SCOTUS: Patent Rights Over a Printer Cartridge Are Exhausted When It Is Sold

IANAL but I was trained at one time as a real estate agent. This is not legal advice and especially does not constitute personalized advice about anyone's particular situation.

Real property is not chattel. There's an exacting legal distinction between real property and chattel.

In the US, real property deeds carry what in the real estate field is sometimes called a "bundle of rights" which are by default included together but can be separable. One is the occupation and use of the land. One is the right to dispose of it to another buyer. One is the mineral rights to what's below the surface. One is inheritability. One is the freedom to put the land to particular uses. It's possible for example to negotiate a contract in which a person, party A, has nearly full ownership of land for a lifetime but it then goes to another party, and party A is not free to sell to someone else in the meantime. It's possible that you own a home under which you own no oil or gold rights. It's possible even (at least in some places) to grant a deed with lease-like restrictions such as giving your ne'er-do-well child a house and land that he actually owns, but only so long as he completes rehab and no drugs are ever found there.

Deed restrictions are agreed to by a number of nearby landholders and depending on jurisdiction may count as a contract or may actually be more fundamental to the ownership of the property, which further may depend on how the property was conveyed to the buyer. In many states or counites / parishes in those states, deed restrictions are on file with a government office and apply only for a certain number of years. A certain number of landholders must agree to new restrictions. A certain lower percentage of them must agree to keep enforcing existing restrictions. Depending on the type of restriction, the nature of the organization enforcing, how equally they've been enforced in the past, the jurisdiction, and potentially other factors they may carry no weight at all or may result in civil actions up to fines, liens, and specific performance rulings to correct deviations.

In Houston, or maybe it was Harris County (most of Houston is in Harris County and much of the county's land is in the city, so it's easy to forget when not using the information that often) HOAs were told that the bylaws must be on record, must be provided to property holders, must be enforced 100% the same across all restricted plots, must be mentioned at regularly held meetings, and a few other conditions must be met or they were completely null and void. I live in a community with a reasonable HOA, and I'm glad it's neither a free-for-all (there's little to no zoning at the city level) nor one of those HOAs that charges hundreds of dollars a month to come and measure the grass and use a spectrometer on the exterior paint.

Perhaps also by a clever rebate scheme.

Product price is $180. Rebate is $40. Applying for and getting the rebate necessitates signing of a 'contract' which prohibits certain action. [1]

[1] May not hold up in advanced legal cases but enough of a leg to stand on to get the ball rolling.

This case sounds similar to the ruling back in the 1980's (I think) that came from a suit by the makers of Warn winches against a North Texas trailer maker/seller.

From flawed memory, the trailer sales business offered the Warn product line at prices well below those of other Warn dealers and below the suggested retail prices from Warn. He was sued by the manufacturer in an attempt to get him to raise the prices and he prevailed I think based on first sale doctrine since the court ruled that Warn had already been paid for the product and that ownership and control of the winches passed to the trailer manufacturer who was thus free to advertise and sell them at any price he desired even if it meant he took a loss on each one sold. They belonged to him and he could do as he pleased with them. He had been using them as a kind of loss leader where one of the incentives of buying a trailer allowed you to purchase a winch at a large discount.

EDIT: The case was not Warn winches, it was Ramsey winches and the ruling was:

(http://openjurist.org/753/f2d/416/pierce-v-ramsey-winch-comp...)

Briefly - I have a bad memory. The case was a lot more involved since Ramsey tried to terminate the distributor agreement and was thus sued by Pierce Sales. Pierce was a high-volume winch dealer and due to the high volume of sales he was able to buy the winches from Ramsey at the lowest price available to dealers. He then used that buying power to advertise the lowest prices for the winches and even offered other dealers the opportunity to buy hard-to-find winches directly from his stock at prices lower than they could buy directly from Ramsey if that particular winch was even available from Ramsey stock. Pierce alleged price-fixing by Ramsey and ultimately won the case.

I remembered the court case but almost none of the pertinent details.

Sorry.

No. That's what SCOTUS is saying. Lexmark is trying to enforce a contract over an item that they do not control. Is like if you signed a contract with me that every time you handed someone a glass of water, you would require them to say "thank you" in a non-native language. I have no control (legal or otherwise) over your actions or the glass or the water, therefore the contract is not enforceable.

In the case, Lexmark relinquished its rights to the physical product in question when they sold it. Then on the basis of patent law (the idea that they own the rights to the "idea" of the toner), they tried to say that you may not sell it to anyone else. What SCOTUS is pointing out is that Lexmark's patent does not grant them control of a product they made and sold.

To be clear here, the patent prohibit others from making (and subsequently selling) these toners, but if Lexmark made the toner, all bets are off.

Don't forget:

4) if HP & Lexmark are unable to use the DMCA to stop cartridge refillers, then the price of printers will go up, as the printer manufacturers won't be able to make any profit on cartridge sales. They'll instead have to make all their profit on the initial sale of the printer.