Mr. Beat presents
Supreme Court Briefs
Charleston, West Virginia 2010
A company called Impression Products makes money by buying up old printer toner cartridges, refilling them with more toner, and selling them at a much lower price than it’d cost to buy one brand new.
Well, Lexmark, one of the companies that makes those printer toner cartridges, didn’t like that so much, as it was, you know, cutting into their profits.
Lexmark sued Impression Products, arguing that by fixing up and reselling its old printer cartridges without their permission, Impression was not respecting the patent Lexmark held on them.
Lexmark said it didn’t just own the patent for the product when it first sold- it owned it for future resales, and they thought they deserved some of that profit Impression was getting.
So first, we are talking about United States patent law here, which Article 1, section 8, clause 8 of the Constitution talks about.
“Promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries”
But could you be more specific please?
Well it’s all spelled out in Title 35 of the U.S. Code, which I’m not going to read to you because that would put you to sleep.
One thing that is important here is what’s known as the exhaustion doctrine, which limits how much control someone has over their patent once the final sale is made.
For example, if I make a guitar and sell it to Jim Bob, and Jim Bob later converts that guitar into a boat and resell it as a boat, the exhaustion doctrine applies.
I don’t get some of that profit from Jim Bob selling the boat.
Basically, there were two parts to this case.
One, as I mentioned earlier, Impression was reselling the cartridges after it re-filled them with toner, but two, they were also importing cartridges Lexmark had sold in other countries.
The district court said that patent was exhausted, yo.
So Impression could refill those cartridges.
However, it also said that didn’t apply to those imported cartridges because there wasn’t a law or case that said patent protections ended for stuff sold outside the country.
So both sides appealed.
It ended up in the Federal Circuit of DC.
They voted 10-2 in favor of Lexmark for BOTH parts of the case, using two other federal circuit cases to back up their ruling.
That said, they said buyers generally could do what they want with a patented product after they bought it.
But if patent holders wanted restrictions, they should be respected.
Impression appealed again, and the Supreme Court agreed to look at the case, hearing oral arguments on March 21, 2017.
That wasn’t that long ago guys. The newly appointed justice Neil Gorsuch didn’t hear arguments, so he did not vote in this one.
In addition to looking at the exhaustion doctrine, the Court revisited a 2013 case called Kirtsaeng v. John Wiley & Sons, in which the Court said the exhaustion doctrine did apply to patents made in other countries.
Impression was hoping that would help their case.
On May 30, 2017, the Court announced its decision. It sided with Impression Products.
For the first part about the exhaustion doctrine, it was unanimous, 8-0.
After a patent holder sold their product, that is it man.
So Lexmark couldn’t try to get some of that profit Impression was getting.
Chief Justice John Roberts used the example of a used car dealership to explain why they sided with Impression.
“The (used car) business works because...the shop is free to repair and resell those vehicles.
That smooth flow of commerce would sputter if companies that make the thousands of parts that go into a vehicle could keep their patent rights after the first sale.”
For the second part dealing with imported toner cartridges, it was 7-1 in favor of Impression.
The only dissent came from justice RBJ, Ruth Bader Ginsburg, who argued if the item was sold outside of the United States independent of U.S. patent law, it doesn’t make sense that the exhaustion doctrine apply to it.
Man...speaking of exhaustion...I’m exhausted.
This was heavy stuff.
Impression Products v. Lexmark was a victory for consumers and a major setback for companies trying to use their patents to attack other companies.
Ultimately, the prices of a lot of stuff, not just printer cartridges, will go down in the future because of this case.
Hey that works out. I like cheap stuff!
Oh, and today, Impression uses their Supreme Court victory to promote their company, on their very cheesy website.
I’ll see you for the next Supreme Court case, jury!
Thanks to my very generous Patreon supporter Roux Rinner for suggesting this Supreme Court case.
And I know this may be asking a lot here, but If this video gets at least 2,000 likes within the first 48 hours I will get a tattoo of the Declaration of Independence on my cheek.
Thanks for watching this boring video about printer toner.
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