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Cartridge Aftermarket Supports Case for Free Competition in Imaging Supplies; Automotive Aftermarket Joins Them

Posted Date 11/26/14

On November 19, the International Imaging Technology Council (Int’l ITC) has once again filed a friend-of-the-court brief, this time in the case ofLexmark Int’l Inc. v. Ink Technologies Printer Supplies,  which is being heard by theU.S. Court of Appeals for the Federal Circuit. 

 

This is the fourth amicus brief filed by the Int’l ITC in support of free trade in imaging supplies.  The other three were filed with the U.S. Supreme Court level and are available to Int’l ITC members at www.i-itc.org. “The Int’l ITC wants decision makers at all levels of government to know about the importance of our industry,” said Executive Director Tricia Judge.  “These briefs convince judges of the importance of a fair and open marketplace for imaging supplies.”

 

At issue in the case is whether a manufacturer of original computer printers and consumable supplies can impose a patent license on new cartridge buyers to thwart competition from remanufactured used laser toner cartridges. 

 

Patent law has a principle of patent “exhaustion” – sometimes called the “first sale” doctrine – that a patent owner who authorizes the sale of a patent product cannot impose post-sale patent restrictions on use or disposition of the product.  After an authorized sale, further use, resale, or repair/reconditioning of the product does not infringe patents embodied in the product.  In 2008, this principle was reaffirmed by the Supreme Court inQuanta Computer, Inc. v. LG Electronics, Inc.  Int’l ITC and two automotive industry remanufacturing associations submitted a friend of the Court brief in that case supporting that principle, as well.

 

However, Lexmark has continued to labels its toner cartridges (on the cartridge and on the outside of the box) with a “patent license” that purports to prevent purchasers from having the cartridge remanufactured or recycled by anyone but Lexmark.  Lexmark has sued dozens of remanufacturers for infringement claiming that the “license” avoids patent exhaustion.  SinceQuanta, two district courts have sided with remanufacturers, finding that Lexmark’s authorized cartridge sales exhausted any patent rights against post-sale uses.  Lexmark is now appealing that issue to the Federal Circuit. 

In the brief, the Int’l ITC opposes any resurrection of the “conditional sales” cases discredited by Quanta, and reaffirming that otherwise lawful remanufacture cannot be thwarted by post-sale patent license conditions. 

 

The brief also outlines policy arguments describing what remanufacturing services do, their contributions to the U.S. economy and job market, their  pro-competitive effects on pricing and product availability, and their beneficial impact on the environment.  It also argues that Lexmark’s interpretation of the law is a threat to the consumer’s right to repair its property, and promotes anti-competitive behavior.

 

The case has serious import for all remanufacturing industries, and “robust commerce” in general.  Two automotive aftermarket associations joined in the brief; the Automotive Aftermarket Industry Association and the Automotive Parts Remanufacturer Association. “While the case in question relates to print cartridges, a failure to reaffirm the principle of patent exhaustion in this case could jeopardize the ability of Auto Care Association members to remanufacture and distribute remanufactured auto parts as well, according to Aaron Lowe, senior vice president for regulatory and legislative affairs for the Auto Care Association.  “The availability of remanufactured parts reduces the use of raw materials and provides an effective and affordable replacement option for car owners in the United States,” Lowe continued.   

The Int’l ITC is the non-profit trade association that represents remanufacturers and recyclers of toner and inkjet cartridges, as well as their dealers. Printer cartridges are remanufactured when worn or exhausted parts are restored or replaced; and the final product performs like the original new one.  The Int’l ITC also administers the STMC quality program that certifies cartridge remanufacturers that achieve tested quality and performance. Toner and ink jet cartridge remanufacturing grew as a trade and now represents a $4.5 billion industry.

 

By Tricia Judge  at www.i-itc.org.

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