The US Supreme Court has ruled that a company's patent claims end after the first sale and customers can refurbish and sell old products without the threat of being sued under patent laws by the product's original manufacturer.
The decision was handed down today in Impression Products Inc. vs Lexmark International, Inc., a case started years before when Lexmark sued the small West Virginia company for refurbishing and reselling old Lexmark ink cartridges.
Lexmark, who received legal backing from multiple other printer makers, argued that patents over the technologies included in ink cartridges were enough to prohibit Impression Products — and many other small-time vendors — from making a buck from refurbished ink cartridges.
The US Supreme Court wasn't impressed by Lexmark's argument that a patent's domain extends indefinitely and can prevent future sales of its product, even if the product has entered the legal ownership of another entity.
In a unanimous 8-0 ruling, the Supreme Court ruled that "extending the patent rights beyond the first sale would clog the channels of commerce."
The Supreme Court argued the case falls under the "first sale doctrine," which says the limitations of a company's patent end after the first sale.
Until now, Lexmark and other vendors have allowed printer prices to go down on the premise they could recoup costs and make a profit by selling ink cartridges at higher prices.
Companies like Impression Products have been buying, collecting, repairing, refilling, and/or reselling old ink cartridges at much lower prices.
Lexmark and other printer vendors have threatened these types of businesses in the past with lawsuits under patent law, in an attempt to keep business flowing to their cartridge selling operations. Today's Supreme Court decision would free these businesses from future patent infringement lawsuits, and will put a stop to a lot of similar litigation across the US.
The Supreme Court decision is also bound to have legal consequences for other fields outside the printer cartridge business.
This includes the markets for auto vehicles, medical devices, or agricultural equipment, which also heavily rely on patent law to prohibit third-party companies from selling refurbished parts.
Some of these companies have sponsored Lexmark's legal effort in an attempt to avoid a disaster in their market.
Even the digital economy might be affected by today's ruling, as many game and software makers have used the same patent law to restrict users from reselling their old video games, software licenses, music CDs, and other digital products.