PATENT UPDATE: SCOTUS Lexmark case - refillable ink cartridges
On May 30, the Supreme Court issued its landmark opinion in the Impression Products, Inc. v. Lexmark International, Inc. case by holding 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. Specific to the facts of the case, Lexmark exhausted its patent rights in its cartridges “the moment it sold them” and resellers may do with the empty cartridges as they please. The opinion was authored by Chief Justice Roberts and was joined by all members of the Court except Justice Ginsburg (concurring in part and dissenting in part) and Justice Gorsuch (taking no part in the case).
Briefly, Lexmark offers the sale of its cartridges on two conditions: purchasers can either (1) buy a toner cartridge at full price with no restrictions or (2) buy a cartridge at a discount with the caveat that the buyer must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark. Lexmark sued Impression for its role as a “remanufacturer,” in that it acquired empty Lexmark toner cartridges from US purchasers, refilled them with toner, and then resold them.
Reversing the decision of the Federal Circuit court, the Supreme Court found that Lexmark exhausted its patent rights in its cartridges “the moment it sold them.” Chief Justice Roberts commented, “Once a patentee sells an item, it has ‘enjoyed all the rights secured’ by that limited monopoly.” According to the Court, this is because “the purpose of the patent law is fulfilled . . . when the patentee has received his reward for the use of his invention, that law furnishes ‘no basis for restraining the use and enjoyment of the thing sold.’”
As a result of this decision, it is possible that we will see new pricing as it involves toner cartridges to offset this potential loss by Lexmark.