Sociology Index

Post-Sale Restrictions

Post-sale restrictions or post-sale restraints are attempts by patent owners using 'label licenses' to deprive consumers of their right to use, repair and resell the products they own. The enforceability of "single use" and "not for resale" labels on patented products in the light of "patent exhaustion" doctrine which entitles a consumer to use, repair, or resell patented products that they have purchased.

Consumers often face "single use only" and "not for resale" labels on patented products, interfering with legitimate after markets for parts and service. Lexmark has used "single use only" labels to limit the market for refilled toner cartridges. Similarly, "not for resale" labels could interfere with used and refurbished product sales.

The Supreme Court is likely to prohibit patent owners from using patent infringement suits to enforce these kinds of post-sale use restrictions on the products they sell.

A post-sale restriction or post-sale restraint, as used in United States patent law and antitrust law, is a limitation that operates after a sale of goods to a purchaser has occurred and purports to restrain, restrict, or limit the scope of the buyer’s freedom to utilize, resell, or otherwise dispose of or take action regarding the sold goods.

Post-sale restrictions or post-sale restraints have also been termed "equitable servitudes on chattels."

Support for the rule against enforcement of post-sale restraints has at times been rested on the common law's hostility to restraints on the alienation of chattels.

"The right of alienation is one of the essential incidents of a right of general property in movables, and restraints upon alienation have been generally regarded as obnoxious to public policy, which is best subserved by great freedom of traffic in such things as pass from hand to hand. General restraint in the alienation of articles, things, chattels, except when a very special kind of property is involved, . . . have been generally held void." - Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 404 (1911).