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A nearly unanimous Supreme Court told Lexmark it can’t use patent law to restrict printer cartridge buyers from doing what they want with the cartridges, including refilling them or even selling them to cartridge manufacturers. In an opinion by Chief Just John Roberts, “Lexmark exhausted its patent rights” once it sold the cartridge.

The case was watched closely by more than printer makers. Lexmark had support from the biotechnology, drug, and agricultural industries. Tech companies, including Google and Intel, supported the cartridge re-manufacturer, Impression Products, as did makers of rebuilt or refurbished auto parts and medical devices.

Lexmark’s Cheaper Cartridges Couldn’t Be Refilled

Perhaps mindful that it was on difficult legal ground, Lexmark set up two prices for its cartridges. One had no lockout mechanism on the cartridge. With the other, Lexmark offered a 20 percent discount for essentially the same cartridge, except the customer had to agree to return the cartridge to Lexmark. Also, the cartridge was equipped with a microchip that (Lexmark thought) prevented the cartridge from being reused.

Impression Products, the company in the lawsuit, and others figured out how to counteract the no-reuse chip, refill the cartridge, and undercut Lexmark on price.

Lexus said on its website:

The Lexmark brand means quality and reliability with every printed page. Genuine Lexmark supplies are the best option when you value your image. Lexmark is actively checking domestic and global markets for manufacturers and sellers whose activities undermine our reputation with counterfeit, grey market or other products that don’t pass the Genuine Lexmark test. Manufacturers and sellers of trademark-infringing counterfeit cartridges and patent-infringing clone/compatible cartridges damage our brand by selling inferior products. Simply put, if you want the very best for your printer, use only the Genuine Lexmark supplies intended for your specific geographical region.

There continues to be an ongoing argument over whether refill cartridges are equal in quality to the original, and whether in some cases (typically where the cartridge does not contain the printhead) the refill, once used in a printer, compromises its print quality ever after. There’s no question some users want the cheaper ink, at least for documents that are drafts or used in-house.

What the Court Said

Lexmark’s contracts with customers may have been enforceable under contract law, but the company did not retain patent rights after sale of the cartridges, Roberts said.

Roberts wrote wrote in the court findings in Impression Products v. Lexmark, 15-1189 (PDF), “We conclude that a patentee’s [Lexmark’s] decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.”

Six other justices concurred with Roberts in full, and Justice Ruth Bader Ginsberg concurred in part, saying she agreed Lexmark patent rights ended when the cartridges were sold in the US. For foreign sales, she said Lexmark’s patent right was not exhausted. Here, “patent rights” refers to restrictions Lexmark placed on the cartridges. The newest justice, Neil Gorsuch, didn’t take part because arguments were heard last year, before he was confirmed and seated.

Drug and biotech companies supported Lexmark, fearing, for instance, that catheters might be washed and re-used as a cost-cutting measure. At least that’s what they say. In the US, squeamish patients might balk at medical providers cutting corners on lower-cost devices. Nobody today employs single-use endoscopy tools when each one costs thousands or tens of thousands of dollars. Instead, they’re sterilized.

Lexmark won’t be appealing the decision because the Supreme Court is the court of last appeal.

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