In this post I will write about a court case, regarding printer cartridges, which recently reached the U.S. Supreme Court. In a nutshell, the Supreme Court was faced this dispute: should individuals be allowed to refill their used toner cartridges? Despite the fact that this looks like a fairly simple argument, the verdict could have striking implications for numerous industries – these are discussed at the end of this blog post.
Eric Smith’s small company, Impression Products, fills and sells used printer cartridges. They do this in order to recycle and make use of old, empty printer cartridges that would have otherwise probably gone to landfill. This sounds innocent and harmless; Impression Products are not only saving the environment through their work, they’re making filled printer cartridges more affordable for those on low incomes. Unfortunately for Impression Products, the companies that initially supply and sell new printer cartridges to consumers, were not happy with this conduct.
Lexmark, in particular, decided to sue Impression Products. Their attack against Impression Products isn’t personal, it is part of a larger effort to shut down numerous small companies that they lose revenue to. Lexmark claim that it is not legal to re-sell their cartridges after they had already been sold because they have a patent which prevents this from happening. However, Impression Products’ main argument involves ‘patent exhaustion’ – this is when the patent-holder (i.e. Lexmark) of a good (i.e. printer cartridges) makes all of their money from the first sale of the good. After this, the buyers of the good are free to do whatever they want with the good (i.e. give them to Impression Products for re-sale). The point at which ‘patent exhaustion’ comes into effect, if it ever does, after a consumer buys a good has been long disputed – this is why the Lexmark vs Impression Products case is so controversial.
Recently, on Tuesday 21st March 2017, the U.S. Supreme Court had oral arguments over the Lexmark case (the link to the full transcript is at the end of the post). An actual Supreme Court ruling is likely months away from occurring, but at least this gives us an idea of which direction the judges are currently leaning. This is important because the eventual ruling of the case will affect all types of consumers. To boil it down, the question being asked is: how much control do companies have over the products they sell? Currently, the idea of ‘patent exhaustion’ is very real; companies have limited power over what happens to their sold products as consumers pretty much have the right to do whatever they want with them. For example, despite the fact that your new toothbrush came with a guide that said ‘only use to clean your teeth’, in reality, after you bought the toothbrush you had the freedom to use it in whatever way you wanted. However, since this very idea of ‘patent exhaustion’ is being attacked by Lexmark, if the Supreme Court decide to give more control to patent-holders over the use of their products after sale, the implications for all consumers are huge.
To put this into context, let’s assume that the Supreme Court rule in favour of Lexmark and award them with more rights to control the use of their printer cartridges. This allocation of rights will spread across all industries and patent-holders. It will mean that your freedom to use a good that you have purchased will be diminished considerably. For example, if you choose to buy a new Tesla car, Tesla could sue you for patent infringement if you decide to pursue maintenance and repairs of the vehicle at an independent mechanic. You will be trapped into paying for the expensive maintenance provided by Tesla mechanics. Alternatively, if you buy something as simple as a notepad from WHSmith (a stationary retailer in the UK), you could be sued if you choose to write with a pen that is not from WHSmith. Something as petty as this would become a big issue.
Every aspect of your life would be heavily controlled and restricted depending on the companies and brands that you choose to buy into. This will all be decided by the Supreme Court, and it is the reason that you should care about their ruling.
This NPR Planet Money Episode inspired this post.
The featured image was from the Wall Street Journal.
Some more articles which informed this post: