Impression Products V. Lexmark International: A Victory For Common Sense

A few months ago we reported on a case coming before the United States Supreme Court that concerned recycled printer cartridges. Battling it out were Impression Products, a printer cartridge recycling company, and Lexmark, the printer manufacturer. At issue was a shrinkwrap licence on inkjet cartridges — a legal agreement deemed to have been activated by the customer opening the cartridge packaging — that tied a discounted price to a restriction on the cartridge’s reuse.

It was of concern to us because of the consequences it could have had for the rest of the hardware world, setting a potential precedent such that any piece of hardware could have conditions still attached to it when it has passed through more than one owner, without the original purchaser being aware of agreeing to any legal agreement. This would inevitably have a significant effect on the work of most Hackaday readers, and probably prohibit many of the projects we feature.

We are therefore very pleased to see that a few days ago the Supremes made their decision, and as the EFF reports, it went in favor of Impression Products, and us, the consumer.  In their words, when a patent owner:

…chooses to sell an item, that product is no longer within the limits of the monopoly and instead becomes the private individual property of the purchaser, with the rights and benefits that come along with ownership.

In other words, when you buy a printer cartridge or any other piece of hardware, it is yours to do with as you wish.

This can only be good news for our community, as so much of the work we see involves the modification or reverse engineering of products that might fall foul of such licences were they to be allowed to be used without restriction. The EFF go into more detail including on the other parts of the decision in their write-up, and if you’d like some background you can read our original report.

[Image Source: US Supreme Court Building by CJStumpf CC-BY-SA 3.0]

56 thoughts on “Impression Products V. Lexmark International: A Victory For Common Sense

  1. One nice thing about this ruling is that they specifically referenced the Kirtsaeng case, so this is very clearly strengthening the First Sale Doctrine for both Copyright and Patent law (and it’s already strong for Trademark Law, so this shows the limits of IP law.

    I am eagerly waiting for some lawyers to latch on to this and go after the deceptive practice of “selling ownership” of digital goods and then claiming that they are just licenses with severe restrictions.

      1. Why would they be different? would it make a difference if you get the digital goods on physical media? what’s the difference between a book ‘printed’ onto a CD and a book printed on paper?

          1. I’m talking about the situation when you buy something, not the situation where you copy something. This entire case is about when the owner of the rights voluntarily sells you something. Piracy is when there is no sale involved and no permission given for you to get the material. First Sale Doctrine says that once you buy something, you can do whatever you want with what you purchased, the person you purchased it from has no right to control what you do with it.

            Piracy is prosecuted under copyright because there is no loss of property to the owners of the copyright. Similarly, fashion forgeries are not prosecuted under property laws because the original designers didn’t loose anything physical, but there is infringement on copyright and trademark rights.

    1. The court decision specifically mentioned that this ruling applies to abusing Patents to restrict second hand use, something that can be done through contract and if applicable, copyright law instead. It will 100% not apply to digital media.

      1. it also referenced a case involving copyright law.

        In this case, Lexmark was claiming that they had a contract with the buyers of the cartridges that prohibited them from selling them to the third party and then tried to use patent law to enforce that (claiming that because the contract didn’t allow the consumer to re-sell the cartridges, there was a patent infringement). The Court struck this down hard and said that First Sale Doctrine prevents them from trying to do anything like this.

        Read the ruling, not just the short summaries of it.

        1. Thats not what it says. It says that first sale doctrine prevents Lexmark from using Patent Law to go after the 3rd party. Nothing prevents them from going after their customers for breaking their contract. Or the 3rd party for tortious interference with that contract (unlikely to succeed).

          [blockquote]This Court accordingly has long held that, even when a patentee sells an item under an express, otherwise lawful restriction, the pa- tentee does not retain patent rights in that product. See, e.g., Quanta Computer, Inc. v. LG Electronics, Inc., 553 U. S. 617. And that well- settled line of precedent allows for only one answer in this case: Lexmark cannot bring a patent infringement suit against Impression Products with respect to the Return Program cartridges sold in the United States because, once Lexmark sold those cartridges, it ex- hausted its right to control them through the patent laws.”[/blockquote]

          [blockquote]If the patentee negotiates a contract restricting the pur- chaser’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.[/blockquote]

          1. It seems to me that the impracticality of suing someone for breach of contract over an ink cartridge prevents Lexmark from suing their customers for breach of contract.

            Also, the tendency for customers to go full “Office Space” on their Lexmark printers and buy another brand after being sued.

          2. @JDK, more to the point, suing your customers is not a very good idea. The MPAA can sort of get away with it because there isn’t a lot of choice if you want to listen to a particular singer (and I really wish the Feds would go after the MPAA and similar for anti-trust violations), but if you are talking about anything where there is a real choice, like printers, getting a reputation for suing your customers will drive them into your competitors arms.

        2. The result: The sale exhausts the patentee’s rights in that item. See Hobbie v. Jennison, 149 U. S. 355, 362–363 (1893). A license may require the licensee to impose a restriction on purchasers, like the license limiting the computer manu- facturer to selling for non-commercial use by individuals. But if the licensee does so—by, perhaps, having each customer sign a contract promising not to use the comput- ers in business—the sale nonetheless exhausts all patent rights in the item sold. See Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, 506–507, 516 (1917). The purchasers might not comply with the re- striction, but the only recourse for the licensee is through contract law, just as if the patentee itself sold the item with a restriction.

      2. There are cases where they allow you to sell a license, of a game for instance, to another person, whereby you lose the right to use it yourself. So transfer is possible with digital stuff.

    2. Ethically, it’s basically a natural right to have a monopoly on any rights of a product you buy. Say, you buy a car, you automatically have a right to use the patents on the engine or repair it with equivalent technology, because you already paid. Because of the nature of cars, this is inherented by the spare parts, and by the time it’s scrapped, no one cares about 20yo patents. Renting a car on the other hand… Enjoy that geolocked GPS module. :D

    1. Abuses Contracts and Copyright to bind their customers. Not patents. This does not apply to them. Though I’m sure that a Magnuson–Moss Warranty Act claim with enough backing could do something instead.

      1. In this case, the court references a case where a publisher attempted to use copyright to sue a student who imported textbooks from outside the US where they were being sold at a fraction of the price in the college bookstore. So this is part of the bigger First Sale Doctrine, not limited to just patents.

        Contracts would be a possibility, but in this Lexmark case, Lexmark was trying to claim that they had a contract with their customers that prevented them from legally doing anything with the empty cartridges except return them to Lexmark. So I don’t know how well that would hold up.

        We really do need a “Right to Repair” law to block manufacturers from trying this sort of thing.

    2. The Deere case is different. A farmer signs a physical contract when they buy one. The cartridges were subject to a contract without the consumer even being aware that one existed.

  2. clones, knock-offs, and ‘similar in design and function’ items produced and exported then bought especially online, are risky. i’m mostly speaking about pcbs, ink, chips, dev boards, USB anything, and whatever else purchased from abroad. buyers should know the risks and know use of these items may violate (I.P.) law and/or possibly destroy other hardware + time. in addition, any company which produces the riskful items listed above, may consider running their business in countries where law and quality is not as important.

    the financial and temporal benefits to consumers of such products has overall been helpful for realizing projects and dreams.

    1. Every manufacturer likes to pretend that only they can make parts of good quality, nobody else can come close.

      In reality, the aftermarket can produce parts as good or better than the OEM.
      The aftermarket can produce parts that are cheaper than the OEM
      sometimes they can even do both at the same time

      Just because it’s a clone/aftermarket doesn’t mean that it infringes on any IP rights. In fact, IP rights are considerably weakened when it comes to what’s required for functional compatibility (this is why Lexmark lost their earlier copyright infringement case against clone printer suppliers)

      Yes, there is frequently a trade off between cost and quality, but once the quality gets ‘good enough’ for the consumer, that’s all that matters. Frequently the ‘low quality’ components available as clones today are better quality than the ‘OEM’ versions were when originally manufactured not that long ago.

      1. So much this. Is your Lexmark cartridge made in the west by western employees with western designs and western materials? No way, some part of it was made in China (probably the whole thing) and as such can be replicated in China with no ill effects unless they recklessly try to cut costs.

          1. I’m fairly certain that recklessly is the only way to cut costs in most copy-cat products. All the reasonable cost cutting was done by the OEM until they hit the minimum cost that still allowed functionality.

          2. @nick, so according to you, nobody can every have a better idea of how to cut costs than the OEM, and the OEM is never greedy and sells for anything higher than the lowest possible cost.

            you have a LOT more faith in OEMs than I do.

            I believe that frequently, aftermarket and OEM equipment is identical in quality, you pay just for the name.

            I also believe that in many cases the OEM doesn’t change products when they could be improved, because the current version is ‘good enough’ and the internal bean block any changes.

            I’ve personally seen a case where a company refused to move from $900/item to $50/item (cost) because they had a markup based on a multiplier of the cost and so would loose money by shifting to the cheaper supplier (no quality change)

          3. ” because they had a markup based on a multiplier of the cost”

            That is very typical for companies supplying the government, but it’s fairly popular in consumer electronics as well.

            After all, people are pound wise and penny foolish. If you charge them a thousand, they will happily spend a 100 more because “it’s just 10%”. If the item is priced in the 100 range to begin with, then the same consumer with the same amount of money to spend will start to argue about paying 20 extra, even though they were content with overspending five times that amount when the price was higher.

            The trap of relative prices allows the company to increase revenue by deliberately using more expensive materials and parts to justify the higher pricetag. The consumer doesn’t know that the same thing could be done a lot cheaper, and there are no competitors for that same product because it’s patented/trademarked/copyrighted/DMCAd to hell and back, or it’s a prestige product like an iPhone or something.

          4. @Dax:
            “to increase revenue by deliberately using more expensive materials and parts to justify the higher pricetag”

            I’d personally prefer to pay more for something reliable rather than cheaper for something that’ll break under my sort of “Normal” use…. There are exceptions.

            Hence I use business grade metal chassis laptops over anything else.
            The number of (2nd hand and a couple new cheapo yet branded) laptops I went through because they died after they became spine negatives from warping in the backpack (I bike everywhere).

            Heck my old home PC was an under-volted and under-clocked AMD x4 Phenom in an old Asus M3A32-MVP Deluxe gaming board, that was before I decided to go completely portable.
            Although I got the board as faulty from the 2nd hand market (Carboot sale) for a fiver and repaired it (RTC 32Khz XTAL faulty), lasted me 6 years before I got rid of it. However it could of easily lasted a good decade (with only the GPU need being upgraded) in today’s economy as long as the PCIe interface don’t become obsolete by then and/or OS support for the CPU ranges aren’t dropped (Looking at the recent CPU support drops in minor parts of the ‘NIX community. OK, for now it seems just mostly web browsers dropping anything without certain SSE instructions etc. i.e. P3 and older)

            Stronger, more reliable == Less landfill e-waste

    2. Noname products have always carried a certain risk. Some are pretty good. Some are not. It’s not really a function of nation of origin, no-name products have always been riskier even when importing goods over long distances was less common.

      The real reason is brand development. A big well-known company like Lexmark can’t get away with selling too many leaky, printer-ruining cartridges. And.. if they do accidentally release a few they have a motivation to shell out some money and make things right, probably by replacing the ruined printer. Why? Because people will remember that name, not buy from them again and encourage others to not buy from them.

      Some random overseas ebay seller… worst case every couple of years or so they might just have to close out their account and have one of their associates open one. That is assuming they can’t get away with just opening a new one in their own name.

      Have you ever bought cheap products off the internet? Do you remember who you bought them from?

      So.. does that mean it is a bad idea to buy such stuff? Not necessarily. There is a cost in risk but also a benefit in the lower price. One has to consider both sides and make a choice.

      In this case.. when it comes to InkJet printers… the printers are practically giveaways but the ink seems to be valued higher than type O blood! I can certainly see why one might decide it is worth the risk. I would! Had I not switched to Laser some time ago that is.

      1. i bought a cheap timing belt for my car on eBay. 13000 miles later it snapped. Fortunately my engine was not ruined.
        Since then I always buy Gates belts. I don’t remember the name of the seller, but I could look it up if need be.

          1. Buying a “Gate” belt off eBay would be just as bad, yeah. The problem was eBay. Rock Auto on the other hand only carries products worth using. :/

    1. Well perhaps common sense has prevailed in the decision but I would like to know how much the proceedings costed (Hundreds of thousands?, millions?) and who gets the joy of paying.

      I would hope Lexmark got to pay the fees otherwise they have effectively placed a very large fine on the recycler.

    2. you should follow the SC court cases more. While they sometimes do make outlandish decisions, the vast majority of them are pretty sane.

      It’s worth pointing out that this decision was 8-0, so there was no left/right split here.

    1. many states already have a right to repair for cars. The auto manufacturers are pretty open with their specs and as a result there is a huge aftermarket for auto parts.

      They don’t opensource the software that runs their systems (although a number of them are toying with the idea of using opensource software in their car entertainment systems), but you can replace just about every part on a car with something made (or refurbished, or tweaked) by someone other than the OEM

  3. OK so stretching a point here – if I buy a very old IBM AS/400 on craigslist for $50, am I entitled to operate it? It can only be legally be operated by the original licensee from what I understand. Or am i missing the point?

    1. I would interpret it as such yes, although I’m only 90% sure about the software part 9that’s a license not goods).
      However if there were a suit that suit could only be brought against the seller not the purchaser.
      So you are safe if you manage to buy it, and any uncertainty applies only to the seller.

    1. I actually prefer that it went to the Supreme Court. This makes it a legal standard for the whole of the US and put more visibility to the issue so that people are more likely to be aware of it.

    2. It’s a form of regulatory capture, the Federal Circuit was created to handle ‘technically difficult’ cases, but it has shown a strong tendency to be very favorable to IP owners, over the last few years the Supreme Court has been overturning their cases on a fairly regular basis.

      We are in the middle of a period of correction where the Federal Circuit Judges view the law as being different than the Supreme Court does and it’s taking some time to get the message through (it doesn’t help that cases take so long to process)

  4. I wonder if this will cause printer manufacturers to ‘lease’ the cartridges to the customer with the customer only purchasing the ink inside. I have a commercial automated paper towel dispenser like this. It wont fit normal rolls of towels so you have to buy theirs (georgia pacific). When purchasing the dispenser, the payment for the dispenser is actually a one time payment for a perpetual lease with GP retaining ownership of the dispenser.

    1. It may not be quite as easy for them to dodge this as you are thinking. There has been some noise on the cable company front about the abuse of the term ‘lease’ around set-top-boxes.

      I also think they will run into trouble trying to ‘lease’ printing supplies through retail outlets.

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