Impression v Lexmark ruling may reduce options for patent owners, say lawyers
The US Supreme Court handed down its decision in the Impression Products v Lexmark dispute yesterday, with several lawyers tipping it to have a considerable impact on patent owners.
Chief Justice John Roberts delivered the opinion, stating that the “patentee’s decision to sell a product exhausts all of its patent rights in that item”.
The dispute stemmed from a patent infringement lawsuit brought by Lexmark, a seller of printer cartridges, which alleged that Impression had infringed by selling modified products that were obtained abroad before being imported to and sold in the US.
According to Michael Albert, chair of the litigation practice group at Wolf Greenfield, the decision is likely to have a considerable impact on the way in which foreign sales of patented products are approached, but not on patent owners’ ability to enforce use or resale restrictions.
“Patent owners now have fewer options to prevent patented products sold abroad from being imported into the US,” he said.
“Although patent owners are not left without any recourse, they can no longer brandish patent rights to control the downstream movement of the patented goods.”
Albert concluded that it is unclear whether the decision will have a major impact on most patent owners’ “already limited ability to enforce use or resale restrictions”.
Tom Kohler, director at Downs Rachlin Martin, referred specifically to the court’s use of four cases from the 19th century as evidence “of just how far out of touch the Supreme Court is with respect to patent law”.
He said: “They reach back to precedents from the 19th century and even further back to ancient English common law as if patent law involved some sort of timeless, natural justice principles, rather than being fundamentally an economic-based law governing business transactions.”
He concluded that the decision will hit small companies with limited products harder than “later companies with diverse products and patents”.
After Lexmark filed its lawsuit, Impression then counterclaimed, arguing that Lexmark’s patent rights had been exhausted. It also argued that Lexmark’s original sale had made Impression’s resale and importation non-infringing under the doctrine of exhaustion.
The US District Court for the Southern District of Ohio handed down a mixed ruling.
Both companies appealed against the decision to the US Court of Appeals for the Federal Circuit, which sided with Lexmark in an en banc decision.
The Supreme Court decision to reverse the Federal Circuit’s ruling may open the door for new business opportunities.
For example, the number of businesses that re-import goods into the US that are sold overseas where there is a price difference between the products is set to increase, according to Ronald Schutz, partner at Robins Kaplan.
He added: “The winners from the decision are those companies that repurpose or reuse items that are covered by patents.”
He said that although the court “left open the possibility that patent holders could attempt to impose post-sale restrictions through contracts, this will be a very difficult thing to do in the consumer products arena.
“This decision will certainly open up new business opportunities,” he added.
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