On May 30, 2017, the United States Supreme Court ruled in Lexmark’s patent infringement suit against Impression Products for refurbishing and reselling Lexmark printer cartridges. Lexmark sued on theories of Patent Infringement and Breach of Contract.
Prior to the dispute, Lexmark tried to prevent the third-party refilling and reselling of its used cartridges by implementing a “Return Program.” The program offered customers a twenty percent discount on their next purchase if they agreed to return the cartridges after their use.
Companies like Impression Products acquired, refurbished, and resold Lexmark ink cartridges that were either sold or part of the Lexmark “Return Program.” Lexmark sued on patent infringement and breach of contract grounds, arguing that Impression was barred from participating in the return program by contract and patent law. Considering the Patent claim, the United States Supreme Court held, “that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale” thereby upholding the rather common sense idea that purchases who buy things get to decide what they do with those things after purchase. This ruling upholds the venerable and interchangeably named “First Sale Doctrine" / "Exhaustion Doctrine."
The primary purpose of First Sale rights is to protect resellers of products, like Impression Products, who lawfully acquire and resell products, from abusive suits alleging intellectual property rights. As the monopoly given through intellectual property rights to producers exist as an incentive to the producer in exchange for a tangible benefit to the public, the First Sale doctrine creates an important limitation on the power of intellectual property owners to police the use of their products after sale. If Lexmark had the right to sue resellers of its patented ink cartridges, the primary economic justification behind patent law (a grant of a monopoly for twenty years in exchange for public disclosure of the novel idea) would be frustrated. The Lexmark decision is another in a long line of cases upholding this important principle in intellectual property law.