Impression Products is a small business that specializes in buying and re-manufacturing used printer cartridges. Lexmark International, Inc. recently decided to add the company to a list of other business that they had decided to sue as a result of this practice. All of the other companies settled outside of court, however, Impression Product stuck it out for the long-run. The case has now reached the Supreme Court, which is now struggling to understand the specifics of the claim and its ramifications on precedent, as well as make a final decision.
Lexmark offers a “shrink-wrap license” in which customers can purchase cartridges at a discounted rate if they agree to not resell or reuse them. The customer essentially accepts the agreement once they have opened the cartridge’s packing. Lexmark argues that customers cannot resell or reuse the cartridges because the item technically never belonged to the customer.
Impression Products is fighting back with the concept of “patent exhaustion.” This is a patent law doctrine specifically states that a manufacturer loses their rights to control the fate of their products once they have been sold to a customer. If a customer purchases an item, they may reuse or resell it.
There have been a number of exceptions to “patent exhaustion” doctrine law over the years. Over two decades ago, the U.S. Court of Appeals for the Federal Circuit decided that patent holders could control post-sale restrictions as long as they were legal and clearly communicated before purchase. In a separate case, a Federal Circuit court argued that a patent holder's post-sale product rights were still upheld abroad. This ruling is contrary to United States copyright law. The Federal Circuit court used both of these precedents to rule against Impression Products, however, the Supreme Court has yet to make a decision.
Both of these court cases, however, went against most of the Supreme Court rulings since 1850. The Supreme Court has generally ruled that a patent holder exhausts their patent rights at the time of sale. If Lexmark wins the case, this could mean developers, manufacturers, and customers looking to resell their goods would need to trace and protect the patent rights of every item they purchase. No final decision is expected until at least June 2017.