Published March 23, 2017
A corporate squabble over printer toner cartridges doesn’t sound particularly glamorous, and the phrase “patent exhaustion” is probably already causing your eyes to glaze over. However, these otherwise boring topics are the crux of a Supreme Court case that will answer a question with far-reaching impact for all consumers: Can a company that sold you something use its patent on that product to control how you choose to use after you buy it?
The case in question is Impression Products, Inc v Lexmark International, Inc, came before the nation’s highest court on Tuesday.
As with many SCOTUS disputes, Lexmark is a devil-in-the-details case that could have wide-ranging implications for basically everyone who ever buys anything—so, all of us.
Here’s the background: Lexmark makes printers. Printers need toner in order to print, and Lexmark also happens to sell toner.
Then there’s Impression Products, a third-party company makes and refills toner cartridges for use in printers, including Lexmark’s.
Lexmark, however, doesn’t want that; if you use third-party toner cartridges, that’s money that Lexmark doesn’t make. So it sued, which brings us to the legal chain that ended up at the Supreme Court.
Printer makers are notoriously finicky about cartridges, because that’s where all the money is. Companies like Canon, HP, and Lexmark aren’t really making their millions from the $75 you spend on a printer; the real cash comes over the longterm when you have to keep spending $30 on name-brand ink cartridges once or twice every year that follows.
In an effort to keep others from getting a piece of that sweet toner revenue, Lexmark turned to its patents: The company began selling printer cartridges with a notice on the package forbidding reuse or transfer to third parties. Then, when a third-party—like Impression—came around reselling or recycling the cartridges, Lexmark could accuse them of patent infringement.
So far the courts have sided with Lexmark, ruling that Impression was using Lexmark’s patented technology in an unauthorized way. The Supreme Court is Impression’s last avenue of appeal.
When inventors make things (not just the idea for things, but actual things), they secure patents on them, so that for a time nobody else can make that same thing that same way.
So far so good. As a concept, at least, patent law is fairly straightforward—even if the details get maddeningly complex.
But patents have limits, and legally speaking those limits basically take hold when you sell the thing you made. That’s a legal concept known as “exhaustion.” When you, the consumer, have bought a thing, it’s yours and you own it and can do what you want with it, even if someone else holds a patent on it.
So: your toothbrush has a special tooth cleaning patent? You can still use it to scrub tile grout if you want, because the patent-holder has exhausted their ability to control use once the toothbrush is yours. They can say, “oh please don’t use this on anything but teeth,” but you’re free to ignore them if you see fit.
Perhaps you sense this getting a little more complicated in the digital era, though, where you don’t “own” things like movies, music, or even the software on your phone; rather, it’s being licensed, which means companies can go to all kinds of lengths to keep controlling how, when, and where you use the things you’ve bought long after you’ve bought them.
Where some kind of digital rights management (DRM) was once standard only for video games and movies, you now find it on everything from coffee to cars and a whole lot of in-between—including printer cartridges.
The question before the Supreme Court, then, isn’t one of “can Lexmark patent this?” Because Lexmark can, and has. The question is, rather: Can patent exhaustion still be a thing, or does the original manufacturer get to keep having the final say in what you and others can do with the product?
A Supreme Court ruling is still likely months away, but the transcript [PDF] of this week’s oral arguments can tell us quite a bit about the way the justices may be leaning.
The attorneys for both sides—Impression and Lexmark—each pointed to several previous rulings on patent law to support their own perspective on why the law does or does not support patent rights’ exhaustion.
The problem faced by either side is that the most recent case dealing with exhaustion applies it to copyright law, not patent law. To the lay consumer, that may seem like a minor distinction, but copyright and patent are two very different beasts, legally speaking.
Justice Anthony Kennedy, for his part, seemed as surprised as the attorneys that the law apparently hasn’t handled this already.
“Are there other exampled of really important rules that have not been codified?” Kennedy asked early in the session. “Why hasn’t this been codified?”
For whatever reason, though, it hasn’t; and the Court is now dealing with 2017 technology and a 1952 law whose authors couldn’t have guessed that patent rights would be used to restrict what a customer can do with a product after it’s been purchased.
Meanwhile Chief Justice Roberts, along with Justices Stephen Breyer and Samuel Alito, kept wanting to probe the question of why patent law was even necessary for this sort of thing, as SCOTUS blog explains. Each of the three asked some kind of question, or raised some argument, wondering why Lexmark couldn’t just restrict use of its items with ordinary contract agreements instead of patents.
In the end, though, the Justices didn’t say very much that indicated a particularly strong position one way or the other. As SCOTUSblog’s analyst put it: “the justices are well aware of the major implications here and don’t see any obvious way to avoid doing something that will have real economic consequences… Rather, it seems, they are going to have to decide if these kinds of restrictions will, or will not, remain a product of 21st-century innovation policy.”
And that is, indeed, a key question. Basically everyone with a stake in technology, copyright, software, DRM, privacy, or any other 21st-century concern has filed briefs supporting one of the two underlying arguments in this case. This includes advocacy groups, industry trade groups, and businesses spanning everything from Costco to Intel. After all, an entire business model—and a whole lot of consumer rights—are at stake.
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