of its somatic or germ cells a nucleic acid sequence,”4 then the most common (if not the only) way of obtaining such patented product would be by natural breeding of those products already on the market. Ordinarily, the sale of patented seeds or animals carries with it the (implied or explicit) license to use the product for breeding purposes and, therefore, produce first-generation offspring, but does not extend to the production of a further generation. If exhaustion rules were to apply to all further offspring, this would amount to a license for the production of otherwise infringing products in direct competition with those marketed by the patentee (at least to the extent that third and further generation products would be stable enough to still possess the advantageous characteristics of the first-generation product).
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