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U.S. Supreme Court, Update

by
Jon Cone
published on 05/31/2017 20:00:00

This is an exciting newsletter to write. Recently, much has happened to affect our industry and company. With a world in turmoil, Tuesday’s Supreme Court decision will impact our economy and environment in a very positive way. Reviewing the arguments presented and the the Justices commentary, I thought the decision might go either way. But, the decision handed down Tuesday was nearly unanimous. I want to take a moment to discuss this decision.  I will refrain from “pitching” our annual Summer Sale that arrives early in July!  – Jon Cone

U.S. SUPREME COURT SIDES WITH CONSUMERS IN REGARDS TO PATENT-EXHAUSTION QUESTIONS

Recently, I reported on an important case being argued before the Supreme Court concerning the issues of patent exhaustion, consumer restrictions, and first-use. The case, Lexmark vs Impression Products, has been in the docket and on appeal for 20 years. Although the case involves printer cartridges, the decision might negatively impact all patented consumer goods. SCOTUS watchdogs were most concerned about a decision impacting medical products. In reality, the effect on all patented consumer goods which are routinely recycled or reused would have been devastating.

In summary, Lexmark sold ink cartridges at a discount (a rebate program of sorts) with the expectation that customers would return the spent cartridges. Lexmark had imposed this as a “restriction”. The intent was to keep Lexmark cartridges out of the “rebuild” market. For well over a century the consumer has been free to do as they please with what they purchase. Consumers have disposed of or recycled products in many different and imaginative ways. That was the standard until Lexmark’s litigation.

Lexmark’s customers either sold their empty carts or deposited them at recycling centers. Impression Products was happy to buy, refurbish, and offer them for sale again as printer carts. And that’s when Lexmark sued Impression Products. The case was appealed all the way to the Supreme Court. On Tuesday, the Court sided with consumers by upholding patent law without restrictions.

The argument was whether a Corporation had the right to restrict a patented product after sale to a consumer. The US Supreme Court answered NO!  The other argument considered a product’s patent viability if it was first sold outside the USA and then imported. Lexmark hoped that if it lost on the first count, at the least, they could block importation of refurbished cartridges. Again, the Supreme Court said NO! Once a patent is exhausted (when it is first sold) it is exhausted no matter where it is sold.

This is a victory for consumers of all patented products. It’s a major victory for those consumers who prefer to use reusable or refillable cartridges.

What does this mean for InkjetMall Customers? It may help us to gain access to the restrictive USA SureColor P large format printer market. We will investigate whether spent international versions of these  cartridges can be refurbished and the chips reset to work in USA version models. Even while China version SureColor P printers are unlocked, the chips are often regional-ized. But, it opens up new possibilities. China vendors have been petrified to export varied inkjet and toner products into the USA because of this case. Now, based upon this decision, a Chinese version of a product exhausts its patent in the same way as the USA version.