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How Lexmark's patent fight to crush an ink reseller will affect us all

Yes, Lexmark is still a thing

If printer maker Lexmark International prevails against ink cartridge reseller Impression Products, tech giants and other American companies will gain the ability to control products through patent claims after they have been sold.

The Federal Circuit Court in Washington, DC, last year supported this idea by siding with Lexmark's position that acquiring printer cartridges abroad, refurbishing them, and reselling them in the US violates its patent rights.

Last month, the US Supreme Court agreed to review that decision and on Monday, advocacy groups AARP, Electronic Frontier Foundation, Mozilla, Public Knowledge, and R Street filed an amicus brief in support of Impression Products' claim that it should be able to resell ink cartridges it has acquired without restriction.

The advocacy groups argue that giving patent owners the ability to control goods after they have been sold could imperil security research, reverse engineering, and the modification of devices.

Since 1853, US law has recognized that when a patent holder sells a patented item, the patent protection is exhausted, allowing the item to be resold or altered without the patent holder's consent.

The exhaustion doctrine limits the monopoly power granted to patent holders, assuming the sale was authorized in the first place. It's similar to the first sale doctrine, which limits copyright claims once a copyrighted work has been sold.

But a 2001 decision, Jazz Photo Corp. v. ITC, suggests that patent exhaustion doesn't apply when patented goods are sold outside the US.

Lexmark also contends that a notice on its packaging binds customers to return used cartridges to Lexmark rather than disposing of them elsewhere. (Lexmark sells some cartridges at a discount under its Return Program, while also selling full-priced cartridges without a contractual notice on the packaging.)

Lexmark in 2010 launched series of lawsuits in Ohio against ink cartridge recyclers. Most of them settled, agreeing not to acquire ink cartridges abroad for resale in the US. Ink cartridges purchased lawfully in the US can be resold under the patent exhaustion doctrine.

In 2013, Lexmark sued Impressions Products for patent infringement and won a Federal Circuit Court decision in early 2016.

Abusing patent law

Daniel Nazer, staff attorney at the Electronic Frontier Foundation and Mark Cuban Chair to Eliminate Stupid Patents, said in a phone interview with The Register, "There's a risk companies will increasingly turn to patent law to do things they're not otherwise allowed to do."

Nazer pointed to a shampoo maker that tried unsuccessfully to block the importation of a product into the US by asserting a copyright claim on the shampoo bottle label. He observed that a design patent claim could be employed in an attempt to achieve the same anti-competitive result.

"What these companies are trying to do is use a contract with a consumer, that they have no intention of enforcing against the consumer, as an end-run around patent exhaustion," he said.

In a phone interview with The Register, Jishnu Menon, associate general counsel at Mozilla, said the case has implications beyond printer supplies. "If patent rights weren't exhausted on first sale, you could conceivably be unable to sell your car to a dealer without seeking some sort of permission," he said.

Menon, in an email, observed that Lexmark has tried to use copyright law to exert post-sale control over its products.

"Prior to this case, Lexmark itself had previously tried to stop other businesses from selling 'competing' printer cartridges using the DMCA, a case it lost at the Sixth Circuit in 2004. (Lexmark v. Static Control Components)," he said.

Menon said that products increasingly have a variety of components – hardware, software, and cloud services – that are subject to intellectual property protections and that the patent exhaustion doctrine is necessary to provide some balance.

"You can't innovate if you can't experiment with the things you bought," he said. "There needs to be a balance between the monopoly created to promote the technology [and what the buyer can do with it]."

It's unclear when the Supreme Court will rule but Menon said oral arguments could come as soon as March. ®

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