Supreme Court leans towards Aftermarket in Oral Arguments
By Tricia Judge, Executive Director
After a chilly, even hostile reception at the appellate level, the US Supreme Court appears warmly open to domestic patent exhaustion. As for international patent exhaustion after the first sale of a cartridge, they appear ready to overturn the lower court on that issue as well.
Oral arguments in the case of Impression Products v Lexmark Inc. were held on Tuesday morning. Lexmark has been using this unsettled area of patent law to threaten – or sue – remanufacturers when they “violate” the return program by remanufacturing cartridges, or buy cores first sold in Canada or overseas for remanufacturing.
An incredulous industry and public wondered how this could be legal? Even Justice Alito pondered on Tuesday, “Why isn’t this codified?” But that is a better question for Congress than aftermarket attorneys.
The Supreme Court seemed to be most vexed by the U.S. government’s answer to the question of whether to exhaust patents that were first sold outside the U.S. The Solicitor General suggested that a foreign first sale presumptively exhausts US patent rights, unless the US patent owner expressly reserves those rights in the terms of the foreign sale. Both Justices Breyer and Kennedy wondered how that could be done. Kennedy said, “do we put a sticker” on the product? If so, that would be “a boon for sticker companies.”
Fellow aftermarket attorneys left the court stating that the first issue would most likely be “a slam dunk” win for the aftermarket. The question of international exhaustion of patent rights will be harder to prevail upon. However, Justice Sotomayor stated that she saw no reason to treat patent rights differently than copyrights, which were recently deemed exhausted in another.
With most of the remaining eight justices indicating they favor the clear-cut case for exhaustion as well, the aftermarket may soon have these impediments to domestic and international commerce removed. The sticker market will probably have to look elsewhere for its boost.
As an attorney admitted to the US Supreme Court Bar, I had a front row seat to the Oral Arguments. Look for more in depth reporting on this important case from the International Imaging Technology and Recycling Times Media.