On Tuesday the Supreme Court ruled that Lexmark International, could not use patent law to prevent other companies from refilling and selling its cartridges.
The ruling was in regards to an infringement lawsuit brought by Lexmark International against Impression Products, Inc. Lexmark a Chinese-owned corporation based in the United States that manufactures laser printers and imaging products sold its cartridges on the condition that they are not reused after the ink is finish. However, Impression Products a small printer business in Charleston, West Virginia, bought used Lexmark ink cartridges and then refurbished, refilled and sold them at a less expensive price than Lexmark, which resulted in the lawsuit.
When toner cartridges run out of toner, a small powdery substance, they can be refilled and used again. This then creates the opportunity for other companies to attain empty cartridges, refill them with toner and then resell at a lower price. Fully aware of this, Lexmark owns a number of patents that cover components of their cartridges and the manner in which they are used. To encourage customers to return empty cartridges Lexmark structured its sales in a way to prevent this as well.
Upon purchase, Lexmark gave their customers two options: one, buy a toner cartridge at full price or two, buy a cartridge through their “Return Program” which gave the customer 20 percent off. With the return program, customers signed a contract agreeing to use the cartridge only once and after return it to Lexmark. On Return Program cartridges, the company installed a microchip that would prevent reuse once the cartridge ran out of toner.
However, this just impelled remanufacturers to get more creative, many kept acquiring empty Return Program cartridges and found ways to counteract the effect of the microchips, the Supreme Court stated.
The appeals court acknowledged that the general rule was that buyers of patented products could do with them what they wished. But it said the conditions Lexmark placed on the sale of its cartridges could be enforced as a matter of patent law for sales in the United States. However, Chief Justice John Roberts, writing for the Supreme Court disagreed, he said Lexmark could not use the patent laws to enforce the contractual conditions it placed on the sale of its cartridges. Under the doctrine of “patent exhaustion,” he wrote, once a patent holder sells an item, it can no longer control the item through the patent laws.
Roberts went on to say that sellers give up their patent rights even when the purchaser agrees not to resell the product to anyone else and that the rule applies regardless of whether the sale happens domestically or overseas.”Extending the patent rights beyond the first sale would clog the channels of commerce, with little benefit from the extra control that the patentees retain,” Roberts wrote.
Director of the Stanford Program in Law, Science and Technology, Mark Lemley, said that anyone who refurbished, repaired or resold used products would now be protected from patent infringement claims. The ruling will also prevent manufacturers from forcing consumers to buy supplies only from the original source.“It’s good for consumers,” Mr. Lemley said. “It’s going to reduce consumer prices.”
Other print companies such as HP have faced similar battles against print remanufacture companies that refill ink and toner cartridges and later sell them at cheaper rates. But instead of taking to the courts, HP used technology to change the internal software in its printers to recognize and block the use of prohibited cartridges.
Companies like HP and Lexmark will have to come with a different way to protect their products and their profits, Kevin Nelson a source from the Chicago Tribune said. “It’s going to impact the prices in the short term while they learn how to deal with the new environment,” Nelson said. And as companies come with more innovative ways to protect their product this could mean higher prices for consumers.
