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Supreme Court restricts patent holder’s bounds | Albuquerque Journal

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.”

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Supreme Court restricts patent holder’s bounds | Albuquerque Journal.