Patents, Patents, and more Patents

The US Supreme Court voted 7-1 to place more limits on the rights of patent-holders, striking down a decision by the nation's top patent court for the second time in two weeks.

In Impression Products v. Lexmark International, the justices' opinion (PDF) made crystal clear that once a patented item has been sold once, the patent is "exhausted" and can no longer be enforced. That's true even if the sale happened abroad and the item was later imported. Lexmark had two different strategies for trying to control how its cartridges get re-used; the high court struck down both of them and paid scant regard to various industry briefs pleading to maintain the pricing structures used by Lexmark and others to maintain profits.

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Lexmark offers US buyers two different ways to buy printer cartridges: pay full price for a regular cartridge or get a 20-percent discount by using a "Return Program" cartridge, which entails agreeing to return the cartridge to Lexmark.

That contractual obligation was reinforced by a technical measure, as well: a microchip that Lexmark installed inside Return Program cartridges prevented them from being reused by anyone other than Lexmark. Those microchips got hacked, though, by third parties who created their own, unauthorized replacement microchips.

Lexmark sued Impression, alleging two different kinds of violations of patent law. First, Impression was accused of buying Return Program cartridges, altering their chips, re-filling them, and re-selling them in the US. Second, Impression bought some Lexmark cartridges abroad and imported them into the US. Lexmark said all the cartridges in that second group infringed its patents, whether they were Return Program cartridges or Regular. The Federal Circuit held that in both cases, Lexmark could go ahead and sue, in part because Impression had full knowledge of exactly the restrictions that were placed on the cartridges.

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