The U.S. Supreme Court ruled this morning that Lexmark International Inc. -- the Lexington-based maker of printers now owned by a Chinese consortium – does not have patent rights to its printer cartridges after they are sold.
Lexmark sells printer cartridges that it also designs and manufactures. It does so both directly at full price and under a discount plan it calls “Return Program” that offers the cartridges at a lower cost but requires buyers to use it once and return the items to Lexmark. In it’s ruling, the court essentially says the act of selling the product invalidates, or “exhausts,” any patent rights regarding the use of that product.
“Lexmark exhausted its patent rights in the Return Program cartridges that it sold in the United States,” the court ruling reads, in part, in the case Impression Products Inc. v. Lexmark International Inc. “A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.”
Bob Patton, senior vice president and general counsel for Lexmark, said Wednesday morning the company was unhappy with the ruling but it looking ahead.
“While we are disappointed by today’s decision, we note that the Court confirmed that the Lexmark Return Program agreement remains clear and enforceable under contract law,” Patton said in a statement to Business Lexington. “Accordingly, the Lexmark Return Program will remain largely unchanged and will continue to offer customer choice and promote environmental sustainability. Lexmark customers always have a choice between a full-price unrestricted cartridge or a discounted Return Program cartridge, which can be used once and then returned to Lexmark to support our own environmentally-friendly remanufacturing program.”
Lexmark had sued Impression Products and several other companies that refill ink cartridges. In the case against Impression Products, Lexmark claimed the refill company violated its Return Program contract restrictions by using cartridges sold in the U.S. under that program. It also claimed Impression Products violated its patents by importing cartridges originally sold abroad.
Chief Justice John Roberts delivered the decision, which was joined by justices Anthony Kennedy, Clarence Thomas, Stephen Breyer, Samuel Alito, Sonia Sotomayor and Elena Kagan. Justice Ruth Bader Ginsburg offered a separate opinion that agreed in part with the majority while dissenting on other grounds. Newly seated Justice Neil Gorsuch did not consider the case.
For more on Lexmark, see Business Lexington's profile of new CEO David Reeder here: Lexmark's new leader hits reboot button