[Infowarrior] - SCOTUS allows resale of used printer cartridges

[Richard Forno]

Supreme Court allows resale of used printer cartridges

By Ali Breland - 05/30/17 01:15 PM EDT 0

http://thehill.com/policy/technology/335633-supreme-court-rules-in-favor-of-resellers-in-patent-case

The Supreme Court on Monday ruled unanimously in favor of a company that sold refilled printer cartridges in a patent case with wide implications for the technology industry.

The case involved a legal dispute between printer and toner cartridge company, Lexmark, and a small West Virginia based reseller, Impression, which would acquire used Lexmark cartridges, disable chips inside them that prevented unauthorized refills and then resold them to consumers at a lower price.

Lexmark argued that Impression’s actions violated patents on their cartridges — which explicitly prohibit resale and reuse — and qualified as unauthorized use of their products.

In their 8-0 decision in favor of Impression, the court ruled that, “when a patentee sells one of its products, however, the patentee can no longer control that item through the patent laws—its patent rights are said to ‘exhaust,'" even if a patent holder, like Lexmark, tried to set post-sale restrictions. 

Lexmark also contended that Impression was violating its patents by importing toner cartridges intended for sale abroad back into the United States. The Supreme Court sided against Lexmark on that claim as well, overruling the lower court's decision which backed Lexmark on both issues.

The court cited previous cases which found that any patent rights restricting the sale of a product were exhausted when the patent holder sold their product.

“When a patentee chooses to sell an item, that product ‘is no longer within the limits of the monopoly’ and instead becomes the ‘private, individual property’ of the purchaser, with the rights and benefits that come along with ownership,” Chief Justice John Roberts wrote in his opinion.

Roberts also noted that, “an authorized sale outside the United States, just as one within the United States, exhausts all rights under the Patent Act,” allowing Impression to lawfully import Lexmark’s toner cartridges back into the U.S.

"Lexmark pushes its patent rights to the limit. It tried to restrict the use or resale of patented products after they have already been sold,” said Case Collard, a partner at Dorsey & Whitney who  focuses on intellectual property disputes.

“Imagine if you could not resell the patented iPhone that you purchased because Apple continued to enforce its patent rights after it sold the product. This is what Lexmark tried to do with its printer cartridges.”

Businesses kept a close eye on the case, which could have an impact beyond the toner cartridge market.

Companies like Costco, Intel and HTC feared that a ruling in favor of Lexmark could disrupt their supply chains, and filed briefs in support of Impression.

Qualcomm backed Lexmark in an amicus brief, along with IBM, which backed Lexmark's claims on importing their cartridges.

The case could also have implications in the fight over the “right to repair,” a fight between consumers and companies like Apple and John Deere, who try to use their patents, beyond the first sale, to restrict third-party repair of their products.

In his opinion, Roberts invoked a hypothetical scenario in which third-party companies were restricted from fixing care. Roberts said it highlighted why extending patent rights after a product's initial sale would cause problems.