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Patent exhaustion and patent repair do not necessarily apply to replacement parts in design cases

Patent exhaustion and patent repair do not necessarily apply to replacement parts in design cases

Automotive Body Parts Association v. Ford Global Technologies was decided on July 23, 2019 on appeal from the Eastern District of Michigan. Plaintiff Automotive Body Parts Association (ABPA) sued defendant Ford seeking a declaratory judgment of invalidity or unenforceability of two design patents covering a vehicle’s hood and headlamp respectively. ABPA sought summary judgment that the patents were invalid as primarily functional, and that the patents were unenforceable under the doctrines of patent exhaustion and repair. The district court denied summary judgment and instead sua sponte granted final judgment to Ford. ABPA appealed.

The Federal Circuit affirmed the finding of no invalidity and affirmed the finding of no unenforceability.

The district court did not err in its patent exhaustion holding. Under the patent exhaustion theory, “[a]n authorized sale compensates the patentee for his invention. After such a sale, the patentee may no longer control the use or disposition of the product.” Exhaustion, however, “attaches only to items sold by, or with the authorization of, the patentee.” Thus, when Ford “sells [a truck], its patents are exhausted as to the components actually sold as part of that truck.” The sale of the truck does not, as ABPA argued, “permit[] use of Ford’s designs on replacement parts,” even if “those parts are intended for use with Ford’s trucks.” ABPA’s sale of the parts “are not authorized by Ford; it follows that exhaustion does not protect them.”

The district court did not err in its patent repair holding. “The right of use transferred to a purchaser by an authorized sale includes the right to repair the patented article. The right of repair  does not, however, permit a complete reconstruction of a patented device or component.” “And it does not permit a purchaser to infringe other patents by manufacturing separately patented components of the purchased article.” Accordingly, “a sale of the … truck permits the purchaser to repair the designs as applied to the specific hood and headlamps sold on the truck.” “[T]he purchaser may not create new hoods and headlamps using Ford’s designs.”
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Auto. Body Parts Ass’n v. Ford Glob. Techs., LLC, 930 F.3d 1314 (Fed. Cir. 2019)