High Court Takes Patent Case on Refilled Lexmark Cartridges

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By Tony Dutra

Dec. 2 — The U.S. Supreme Court agreed Dec. 2 to review the rules on when patented products are infringed after their first sale in a case involving Lexmark International Inc. printer cartridges ( Impression Prods., Inc. v. Lexmark Int’l, Inc. , U.S., review granted 12/2/16 ).

Under current patent exhaustion law, Impression Products Inc. is liable for infringement when it buys up empty, patented inkjet cartridges sold by Lexmark and sells the refilled cartridges. The high court will consider whether Lexmark can restrict buyers from selling spent cartridges, and whether the rule changes if the sale is overseas and the refilled cartridges are imported into the U.S.

Computer and other electronics companies generally support Impression and changing the standards. They complain that there is a chance of unintentional infringement when importing complex products covered by hundreds of different patents. Biopharmaceutical stakeholders, on the other hand, want current law retained in order to stop imports of lower-priced drugs from foreign markets.

Government Supported Review

Impression filed its petition in March contesting a 10-2 ruling by the full U.S. Court of Appeals for the Federal Circuit. Lexmark Int’l, Inc. v. Impression Prods., Inc., 816 F.3d 721, 117 U.S.P.Q.2d 1817 (Fed. Cir. 2016) (en banc).

The importation aspect of the case was most prominent at the time, as the appeals court had to distinguish patent law from copyright law. The Supreme Court had held that a copyrighted article sold outside the U.S. invokes the first-sale doctrine and can’t infringe in the U.S. after importation. Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 85 PTCJ 695, 3/22/13 (2012).

The U.S. government, responding to the high court’s call for its views on Impression’s petition, rejected the Federal Circuit’s view that an overseas sale never exhausts a patent holder’s domestic rights. Instead, a “rule of presumptive exhaustion should apply,” permitting a patent holder to “reserve his U.S. rights as part of a foreign sale if he does so expressly,” the government said.

The government’s brief, filed by Acting Solicitor General Ian Heath Gershengorn, agreed with Impression on the resale-restriction question as well. So long as the original cartridge’s sale was authorized under Lexmark’s agreement with its customer, Lexmark’s only cause of action is against the buyer for contract breach, it said. Impression, by contrast, is protected under the exhaustion doctrine, it said.

Intel Corp. and Vizio Inc. filed an amicus brief reflecting the interests of the electronics industry. Seven other third-party briefs supported review. The biopharmaceutical industry’s viewpoint is exemplified by the Biotechnology Innovation Organization’s amicus brief filed when the Federal Circuit heard the case.

Impression’s brief on the merits is due Jan. 16. Lexmark’s brief is due 30 days after Impression’s filing. The case will likely be heard in March or April and decided before the end of the Supreme Court’s term in June.

Andrew J. Pincus of Mayer Brown, Washington, represents Impression. Constantine L. Trela Jr. of Sidley Austin, Chicago, represents Lexmark.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

For More Information

Text of petition available at http://src.bna.com/ke1.

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