Supreme Court Rules Patent Laws Can't Be Used to Prevent Reselling

["Dave Farber" <dave () farber net>]

---------- Forwarded message ---------
From: Dewayne Hendricks <dewayne () warpspeed com>
Date: Wed, May 31, 2017 at 6:42 AM
Subject: [Dewayne-Net] Supreme Court Rules Patent Laws Can't Be Used to
Prevent Reselling
To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>


Supreme Court Rules Patent Laws Can’t Be Used to Prevent Reselling
By ADAM LIPTAK and VINDU GOEL
May 30 2017
<
https://www.nytimes.com/2017/05/30/business/supreme-court-patent-rights-lexmark.html
>

WASHINGTON — The Supreme Court on Tuesday placed sharp limits on how much
control patent holders have over how their products are used after they are
sold.

The case concerned Lexmark International, which makes toner cartridges for
use in its printers. The court ruled that the company could not use patent
law to stop companies from refilling and selling the cartridges.

Mark Lemley, director of the Stanford Program in Law, Science and
Technology, 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.”

Lexmark sold the cartridges on the condition that they not be reused after
the ink ran out. Impression Products, a small company in Charleston, W.Va.,
nonetheless bought Lexmark cartridges in the United States and abroad,
refurbished and refilled them, and sold them more cheaply than Lexmark does.

Lexmark sued for patent infringement, and the United States Court of
Appeals for the Federal Circuit, a specialized court in Washington,
accepted both of its main arguments, concerning domestic and international
sales.

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.

Chief Justice John G. Roberts Jr., writing for a unanimous Supreme Court on
this point, 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.

“The purchaser and all subsequent owners are free to use or resell the
product just like any other item of personal property, without fear of an
infringement lawsuit,” the chief justice wrote.

He used an illustration to make the point.

“Take a shop that restores and sells used cars,” Chief Justice Roberts
wrote. “The business works because the shop can rest assured that, so long
as those bringing in the cars own them, the shop is free to repair and
resell those vehicles. That smooth flow of commerce would sputter if
companies that make the thousands of parts that go into a vehicle could
keep their patent rights after the first sale.”

[snip]

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