The Intellectual Property Owners Association Backs China Owned Lexmark. IP Owners Group Backs Lexmark In Patent Exhaustion Row
By Kelcee Griffis.
Law360, New York, February 2017 — The Intellectual Property Owners Association backed printer cartridge maker Lexmark International Inc. before the U.S. Supreme Court on Wednesday, arguing in an amicus brief that it should uphold the Federal Circuit’s en banc decision that overseas sales of a product don't exhaust a patent owner's right to sue in the U.S. The trade association, which represents entities that own and license intellectual property rights, told the high court it should avoid upending well-established patent law precedents and affirm that patent owners should be given flexibility to control the way products are used after they’re sold.
“That holding will provide the parties to sales and license contracts maximum flexibility to arrive at commercially feasible and procompetitive arrangements,” according to the brief.
The dispute stems from Impression Products Inc.’s business of refurbishing and reselling used printer cartridges. Impression, a small West Virginia company, does not dispute that the refilled printer cartridges infringe on a Lexmark's intellectual property, but argues that Lexmark's patent rights were exhausted.
The trade association contended Wednesday that giving patent holders the right to reasonably oversee the life of a product is in everyone’s best interest.
“Allowing a patentee to exercise control over end products incorporating patented technology by imposing restrictions on, for example, quality or resale, protects the consuming public and the patentee’s reputation,” the association said.
The group told the justices that overturning the Federal Circuit’s decision, which concluded a 2013 U.S. Supreme Court decision that foreign sales exhaust copyrights has no impact on patent law, would have a disruptive effect.
“Recognizing international patent exhaustion undercuts the incentive to innovate and market patented articles abroad, stifling foreign commerce and its benefits in both the developed and developing world,” the brief said.
Impression Products appealed after the Federal Circuit in February rejected both of its main arguments and held that foreign sales never exhaust U.S. patent rights and that post-sale restrictions on patented items are permissible. Impression had argued that since some of Lexmark's cartridges were sold outside the U.S., those foreign sales exhausted the company's patent rights. The district court ruled in 2014 that such sales did not exhaust Lexmark's rights, and the Federal Circuit agreed.
The justices agreed to hear the case in December, at the urging of the U.S. Solicitor General’s Office. Several outside businesses and groups have weighed in throughout the case, including the Electronic Frontier Foundation.
Earlier this month, Lexmark filed its own brief, arguing in the Feb. 16 document that Impression is basically seeking to establish “an unalterable rule” that would have impractical implications.
Under Impression’s requests, “every patentee-authorized sale of a patented article anywhere in the world, no matter what the agreed terms of sale, must transfer all U.S. patent rights over that article,” Lexmark contended.
The association is represented by Robert M. Isackson, William D. Coston and Joshua C. Cumby pf Venable LLP.
Impression Products is represented by Andrew J. Pincus, Paul W. Hughes and Matthew A. Waring of Mayer Brown LLP and Edward F. O'Connor of Avyno Law PC.
Lexmark is represented by Constantine L. Trela, Robert N. Hochman, Benjamin J. Beaton and Joshua J. Fougere of Sidley Austin LLP, Timothy C. Meece, V. Bryan Medlock Jr., Jason S. Shull and Audra C. Eidem Heinze of Banner & Witcoff Ltd., Steven B. Loy of Stoll Keenon Ogden PLLC, and in-house counsel D. Brent Lambert.
The case is Impression Products Inc. v. Lexmark International Inc., case number 15-1189, in the Supreme Court of the United States.