The Supreme Court affirmed a lower court’s decision stipulating that consumers and even small businesses have the right to resell products without it being considered an infringement on the rights of the original manufacturer.
In a 7-1 verdict, the high court overwhelmingly ruled on May 30 that after a patent owner sells an item, all patent rights are “exhausted,” thus prohibiting the original owner from having any control over what the buyer elects to do with the product.
The case stemmed from the Impression Product v. Lexmark International suit, in which Lexmark filed legal action aimed at preventing manufacturers from buying used cartridges, refilling them with toner and reselling them.
The high court further concluded that after Lexmark sold its cartridges all its rights were extinguished whether the sale was made domestically or abroad.
Lexmark first filed suit in 2010, alleging patent infringement based on violations of post-sell restrictions here in the U.S. and internationally. The company also argued that it retained patent rights because the limitations were disclosed in the “return-cartridge” agreements signed by the buyers.
“The Supreme Court’s decision clarified when the exhaust doctrine applies and to what extent restraints on a pattern occur,” Phillip Goter, an associate attorney with the Fish & Richardson law firm, told the Cook County Record. “It made clear the sale of an object exhausts all patent rights to it.”
Delivering the opinion for the majority, Chief Justice John Roberts stated that “a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.”
Up until now, Lexmark cartridge buyers were only presented with the options of buying a toner cartridge at full price, with no restrictions, or participating in a “return program” where, in exchange for a lower price, the consumer must agree to use the cartridge once and resell it only to Lexmark.
Consumer Reports has previously estimated that printer ink is one of the most expensive liquids on the market, routinely pricier than fine champagnes and perfumes.
Impression Products is one of several entities that operates by buying and refilling empty cartridges. They also sell remanufactured cartridges across the globe.
“People who market products and try to restrain consumer use won’t be able to do so as easily anymore,” Goter added. “I think you will see some methods of patent use become more important.”
Finally, in remanding the case for further proceedings on other issues, the court established that patent exhaustion and the doctrine of copyright exhaustion “should be equated because the doctrines share a strong similarity and identity of purpose.”
Added Goter, “It’s hard to say how much this will change things. My advice will be to try to determine an objective, but there is no blanket advisory.”