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

law.cornell.edu

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

#91

Post by socalnate1 »

gnicholas wrote: post #89
ChuckMcM wrote: post #84

Yay, hopefully this will translate into a non-crazy ink refill situation which will translate into a much reduced price in ink cartridges. My hope is that the following will occur; 1) People who sell re-filled cartridges, and offer to refill your existing cartridges will no longer suffer malicious lawsuits from HP & Lexmark. 2) That will increase the supply and create a price competition between re-fillers. Making it…

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.

Isn't this a good thing? I'd rather not companies obfuscate the true cost of the things I buy.

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

#93

Post by LukeShu »

gameshot911 wrote: post #65

Can someone clarify one part: >The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark. >As a result, even if the restrictions in Lexmark’s contracts with its customers were clear…

I only skimmed the Opinion of the Court, but AFAICT:

The contract was between Lexmark and the consumer. If the consumer violates that contract and sells to a re-manufacturer, then the re-manufacturer may refill the cartridges, as the re-manufacturer never entered in to a contract with Lexmark.

To the degree that the contract is enforceable, then it is with individual consumers. No individual consumers were parties to the case, so the validity of the contract wasn't ruled upon.

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

#94

Post by EpicEng »

joshuak wrote: post #62
touchofevil wrote: post #48

If you want to learn about a really interesting aspect of the "first sale doctrine" and how it applies to software, you should have a look at "Vernor vs Autodesk" in the USA and compare it to "Oracle vs UsedSoft" in the EU. Basically, in the USA the courts determined that if a company sells you software, but in their terms & conditions claim that they are merely granting you a license, then you can't resell the softw…

That sounds a little better than the ridiculous Autodesk decision, however it sounds trivial to circumvent by simply putting a 'term of license' clause in the EULA. I'd go so far as to say I don't think EULAs should be considered a valid legal instrument.

My uneducated opinion is that it wouldn't matter, in the same way that you cannot sign away your right to warranty in the EU.

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

#95

Post by gech »

ghaff wrote: post #70
SeanDav wrote: post #50

I can't believe that the printer market has not been disrupted by someone offering a decent printer without ridiculous ongoing printer cartridge costs. I just bought a £99 printer that will cost more than £99 in printer cartridge costs after just a few months of casual use and I did not spot any alternatives.

The alternative for most people is to buy a cheap laser printer. You don't need color for most things and the operational costs are far lower. To answer your question, though, the profits for fairly low margin printing hardware business need to come from somewhere. Sure, you can cut the margins on ink. Now you're paying $500 for the printer whether you use it heavily or just now and then.

Why can't they just accept lower margins

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

#96

Post by awinter-py »

phkahler wrote: post #77
joshuak wrote: post #62

Earlier quoted context omitted.

That sounds a little better than the ridiculous Autodesk decision, however it sounds trivial to circumvent by simply putting a 'term of license' clause in the EULA. I'd go so far as to say I don't think EULAs should be considered a valid legal instrument.

>> I'd go so far as to say I don't think EULAs should be considered a valid legal instrument. Agreed. The EULA is not even mentioned at the point of sale. Most notably, the company that sold the software often has no idea who has entered into such an (alleged) agreement with them. I thought acknowledgement was a critical part of contract law, but somehow clicking a virtual button in private is claimed to qualify.

contract-wise it seems from case law they're on pretty steady ground. Of consideration + capacity + intent, capacity is probably the trickiest when you're not in person with the counterparty.

I think the more interesting angle of attack is by calling this a contract of adhesion, i.e. saying that the vendor is using their superior market position to force a long and disadvantageous contract on customers.

At the point where EULA was being invoked for many or most buyers, you could probably file a class action claiming the product was falsely advertised (i.e. it costs not $9.99 but $9.99 plus 100 hours of legal fees).

The uniform code of commerce is very concerned about terms hidden in long contracts, which is the reason some parts of long EULAs are in caps.

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

#97

Post by mbreese »

gameshot911 wrote: post #65

Can someone clarify one part: >The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark. >As a result, even if the restrictions in Lexmark’s contracts with its customers were clear…

Yes, assuming the contract was valid. Lexmark could in that case sue their customers that sent cartridges to a re-manufacturer. The only one with a relationship with Lexmark is their customer, so that's the only entity they could sue. (However, given that this isn't a case involving Lexmark and a customer, the court didn't rule on that contract, just acknowledges the possibility.)

"If the patentee negotiates a contract restricting the purchaser’s right to use or resell the item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit."

Although, this brings up an interesting idea, which may be the logical conclusion to all of this. The patentable parts at play here are in the cartridge, and it was the sale of that that exhausted their patent rights. Now if Lexmark decided that it was only going to sell you the toner, but maintained ownership of the cartridge, then they'd be able to sue any re-manufacturer, regardless of their source (domestic vs abroad end users). Because (a) it would be patent infringement and (b) it would be selling stolen goods.

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

#98

Post by moomin »

joshuak wrote: post #62
touchofevil wrote: post #48

If you want to learn about a really interesting aspect of the "first sale doctrine" and how it applies to software, you should have a look at "Vernor vs Autodesk" in the USA and compare it to "Oracle vs UsedSoft" in the EU. Basically, in the USA the courts determined that if a company sells you software, but in their terms & conditions claim that they are merely granting you a license, then you can't resell the softw…

That sounds a little better than the ridiculous Autodesk decision, however it sounds trivial to circumvent by simply putting a 'term of license' clause in the EULA. I'd go so far as to say I don't think EULAs should be considered a valid legal instrument.

Shouldn't be, but most definitely are as a matter of settled law in the US. :(

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

#99

Post by djrogers »

SeanDav wrote: post #50

I can't believe that the printer market has not been disrupted by someone offering a decent printer without ridiculous ongoing printer cartridge costs. I just bought a £99 printer that will cost more than £99 in printer cartridge costs after just a few months of casual use and I did not spot any alternatives.

Assuming you're referring to inkjet style printers - Epson did exactly that with their Ecotank printers. Big (by ink cartridge standards) tanks in the printer you fill up with relatively cheap bottled ink. Got my wife one for the homeschool classroom and it lasts a long time for very little $$.

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

#100

Post by LukeShu »

tbirrell wrote: post #87
gameshot911 wrote: post #65

Can someone clarify one part: >The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark. >As a result, even if the restrictions in Lexmark’s contracts with its customers were clear…

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, Lexma…

No. Lexmark can negotiate a contract with its customers (this is unrelated to patent rights). But, if the customer sells the item to a 2nd customer (possibly in violation of the contract), then that 2nd customer is not subject to the contract, as the contract was between Lexmark and the initial customer.

SCOTUS is saying that they can't use patents to say you may not sell to anyone else. You can instead use contracts to say these things, but those contracts are with the initial customers only, and don't "flow through the market" with the item.

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