U.S. Supreme Court

Supreme Court decision allows resale of used ink cartridges despite patent holder restriction

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A patent holder that restricts the reuse or resale of its printer ink cartridges can’t invoke patent law against a remanufacturing company that violates the restriction, the U.S. Supreme Court ruled on Tuesday.

The court ruled that Lexmark International’s patent rights are exhausted with its first sale of the cartridges, despite restrictions it tried to impose.

Chief Justice John G. Roberts Jr. wrote the opinion (PDF), joined in full by six justices. Justice Neil M. Gorsuch didn’t participate in the case.

The court ruled in Lexmark’s infringement suit against Impression Products for refurbishing and reselling Lexmark cartridges.

Lexmark tried to prevent third parties from acquiring, refurbishing and reselling its used cartridges by creating a “return program.” Customers who bought cartridges and agreed to return them got 20 percent off their cost. To prevent customers from reselling the cartridges to others, Lexmark installed a microchip that prevents reuse.

Companies such as Impression Products had developed methods to counteract the microchip, enabling it to refurbish Lexmark cartridges and undercut the Lexmark new-sale price.

Lexmark’s contracts with customers may have been enforceable under contract law, but the company did not retain patent rights after sale of the cartridges, Roberts said.

“We conclude 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,” Roberts wrote.

Justice Ruth Bader Ginsburg concurred with Roberts’ conclusions regarding patent exhaustion for domestic sales of the cartridges. But she would have held that Lexmark’s patent is not exhausted for foreign sales.

The decision in Impression Products v. Lexmark International takes away an important tool used by companies to control the marketplace, Bloomberg News reports.

Biotechnology, drug and agricultural industries had supported Lexmark, while Silicon Valley companies such as Google had supported Impression Products. Sellers of refurbished auto parts and medical devices also supported exhaustion of the patent.

Related articles:

ABAJournal.com: “Can company restrict reuse of its ink cartridges to bypass patent doctrine? SCOTUS to decide”

ABAJournal.com: Can patent laws halt the reselling of used ink cartridges? Federal Circuit to consider”

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