This Week in Imaging: A Closer Look at the Landmark Impression Products v. Lexmark Case

Photo credit: Kathy Wirth

The big news this week was the U.S. Supreme Court’s decision in the long-running case, Impression Products v. Lexmark International, with the court essentially ruling that patentee’s patent rights are exhausted once a product is sold, either in the United States or abroad.

This was a big blow to Lexmark – now owned by China’s Apex Technology and a consortium of investors – as well as to other OEMs, and a big win for refurbishers, refillers, and resellers of toner and ink cartridges – including tiny Impression Products with its 25-employee workforce. (It was also a big blow to U.S. pharmaceutical companies, which have traditionally sold drugs at lower prices to poorer countries, and have tried to stop those in poorer countries from selling those drugs back to the United States at lower prices than sold in the United States.)

For the printer/MFP industry, the decision couldn’t have been received happily. However, it may not be all bad news. On the one hand, it would seem that non-OEM cartridge manufacturers still need to be wary of building non-OEM brand-new from-the-ground-up cartridges whose (new) parts may infringe on OEM patents. In these cases of new-built “XYZ-brand” cartridges, it would seem that the OEMs would still have a right to enforce their patents under patent law.

On the other hand, nothing would prevent third parties from refurbishing, refilling, and reselling OEMs’ depleted cartridges – as long as they could obtain those depleted OEM cartridges. This should give OEMs a lot more motivation to obtain those depleted cartridges so that third parties can’t obtain them (then refurbish, refill, and resell them).

That’s where, second, Lexmark’s Return Cartridge Program comes in. Lexmark’s Return Cartridge Program will still be in effect. Under the program, Lexmark Return Program Cartridges are sold at a discounted price versus the prices of regular cartridges in exchange for the customer’s agreement to use the cartridge only once and then return it only to Lexmark for remanufacturing or recycling.

Indeed, Bob Patton, general counsel for Lexmark, stated that the decision won’t affect Lexmark’s business strategy: “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 (emphasis added). Accordingly, the Lexmark Return Program will remain largely unchanged…”

Patton appears to be referring to this statement in the court’s written decision: “If the patentee negotiates a contract restricting the purchaser’s right to use or resell the item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit.”​

That means that under contract law – not patent law – Lexmark could sue customers who resold their Lexmark Return Program cartridges.

Other OEMs may also consider instituting similar programs – lower-priced cartridges in exchange for the customer returning depleted cartridges back to the OEM – since it will likely be key to keeping depleted cartridges from being re-sold.

Suing one’s customers, however, might not be the best thing for attracting and keeping customers, of course, and would be time-consuming, costly, and not the best PR, essentially requiring OEMs to police their own customers.

Legally, the U.S. Supreme Court decision appears to be the end for the Impression Products v. Lexmark litigation, and lower U.S. courts must abide by this ruling which means that it can’t be appealed to the U.S. Supreme Court. But the ruling – though unlikely – could theoretically be overturned, but in difficult ways: the U.S. Constitution must be amended (requiring approval by three-quarters of U.S. state legislatures, an extremely difficult process), or the U.S. Supreme Court can over-rule itself. The former is highly unlikely, but with the latter, the U.S. Supreme Court has over-ruled itself in the past, but only several times, and only usually after much time has passed, and after key historical changes have occurred – resulting in landmark, history-changing decisions. In a nutshell: it’s not likely this decision will be overturned – at least not for many years to come.

After a long holiday week in the United States, we saw no new hardware introductions, but, highlighting a key trend – securing printers, MFPs, and the documents and data they process – Lexmark was again in the news with a new security solution, Secure Document Monitor, as was Samsung with a new security app, Smart Security Manager.

Legal News

Supreme Court Rules in Impression Products v. Lexmark: No Patent Rights After Domestic and Foreign Sales – Read more here.

Authorities Seize 100,000 Counterfeit HP Toner Cartridges in Saudi Arabia – Read more here.

Canon Resolves Patent-Infringement Litigation with J&H Greentech and Trading – Read more here.

Office-Imaging News

Lexmark Beefs-Up Printer and MFP Security with New Secure Document Monitor –  Read more here.

Samsung Launches New Remote-Troubleshooting, Security Apps – Read more here.

HP Inc. CEO Weisler Critiques Xerox Dealer-Acquisition Strategy – Read more here.

HP Brings High-Capacity Ink-Tank All-in-Ones to South Africa – Read more here.

3D-Printing News

IDC Forecasts U.S. 3D-Printer Market to Grow at 14 Percent CAGR – Read more here.

Financial News

Toshiba Not Reporting Audited Full-Year Fiscal Results at Shareholders’ Meeting – Read more here.

Commercial- and Production-Printing News

New Fiery imagePRESS Server H300 for Canon imagePRESS C850, C750 and C65 Digital Presses – Read more here.

Market-Research News

Copier Careers’ Survey: 71 Percent of Service Techs Looking for a New Job – Read more here.

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May 2017

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