The U.S. Supreme Court sided with the Charleston-based Impression Products in a patent rights case Tuesday, which will greatly reduce patent control after a sale and is expected to benefit companies that resell items produced by other businesses.
Printing giant Lexmark sued Impression Products, which supplies and repairs printing equipment to companies in West Virginia, in 2010 for patent infringement after the small business refilled and resold used Lexmark toner cartridges. Impression Products argued Lexmark's patents are no longer in effect once a cartridge is sold because of the United States' first-sale doctrine, allowing it to sell the cartridges it bought as it pleases. However, Impression Products purchased some of its cartridges outside the United States, leading to a debate on the doctrine's application for foreign purchases.
The Supreme Court ruled Lexmark's cartridges no longer were protected by patent law in both Impression Products' domestic and foreign purchases, saying where a product is purchased does not affect the first-sale doctrine. That reverses the Federal Circuit's decision, which upheld Lexmark's patent rights in both instances, saying it "clearly communicated restrictions on the buyer's reuse and resale."
"I'm just so excited with the ruling," said Impression Products owner Eric Smith, who runs the business of 25 employees out of a small office and warehouse on Dutch Road. "It's not just a victory for us. It's a victory for pretty much every consumer in the world."
Chief Justice John Roberts issued the Supreme Court's decision, which was joined by all other justices in full except for Justice Ruth Bader Ginsburg, who dissented in part to the opinion on patent rights for foreign sales.
"[Patent exhaustion] does not depend on whether the patentee receives a premium for selling in the United States, or the type of rights that buyers expect to receive," Roberts wrote in his opinion for the court. "As a result, restrictions and location are irrelevant; what matters is the patentee's decision to make a sale."
The opinion added a product "is no longer within the limits of the monopoly" once sold and becomes the purchaser's property with all of the rights and benefits.
Roberts wrote that ending or compromising the first-sale doctrine would make it difficult for companies that deal with used parts, such as a used car shop, to succeed.
"That smooth flow of commerce would sputter if companies that make the thousands of parts that go into a vehicle could keep their patent rights after the first sale," Roberts wrote. "Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement."
Lexmark argued before the Supreme Court that patent rights vary widely throughout the world and having the doctrine apply for international sales could negatively affect the business of U.S. companies in trade abroad.
Impression Products received the support of companies that frequently deal with international supply chains like Samsung, Costco and Google. Pharmaceutical and medical companies like Pfizer and Medtronic backed Lexmark, arguing the patent rights are needed to prevent lawsuits for the products they originally produced.
Smith said the decision will help both companies that rely on reselling products and consumers looking for cheaper alternatives.
"It just gives everyone like us the confidence to sell their product and thrive," he said.
The federal government recommended the Supreme Court review the case last year, with then-Acting Solicitor General Ian Gershengorn arguing the Federal Circuit's decision would mark the end of the first-sale doctrine.
It wasn't initially clear which way the Supreme Court would rule, according to a Lexology article written by lawyers Christopher Loh and Chitra Kalyanaraman in March.
"The other Justices [besides Justice Stephen Breyer] seemed to acknowledge that Impression's positions on both the domestic and foreign sales questions would disrupt settled expectations and present serious consequences," the article reads.
Smith said he is looking forward to running Impression Products, which he took over from his father more than 20 years ago, with his mind free of the legal battle. Prior to the case, Lexmark had a history of threatening other small companies that resold their products, according to Smith.
"[Lexmark was] intimidating so many companies like ours," he said. "They were all scared to death. But I'm proud to say it was a West Virginia company that took the fight to them and won."
Smith said the case has given Impression Products a national spotlight. He said he hopes to use that spotlight to see more business from companies outside West Virginia that need printing equipment.
Lexmark's communications office did not respond to interview requests.
Reach Max Garland at max.garland@wvgazettemail.com, 304-348-4886 or follow @MaxGarlandTypes on Twitter.