Imaging Supplies Coalition Files Brief in Support of Lexmark with U.S. Supreme Court

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The Imaging Supplies Coalition (ISC), a non-profit trade association made up of original equipment manufacturers (OEMs) of printer and copier/MFP imaging supplies and equipment, reports today that it’s filed an amicus brief with the U.S. Supreme Court in support of Lexmark International in the case of Impression Products Inc. v. Lexmark International Inc.

The members of the ISC are: Brother International Corporation, Canon U.S.A., Epson America, HP, Lexmark International, Samsung; and Xerox.

Background

The case centers around how much control a company – in this case, Lexmark – should have over products it’s sold – in this case, printer toner cartridges.

In Impression Products, Inc. v. Lexmark International Inc., printer company Lexmark sold printer cartridges with restrictions on refilling them and reselling them. Impression Products acquired used Lexmark cartridges and then refilled and resold them, sparking a lawsuit from Lexmark, with Lexmark claiming that Impression Products infringed on its patents by doing so.

In February 2016, the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., decided in Lexmark’s favor, ruling that a customer’s use of a product can be “restricted” by the patent owner with something as simple as a notice on disposable packaging.

ISC Brief’s Argument

According to the ISC, “both rights holders and consumers benefit from a rule of patent exhaustion that allows for valid use-restrictions and respects the territorial boundaries of U.S. patent law.” In its brief, the ISC urges the court to “affirm the decision below and maintain the stable and long-standing practices of patent holders and downstream users that contribute to a vibrant and healthy U.S. economy.”

ISC is represented at the Supreme Court by Burns & Levinson partners Mark Schonfeld and Sara Beccia.

In asking the court to uphold the rules of patent exhaustion set forth by the Federal Circuit, ISC argues, “To do otherwise would be inconsistent with long-standing and stable precedent with respect to the patent exhaustion doctrine. The rules and limits on the patent exhaustion doctrine set forth in the decision below have been relied upon by rights owners in: developing and investing in innovative new products; supporting the availability of products in less-developed countries through price differentiation and market segmentation; designing and executing programs against infringement and gray market exploitation; structuring and relying upon valid patent license use-restrictions that incentivize innovation and reward research and development; and developing important policies and programs that enhance consumer choice, quality control and OEM reputation, health and safety, and environmental preservation.”

“Consumable imaging supplies and equipment are a repeat market with a ready supply of empty consumed units, which means infringers and arbitragers have relatively easy access to use patented goods to create an illegal aftermarket in imaging supplies,” said Allen Westerfield, president of ISC. “OEMs in the imaging supplies industry must wage a constant battle against unauthorized and infringing activity to protect their valuable intellectual property rights, to maintain the goodwill associated with their brands, and to protect their consumers from inferior products that trade off the OEMs’ well-earned reputations.”

In the case, Impression, which refurbishes, refills and resells Lexmark cartridges, argues that Lexmark’s patent rights were exhausted.

Patent right exhaustion of a first sale outside of the U.S. and elimination of use restrictions would cause serious policy issues. The Federal Circuit said that foreign sales do not exhaust U.S. patent rights, and that certain post-sale restrictions on patented items are permissible,” said Mark Schonfeld, the partner at Burns & Levinson who led the writing of the brief. “If the Supreme Court overturns the Federal Circuit’s ruling, it will also have broad implications for many other industries like pharmaceutical companies that sell drugs at lower prices in foreign countries. Reversing current law could inhibit U.S. pharmaceutical companies from pricing drugs in developing economies to meet the needs of these emerging markets.”

ISC’s brief also lays out an argument concerning “the importance of upholding a territorial rule of exhaustion, which the organization argues properly incentivizes innovation in the United States, supports economic development, allows for beneficial global price differentiation and market segmentation, enables patentees to meet the needs of underdeveloped markets, and aids in combating unauthorized gray markets and counterfeiting while supporting consumer protection.”

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