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

884 points by beefman 9y ago

inputcoffee 9y ago
Some context for this consequential decision: http://www.npr.org/2017/04/06/522826514/supreme-courts-decision-about-printer-cartridges-could-have-big-consequences http://www.npr.org/2017/04/06/522826514/supreme-courts-decis...
- euyyn 9y ago
  Thanks! The usage being litigated (and confirmed lawful) was this: > A Lexmark refill toner cartridge costs about $130. It's not cheap. So there are businesses that have sprung up that take empty Lexmark printer cartridges, refill them and then resell them for a lot cheaper.
- Steko 9y ago
  I wonder if this will affect the various Qualcomm suits. Qualcomm tries to collect patent royalties from (say) Foxconn based on the sale price between (say) Apple and the carrier/consumer. Edit: moved long commentary from FOSS blog to separate thread: https://news.ycombinator.com/item?id=14448205 https://news.ycombinator.com/item?id=14448205
  - test6554 9y ago
    If Apple purchased Qualcomm chips and then resold them as part of the iPhone, then it might affect those suits, but this is not the case. Apple licenses proprietary Qualcomm technology from Qualcomm. Apple uses the technology, but builds its own chips.
    - Steko 9y ago
      No Qualcomm's licenses are with Foxconn et al. Apple has been negotiating for a direct license but they haven't reached any agreement: http://www.reuters.com/article/us-apple-lawsuit-qualcomm-idUSKCN18D1EC http://www.reuters.com/article/us-apple-lawsuit-qualcomm-idU... Qualcomm apparently filed an amicus brief in support of Lexmark in this case: http://www.scotusblog.com/wp-content/uploads/2017/03/15-1189_amicus_resp_qualcomm.pdf http://www.scotusblog.com/wp-content/uploads/2017/03/15-1189...
deleted 9y ago
[deleted]
jasonlfunk 9y ago
The Planet Money podcast recently did an episode about this case: http://www.npr.org/sections/money/2017/03/31/522226226/episode-762-the-fine-print http://www.npr.org/sections/money/2017/03/31/522226226/episo...
- dangerboysteve 9y ago
  I listened to this podcast yesterday. Planet Money is well produced and entertaining as heck!
- reledi 9y ago
  Also http://www.npr.org/2017/04/06/522826514/supreme-courts-decision-about-printer-cartridges-could-have-big-consequences http://www.npr.org/2017/04/06/522826514/supreme-courts-decis...
pitaa 9y ago
> Gorsuch, J., took no part in the consideration or decision of the case. Does anyone know why this is?
- frandroid 9y ago
  Because the case got before the court before he was confirmed, likely.
- rhino369 9y ago
  He wasn't sworn in before oral arguments.
- snerbles 9y ago
  Justices typically recuse themselves from cases that pre-date their nomination.
  - frandroid 9y ago
    But they could decide to jump in?
    - sowbug 9y ago
      The "could" in your question implies that anyone would be able to stop them. More likely it's a convention they've chosen to follow.
    - roywiggins 9y ago
      The Justices pretty much set their own rules, so sure, probably.
    - bluGill 9y ago
      Possibly, but why? He has to learn everything there is to know about being on the supreme court (including things like where to park in DC), and all the other work he is expected to do. All this to weigh in on a case that was 7-1 (and the 1 was a minor dissident), so his voice would mean nothing to the result, and it would inflame the Democrats (in this case - if a Democrat did the nomination the Republicans would be inflamed) who would look extra hard for a reason to impeach him. If congress is close such a thing along might be enough to impeach. If this ever happens it will probably be a 4-4 decision where the other justices - knowing they are tied - ask for a tie breaker. Expect there to be a lot of publicity: they will want to make it clear to everything that everything is being done right. This probably includes redoing the oral hearings for the benefit of the new member.
ryandamm 9y ago
This is really similar to the concept of 'first sale' in copyright law, which similarly prevents the copyright holder from using copyright to restrict what a buyer does with the object. Glad to see it extended to patent law as well.
- DannyBee 9y ago
  Yes they both stem from common law disfavouring restraints on alienation.
  - _delirium 9y ago
    Something I've searched for but not found a layperson introduction to: any idea why that doesn't apply to real estate? Deed restrictions that purport to put conditions on how property can be resold have repeatedly been upheld, except for a really narrow, somewhat recent carve-out for no-selling-to-black-people deed restrictions, which were held unenforceable, but specifically because they were racially discriminatory [1], not because of any general principle that covenants can't restrict alienation of property. [1] https://en.wikipedia.org/wiki/Shelley_v._Kraemer https://en.wikipedia.org/wiki/Shelley_v._Kraemer
    - zerocrates 9y ago
      Restrictions and covenants and so on are very common, but actual restraints on alienation or sale itself aren't so much, at least not enforceable ones; they're heavily disfavored in the realm of real estate as well.
    - toast0 9y ago
      Many restrictions may be implicitly time limited by the common law rule against perpetuities; but different rules apply to real estate and retail sale because of the process to buy either one. If I buy a book, I'm not bringing my lawyer to review the contract and objecting to terms in the purchase agreement; if I buy real estate, it's a major investment and I'm expected to examine the title for encumbrances and carefully consider the consequences of them; and there's a customary process (escrow) which provides for time to ensure any defects in title or other condition are remediated or compensated for to the agreement of both parties.
3JPLW 9y ago
The text is the same, but I find the official PDF better typeset and much more readable: https://www.supremecourt.gov/opinions/16pdf/15-1189_ebfj.pdf https://www.supremecourt.gov/opinions/16pdf/15-1189_ebfj.pdf
- zeeveener 9y ago
  What an amazing waste of space on the paper... I mean, yes margins are good, but when you lose 60% of the page to them they might be overbearing.
  - cooper12 9y ago
    It's possible that the margins are meant to be cropped by the printer. Though more likely it's just an optimization of line-length, font size, and ink usage. (since ink costs more than paper)
  - rkangel 9y ago
    My guess is that it is typeset for a particular journal of law - whatever is used to officially document SCOTUS decisions, with an appropriate column size for that. The additional electronic publishing is just using the same format but slapping it in the middle of A4/Letter.
roywiggins 9y ago
When you can cite Lord Coke in your opinion, I guess it's practically mandatory to do so. > As Lord Coke put it in the 17th century, if an owner restricts the resale or use of an item after selling it, that restriction “is voide, because . . . it is against Trade and Traffique, and bargaining and contracting betweene man and man.” 1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628)
- theandrewbailey 9y ago
  https://en.wikipedia.org/wiki/Edward_Coke https://en.wikipedia.org/wiki/Edward_Coke
- owenversteeg 9y ago
  Semi-off-topic: I've noticed that Coke's writings are a bit more similar to "modern English" than other things I've read written in the 1600s. This surprised me, because he was a judge and probably wrote in formal language for the time. Formal language, to me, seems perpetually set back to the way people talked about 60-100 years previously. Thus you'd expect Coke to sound like he's writing in the 1500s, but instead he sounds like an 1800s writer. Perhaps I've caught a time-traveler? If so, to Coke: I'm having some friends over for dinner tonight, and you're welcome... email's in my profile if you need directions ;)
  - mayoff 9y ago
    I don't know anything about Coke, but my impression of SCOTUS opinions is that they often use language I wouldn't consider formal. Consider the first sentence of section II-A of this decision: > First up are the Return Program cartridges that Lexmark sold in the United States. I often find the decision to be more readable (if much longer) than the syllabus.
  - dragonwriter 9y ago
    Formal writing probably was influenced by the move to standardization of grammar and spelling (which was, after all, elite-driven) sooner than informal writing, so that may be part of the reason for the results you describe in that particular time frame.
awjr 9y ago
In short, the sale of a product does not allow you to control what is done with the product afterwards through patent law. I'm assuming this is almost similar to attempts to use copyright law to stop the sale of products on the grey market. http://www.bipc.com/court-rebuffs-attempt-to-use-copyright-law-to-prevent-grey-market-imports http://www.bipc.com/court-rebuffs-attempt-to-use-copyright-l... I do wonder though, if they changed the underlying software on the cartridges they would get into trouble. I do not see this stopping John Deere's practice of locking up their hardware through copyright laws. https://www.wired.com/2015/02/new-high-tech-farm-equipment-nightmare-farmers/ https://www.wired.com/2015/02/new-high-tech-farm-equipment-n...
- tr1ck5t3r 9y ago
  Tell Microsoft, Intel, AMD, Apple, Samsung, HP, Dell, GM, Volvo, Ford, VW, in fact any company that makes things. What a little stick in a wasps nest!
- balls187 9y ago
  Interesting that even with importation fees, it was cheaper for Costco to import watches.
  - schoen 9y ago
    That's especially likely to happen when manufacturers are deliberately trying to charge very different prices in different markets (like you see in a lot of parallel importation cases). https://en.wikipedia.org/wiki/Market_segmentation#Geographic_segmentation https://en.wikipedia.org/wiki/Market_segmentation#Geographic... https://en.wikipedia.org/wiki/Price_discrimination#International_price_discrimination https://en.wikipedia.org/wiki/Price_discrimination#Internati... https://en.wikipedia.org/wiki/Parallel_import https://en.wikipedia.org/wiki/Parallel_import
  - icantdrive55 9y ago
    On the right day, you can get a high end watch for a lot less than going into a boutique. I bought a Omage Aquaterra, with the big white dial for $1400 years ago. This watch was going for $3500 in the authorized retail stores. Swatch took Costco to court, and lost. There's no factory warranty, but most of these new high end watches will keep perfect time for 10 plus years. Oh yea, Costco does have some watchmaker that supposedly repairs watches. I can repair, so I don't trust anyone anymore. It's too bad companies continually screw Americans on price, on so many products--the medication cost difference really bothers me.
baltimore 9y ago
Does this mean that printer prices are about to go up since HP/Brother/Lexmark will no longer be able to make as much money on the ink?
- euyyn 9y ago
  The writing's on the wall for the whole business anyway.
  - tuwtuwtuw 9y ago
    Lexmark did attempt to move to new markets some years ago due to this. They sold off their consumer/inkjet business and have been buying a bunch of software companies. This attempt to "softpivot" failed miserably. Lexmark was sold to a Chinese business some time ago. Now the software business is being split up and sold.
- ocdtrekkie 9y ago
  Perhaps, but how often do you really need to buy a printer? And they're so cheap a mild price increase wouldn't harm much. The Canon MG2520 (I think there's a newer version now) is a printer/scanner/copier combo that often retails for $20. (And comes with ink.) Price of ink would fall in exchange, since they have to compete with the off-brand folks.
  - owenversteeg 9y ago
    Hmm, cheapest I found the MG2520 was $30 shipped including ink. Not bad, and still pretty low. I'd expect the minimum for a wireless printer-scanner with ink, shipped, to be $40 or so. $9 shipping, $3 wireless chip, $5 ink, $9 plastic/frame, $5 motors/print heads, that's already $31. (I could be off, of course.) I wonder how much, if anything, Canon loses on the printer, and how many people buy replacement ink.
    - ocdtrekkie 9y ago
      The $20 price comes and goes. Micro Center was where you could easily pick it up for that regularly. And it's not wireless, FYI. The new version is the MG2522, which is currently $25 at Micro Center, and a wireless model, the MG3620, is $40.
DannyBee 9y ago
In practice it means people will still be able to stop you from doing things with stuff you own. Just not using patent rights. Lexmark's real problem here is that its enforceable contracts are usually with the resellers, and so enforcing against a third party purchaser is trickier, so it tried to use patent law instead. (It has plenty of contracts, including on the wrapping of the printer cartridges, I'm just sticking with the ones that are easy to enforce)
- Analemma_ 9y ago
  They'll always be looking for new ways, but fortunately for the moment SCOTUS has been productive about shooting them down as they come up. Kirtsaeng v. John Wiley prevented bizarre applications of copyright exhaustion, and now they've done the same to patent law. This is an encouraging sign that, whatever its other faults, SCOTUS seems to take the first-sale doctrine pretty seriously.
- Glyptodon 9y ago
  All they really need to do is make cartridges rentals instead of sales, no?
  - gist 9y ago
    Perhaps also by a clever rebate scheme. Product price is $180. Rebate is $40. Applying for and getting the rebate necessitates signing of a 'contract' which prohibits certain action. [1] [1] May not hold up in advanced legal cases but enough of a leg to stand on to get the ball rolling.
    - dsp1234 9y ago
      FTD: "The other is to buy a cartridge at roughly 20-percent off through Lexmark’s “Return Program.” A customer who buys through the Return Program still owns the cartridge but, in exchange for the lower price, signs a contract agreeing to use it only once and to refrain from transferring the empty cartridge to anyone but Lexmark." Note that because the contract is with the purchaser, and not with the refiller/reseller, Lexmark can only use the original purchaser. Which is why they turned to patent law in order to try to and stop the refiller/reseller.
AdmiralAsshat 9y ago
Outside of the narrow case involving printer cartridges, what other implications and precedents can we expect this to set? Can it stop smartphone makers from being able to blacklist devices that are resold, for instance?
- euyyn 9y ago
  > smartphone makers from being able to blacklist devices that are resold What is that blacklist?
  - AdmiralAsshat 9y ago
    http://www.howtochoosealaptop.com/silent-circle-is-blocking-the-blackphone-2-unauthorized-sellers/ http://www.howtochoosealaptop.com/silent-circle-is-blocking-...
  - blacksmith_tb 9y ago
    I am guessing this is a reference to some Google Pixel phones that were resold when they first hit the market[1]. 1: http://wccftech.com/google-blacklist-pixel-project-fi/ http://wccftech.com/google-blacklist-pixel-project-fi/
  - elipsey 9y ago
    Verizon denied my activation of used phones a couple of times due to a blacklisted IMEI, so apparently they (at least used to) keep an internal blacklist also.
    - tooltalk 9y ago
      I thought the blacklist was for only stolen or lost devices reported by the first owner.
    - twoodfin 9y ago
      Verizon owns their network, so I'd imagine they have pretty broad discretion (FCC-willing) on restricting the specific devices they'd allow on it. Blacklisting IMEI's seems like a pretty reasonable theft deterrent.
mmastrac 9y ago
Wasn't apple using patents to stop modding of their magsafe cables?
- djrogers 9y ago
  Not modding, but production of alternatives. Most (all?) products that were magsafe compatible that actually made ti to market were hacked up magsafe adapters.
bhhaskin 9y ago
This is a pretty big deal. It is great to finally start to see what patents where supposed to be, which was to protect the inventor until they could become established in the market. Not as a tool to stifle innovation. Very interesting outcome.
conistonwater 9y ago
Can somebody explain, what does the word ‘exhaust’ mean? It doesn't seem like it's being used in the plain-English sense here.
- schoen 9y ago
  One meaning of exhausting is "using up" (like exhausting a resource). In copyright and patent law, there is an idea that the rights of the copyright holder or patent holder only extend so far, and can be in effect "used up" in certain contexts so that they don't have further rights to restrict other people's activities. This case related to such a situation. Edit: Wikipedia describes this at https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_property_rights https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_pro... and in a lot more detail at https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S._law https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S....
- geofft 9y ago
  The decision has this definition in the first paragraph, which I think is reasonably clear: "When a patentee sells one of its products, however, the patentee can no longer control that item through the patent laws—its patent rights are said to 'exhaust.'" (It sounds to me like the plain-English sense of "run out": there are no more patent rights left after the sale, they have been used up in the process of getting the product on the shelves and sold in preference to a competitor's product.) Wikipedia has some articles about it: https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_property_rights https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_pro... https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S._law https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S.... If I'm reading the decision right, the question is not whether patent rights "exhaust" in the common case when you sell things (everyone agrees that they do). The question is whether Lexmark, by putting conditions on the sale, can prevent their rights from exhausting. The federal circuit's interpretation was, yes, the rights would exhaust, except that when Lexmark put conditions on the sale that the toner-cartridge purchaser agreed to, Lexmark retained its rights because that's a legal and valid contract between the buyer and seller. SCOTUS said, no, it doesn't work that way, the rights were definitely exhausted: "Lexmark exhausted its patent rights in the Return Program cartridges that it sold in the United States. A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell."
kevin_b_er 9y ago
You better be glad it went this way, or you would have no reasonable property rights. All objects may have contained an unknowable restriction on their use or ownership. Everything could have what is tantamount to an easement and you wouldn't know what it was unless you found out how it was first sold. Fortunately sanity on basic notion of property rights remains within the SCOTUS.
jvandonsel 9y ago
Could Lexmark argue that they're not really selling the cartridges to you, but are instead leasing them for an indeterminate period of time?
- distances 9y ago
  I think you'd then have to enter some kind of a lease agreement, which would be a big turn-off for customers that would like to just buy a replacement cartridge without signing a contract.
  - jawns 9y ago
    1) As with many of the tricks that printer companies use to dissuade people from buying off-brand inks, if enough printer manufacturers did it, consumers might find that they have few other options -- especially if they've had poor luck with third-party inks. 2) I pay $3 a month for HP's Instant Ink program. It allows me to print up to 50 full-color pages a month with my inkjet printer, and when one of the cartridges is running low, it automatically sends a replacement. It's not significantly more expensive, in my case (low-volume usage), than buying the ink cartridges directly, but it's a lot more convenient. I'm not quite sure if it technically counts as a leasing program, but it follows a similar ethos. So I wouldn't so easily dismiss the idea that a leasing program would lead to a consumer backlash.
    - stale2002 9y ago
      And then what happens if the consumer just ignores the lease and sells it anyway? They tell the company "I threw it away". People throwing used printer cartridges away would probably happen a lot, anyway, right? Technically it would break the contract but the issue is that it would be very difficult to enforce.
    - rhizome 9y ago
      1. This seems like collusion would be necessary 2. I have to think it's pretty hard to establish that a consumable is subject to a lease. What is returned at the end of the lease?
guelo 9y ago
This is another in a series of necessary smackdowns of the Federal Circuit.
touchofevil 9y ago
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 software b/c you aren't considered to own it. In the EU however, if a company sells you a permanent life-time license in exchange for a one-time fee, the courts determined that you aren't merely licensing that software, you own it and you are allowed to resell it. I think these different rulings haven't been fully appreciated yet. For example, if you buy Apple's Final Cut X for $299, you should be allowed to resell that software if you live in the EU, but there is currently no way to transfer licenses between users, preventing users from reselling it. It seems to me that by preventing users from reselling their software, Apple (and the Google Play Store) are probably violating EU law on this matter.
- joshuak 9y ago
  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.
  - chmod775 9y ago
    In the EU it is impossible for normal consumers to sign away most rights intended to protect the consumer. Misleading the consumer in any way about that can even end in fines.
  - phkahler 9y ago
    >> 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.
SeanDav 9y ago
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.
- ghaff 9y ago
  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.
  - HarryHirsch 9y ago
    Now you're paying $500 for the printer whether you use it heavily or just now and then. That's how it ought to be, if a printer is USD 500 perhaps quality will rise. I hate replacing equipment every other year because product quality for home use is that abysmal.
  - gech 9y ago
    Why can't they just accept lower margins
    - PeterisP 9y ago
      Why should they? After all, margins is the only reason why they're producing printers at all; if the margins are bad then it would be better for them to stop producing these products as they can get more profit manufacturing something else.
  - moduspwnens14 9y ago
    I got this color laser printer [1] at $179.99 in 2013 and it's still going strong. I got it specifically as a long term investment because I don't print very often and was tired of having dried-out ink every few months when I did go to print. I'm curious how close to that price point inkjets will get if they have to turn a profit without proceeds from ink cartridge sales. We might be moving toward a point where it makes less and less sense to buy an inkjet at all. [1] http://a.co/2kJojV2 http://a.co/2kJojV2
geofft 9y ago
I'm a little surprised that Ginsburg dissented here, and also dissented from Kirtsaeng v. John Wiley: naively, she's "liberal", and (at least in my bubble) being "liberal" is associated with wanting less strong IP protection. But I see also that she wrote the majority opinion in Eldred v. Ashcroft, saying that the 28-year extension to copyright terms was constitutional. What's the right way to understand her legal thinking here? Is she known as an IP maximalist? Or are there other principles she's using to reach these conclusions? (I don't completely follow her logic that, because US patent law doesn't provide any protection in other countries, US patent rights are preserved across a sale in some other country.)
- schoen 9y ago
  Justice Ginsburg is definitely known as an IP maximalist. Some people have wondered if she's been influenced by her daughter's views on IP, since Jane Ginsburg (a colleague of Eben Moglen's at Columbia!) is one of the most influential copyright law professors and has taken a maximalist view in many copyright controversies. https://en.wikipedia.org/wiki/Jane_Ginsburg https://en.wikipedia.org/wiki/Jane_Ginsburg > (at least in my bubble) being "liberal" is associated with wanting less strong IP protection And that's also much less true in regions with major media industries, like New York and Los Angeles.
  - ab5tract 9y ago
    I wish I could go back in time to ensure that Americans never started using "liberal" to mean anything other than "one who advocates for liberalization of trade and economics". This is what it means in Europe. It took me a good long time after moving to start hearing it with its international meaning, but now I find the Americanized form absurd in its conflation. In other words, liberals--in the international sense of the word--absolutely 100% endorse IP maximalization and indeed all forms of corporate ownership, rent, and public infrastructure transfer.
- ckozlowski 9y ago
  I think she's trying to say specifically that patent rights are preserved in the U.S., because that's where U.S. patent law applies. Her dissent is brief and only partial; and so I think she's only calling attention to a minor point that nonetheless has legal ramifications. Remember that the court's can also be to clarify the laws, and in this case, it seems to me that she took the opportunity to point out a gray area that might come up in the future. I see this "dissent" (if it can really be called that) as a footnote of sorts. "Watch out for these situations here", she's saying. It's not a political stance, but rather pointing out a technicality.
joshuak 9y ago
Good, but the tip of the issue is licensing. Autodesk[1] has set precedence that all an organization must do to limit the resale of anything is institute a EULA. Simply by asserting that an offer is for a license not the thing being licensed the seller can bypass common law, Lord Coke, and the first sale doctrine. P.S. This also means that expensive professional software like Autodesk's, or anything with such an EULA, cannot be considered an asset since it has no dollar value after purchase. 1: https://www.wired.com/2010/09/first-sale-doctrine/ https://www.wired.com/2010/09/first-sale-doctrine/
- Shivetya 9y ago
  well I am curious how it will play out in the long run because unlike printer cartridges you have no physical object with software since almost all is done via digital distribution. I do know our commercial software at work on about every platform is by license only. we don't own any of it. didn't microsoft do this with Office, give you a "low" monthly rate instead of selling out right? Perhaps the plan is, buy it for 299 or license it for 9.99 a month or 99 a year? so this would skirt the issues presented with physical items?
  - joshuak 9y ago
    I do not believe that mechanism of delivery is a relevant feature of any of these laws. The copyright of a book is not contingent on its delivery via a binding of paper. One could argue a subscription is different than a purchase (of anything license or otherwise), but if you subscribe to a magazine you can legally resell any issues you receive. I see no reason you shouldn't be able to re-sell your Office 360 subscription. The law as decided in the Autodesk case seems to indicate that you can restrict the sale even of physical items if you assert that the items contains 'licensed' software, and state the terms of the license do not allow resale. The owner of the product could sell the physical item, but only if they could remove the 'licensed' software.
- Omniusaspirer 9y ago
  There seems to be a logic gap here if I'm understanding the possibilities correctly. What stops me from founding a company through which I get paid, leveraging that company to purchase 100% of my "assets", then instituting a EULA and selling (at no cost) a lifetime license to use anything I want to myself? As per your logic (as I understand it), I could then declare myself utterly destitute and owning $0 worth of assets. My company could also claim $0 worth of assets. At that point, could I not play any number of games to increase eligibility for government assistance programs or reduce tax burden? (This is a quick thought, so if there's any glaring flaws in this idea please do point them out.)
gameshot911 9y ago
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 and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell. There are two issues at play here, right? One is Lexmark's patent rights, and the other is the contract between Lexmark and the consumer. The Supreme Court held that Lexmark can't use patent rights to prevent refilling the cartridges, but what of the contract? Is that enforceable?
- deleted 9y ago
  [deleted]
- HappyTypist 9y ago
  I don't see any reason why that would be unenforceable, but resellers are not a party to that contract, and there is no contract if you just buy new cartridges and refill those ones.
- colinbartlett 9y ago
  The court doesn't rule on that contract issue. It is not in play in this case at all, as it would require that Lexmark sue its own customers for contractual infringement. The ruling mentions: > even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law > and whatever rights Lexmark retained are a matter of the contracts with its purchasers, not the patent law
- tbirrell 9y ago
  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, Lexmark relinquished its rights to the physical product in question when they sold it. Then on the basis of patent law (the idea that they own the rights to the "idea" of the toner), they tried to say that you may not sell it to anyone else. What SCOTUS is pointing out is that Lexmark's patent does not grant them control of a product they made and sold. To be clear here, the patent prohibit others from making (and subsequently selling) these toners, but if Lexmark made the toner, all bets are off.
sova 9y ago
An excellently subtle line of English text to say "yeah your friend can refill your printer cartridges for you, without facing penalties of patent infringement"
ChuckMcM 9y ago
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 possible to easily find ink cartridges at 1/2 to 1/3 the price that the printer manufacturer sells it for. 3) The manufacturers will reduce prices on their ink cartridges in order to support their revenue stream. I also expect more counter measures like ink cartridge chips that 'self destruct' when the cartridge is exhausted to prevent refilling. And aggressive prosecuting under the DMCA people who reverse engineer cartridge chips to create work alike versions.
- gnicholas 9y ago
  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.
  - socalnate1 9y ago
    Isn't this a good thing? I'd rather not companies obfuscate the true cost of the things I buy.
    - gnicholas 9y ago
      You make a good point that it is good for consumers to be informed. But it is also a good thing for sellers to be able to price discriminate between high-volume and low-volume users, which is made possible by making more profit on the ink than on the printer. If they could not do this then printers would be more expensive than most people would want to pay, even though the cost of production is actually less. So there would be a lost opportunity from gains from trade, which results in decreased total social welfare. But to reiterate, yes it would be good if we all knew how much cartridges would cost up-front. I've even heard of some printer companies (Samsung, if memory serves) selling printers with half-full toner cartridges, to make the up-front cost even lower. This gives consumers the (false) impression that toner will be cheaper than it is, on the thinking that "I just bought printer + toner for $80, therefore toner obviously costs much less than this". Unfortunately, this isn't true when it's a half-full toner cartridge.
doodlebugging 9y ago
This case sounds similar to the ruling back in the 1980's (I think) that came from a suit by the makers of Warn winches against a North Texas trailer maker/seller. From flawed memory, the trailer sales business offered the Warn product line at prices well below those of other Warn dealers and below the suggested retail prices from Warn. He was sued by the manufacturer in an attempt to get him to raise the prices and he prevailed I think based on first sale doctrine since the court ruled that Warn had already been paid for the product and that ownership and control of the winches passed to the trailer manufacturer who was thus free to advertise and sell them at any price he desired even if it meant he took a loss on each one sold. They belonged to him and he could do as he pleased with them. He had been using them as a kind of loss leader where one of the incentives of buying a trailer allowed you to purchase a winch at a large discount. EDIT: The case was not Warn winches, it was Ramsey winches and the ruling was: (http://openjurist.org/753/f2d/416/pierce-v-ramsey-winch-company-a http://openjurist.org/753/f2d/416/pierce-v-ramsey-winch-comp...) Briefly - I have a bad memory. The case was a lot more involved since Ramsey tried to terminate the distributor agreement and was thus sued by Pierce Sales. Pierce was a high-volume winch dealer and due to the high volume of sales he was able to buy the winches from Ramsey at the lowest price available to dealers. He then used that buying power to advertise the lowest prices for the winches and even offered other dealers the opportunity to buy hard-to-find winches directly from his stock at prices lower than they could buy directly from Ramsey if that particular winch was even available from Ramsey stock. Pierce alleged price-fixing by Ramsey and ultimately won the case. I remembered the court case but almost none of the pertinent details. Sorry.
optimiz3 9y ago
Couldn't find the vote without teasing it out of the text - It was an 8-0 decision, with a minor dissent from Ginsburg on what happens when a product is sold in a foreign territory.
- test6554 9y ago
  Where did they land on the foreign territory scenario? I only saw that the lower courts thought foreign territories did not cause patent rights to expire.
  - sbuttgereit 9y ago
    They said those rights were exhausted as well. That was the point on which Ginsburg dissented; in my non-lawyerly paraphrasing it sounded as though she saw foreign patent law as something that could not be exhausted on the same grounds as domestic patent law (being foreign and all). I saw some citations of trade-treaties and such (Bern Convention) in her dissent, but didn't go farther. She joined on the the domestic point.
01572 9y ago
Will companies now save more money on toner? Is there anyone selling a reverse-engineered, refillable pod for the coffee machines that only accept pre-filled proprietary ones? Do these coffee machine vendors seek to use patents to protect their sales of coffee? Edit: I know Keurig and Nespresso are the well-publicised examples, but I was thinking of the others. I assume with reasonable confidence there are others still using non-refillable proprietary pods.
- lallysingh 9y ago
  You can get a refillable pod for kuerigs. I think it's even kuerig branded. Is there another vendor you're thinking of?
- cromulent 9y ago
  Lidl sell Nespresso compatible capsules.
- vmarsy 9y ago
  > Do these coffee machine vendors seek to use patents to protect their sales of coffee? A couple years ago this was a debate in France, Nespresso lost but it was because of anti-competitive behavior[1]. There's apparently[2] plenty of 3rd party nespresso pods : around 50 brands worldwide. [1] https://arstechnica.com/business/2014/04/nespresso-open-sources-coffee-pod-business-under-government-pressure/ https://arstechnica.com/business/2014/04/nespresso-open-sour... [2] http://www.beveragedaily.com/Processing-Packaging/Coffee-capsule-maker-sues-Nestle-Nespresso-for-150m http://www.beveragedaily.com/Processing-Packaging/Coffee-cap...
post_break 9y ago
Apple really pissed me off about this. Magsafe is not licensed. Buy Magsafe bricks, cut the end off, and make a battery that can charge MacBooks? See you in court. http://appleinsider.com/articles/10/11/01/hypermac_to_be_rebranded_hyperjuice_after_apple_legal_action http://appleinsider.com/articles/10/11/01/hypermac_to_be_reb...
- PascLeRasc 9y ago
  Apple hasn't made a similar product in the seven years since this case. That's ridiculous that they would discourage accessories for their product. That's free R&D for them.
test6554 9y ago
So a company signs a contract for cheaper ink that requires them to return the cartridges to Lexmark and only Lexmark. Then companies willfully break the contract and send their cartridges to a 3rd party. Lexmark sues the third party and courts throw out the suit. Lexmark can either tighten enforcement and restrictions on their own customers as well as sue them, or stop the program all together. I assume they will just stop the program and only sell the more expensive new cartridges going forward.
EGreg 9y ago
What's new precedent has been set by this decision? It seems it upholds an existing doctrine.
Steko 9y ago
Florian Mueller (yes, [1]) says this is very bad news for Qualcomm. He quotes Roberts' decision: "The problem with the Federal Circuit's logic is that the exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is a limit on the scope of the patentee's rights. The Patent Act gives patentees a limited exclusionary power, and exhaustion extinguishes that power. A purchaser has the right to use, sell or import an item because those are the rights that come along with ownership, not because it purchased authority to engage in those practices from the patentee." Then recaps FTC v Qualcomm: Presumably, some people in another Washington DC building are now reading the Supreme Court decision: the lawyers working on the FTC's case against Qualcomm. The FTC argued in its January complaint, under a headline that describes Qualcomm's "no license-no chips" policy as "anomalous among component suppliers," that "when one of Qualcomm's competitors sells a baseband processor to an OEM, the OEM can use or resell the processor without obtaining a separate patent license from the competitor—just as a consumer buying a smartphone does not have to obtain a separate patent license from the seller of the smartphone." The FTC went on to explain that "Qualcomm is unique in requiring an OEM, as a condition of sale, to secure a separate patent license requiring royalty payments for handsets that use a competitor's components." For example, this would apply to a situation in which a device maker is a customer of Qualcomm and, say, Intel or Samsung's component business. And Apple v Qualcomm including relevance of overseas sales portion of today's decision: Count XXIII of Apple's antitrust complaint against Qualcomm is a request for judicial "declaration of unenforceability [of Qualcomm's patents in certain contexts] due to exhaustion." Apple alleged in its January complaint that "Qualcomm has sought, and continues to seek, separate patent license fees from Apple's [contract manufacturers] for patents embodied in the chipsets Qualcomm sells to Apple's CMs, a practice that is prohibited under the patent exhaustion doctrine." ... Apple's complaint already anticipated that Qualcomm would point to its corporate structure: "Qualcomm has attempted to evade the patent exhaustion doctrine by selling baseband processor chipsets to Apple's [contract manufacturers] through QTC, which is operated by QTI, which is in turn a wholly owned subsidiary of Qualcomm." Apple then points to Qualcomm's 2012 restructuring, which I already blogged about back then with a focus on open-source licensing issues. The Supreme Court's broad and inclusive approach to exhaustion simply doesn't allow any kind of end-run around the exhaustion doctrine through a first sale outside the United States as in one of the two issues relevant in the Lexmark case. http://www.fosspatents.com/2017/05/supreme-court-rules-against-lexmark-on.html http://www.fosspatents.com/2017/05/supreme-court-rules-again... [1] Yes it's FM but his analysis here seems better than it did 6+ years ago. I don't remember him saying things like this in the oracle case: "The good news is that the Supreme Court has once again overruled the Federal Circuit in a way that strengthens those defending themselves against attempts to gain excessive leverage and extract overcompensation from patents."
CalChris 9y ago
There's a certain obviousness to this decision. Indeed it's hard to read the rest of the opinion after it explains what it is to exhaust patent rights in the first paragraph. There's plenty of precedent, indeed when you're quoting Coke, you're going back to the 17th century and his decision doesn't seem different from the opinion. This all begs the question how did this ham handed attempt to abuse patent rights even end up in court and then how did it get appealed to the Supreme Court and moreover why did the Supremes bother to hear it? Because it seems obvious at least to this NL and obvious stuff usually isn't on their docket.
Angostura 9y ago
That's a fascinating judgement and the hypothetical case that they use to illustrate things seems interestingly chosen: >But an illustration never hurts. Take a shop that restores and sells used cars. The business works because the shop can rest assured that, so long as those bringing in the cars own them, the shop is free to repair and resell those vehicles. 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. Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement. And even if they refrained from imposing such restrictions, the very threat of patent liability would force the shop to invest in efforts to protect itself from hidden lawsuits. Either way, extending the patent rights beyond the first sale would clog the channels of commerce, with little benefit from the extra control that the patentees retain. And advances in technology, along with increasingly complex supply chains, magnify the problem. See Brief for Costco Wholesale Corp. et al. as Amici Curiae 7–9; Brief for Intel Corp. et al. as Amici Curiae 17, n. 5 (“A generic smartphone assembled from various high-tech components could practice an estimated 250,000 patents”).
wordsarewind 9y ago
As opined here the justification for the exhaustion of the patent after sale is that the patent holder has in the sale been granted the price desired, fair compensation, for the patented item, and thus cannot demand further use of the patent with respect to the item. However, this desired price can only be set by the patent holder in the monopoly granted through the patent in the US. Therefore, this price cannot be set outside of the US where the patent holder has no patent monopoly, and thus competition. Consequently, the patent holder will not receive the desired price and remain uncompensated by the patent, and thus may still require further use of it. Surely the Supreme Court shouldn't disqualify the patent holder's right to fair compensation for the invention in sales outside of the US?
rabboRubble 9y ago
How does this case compare to Monsanto vs Bowman? If you recall, this case pertained to a farmer that bought seeds from a local farmers association, then applied Roundup guessing that some/all of the seeds were GMO. Monsanto argued he violated their patent. Bowman argued that the GMO patent was exhausted after the first sale. He lost. This Lexmark case seems to undermine the Monsanto case. I don't understand this inconsistency between the two cases. Anybody able to clarify why these are different?
- delecti 9y ago
  Because using the resulting soybeans as seeds constituted creating unauthorized copies of a patented object.
  - rabboRubble 9y ago
    Thank you... I guess that makes some sort of sense. Now if Lexmark can modify their printer cartridges to print and replicate themselves, Lexmark might might find cover under the Bowman case! I wish I could hand the SC justices 10 seeds each, with each 10 seed packet comprised by 5 GMO seeds and 5 non-GMO seeds. If the justices could visually sort the GMO and non-GMO seeds correctly, their ruling is actually "followable". If the product in question appears on the surface to be a natural object without patentability, extending patent protections to something that is indistinguishable from a non-patented object and self replicates seems incredibly academic.
    - ensignavenger 9y ago
      When you go to the store and buy anything, do you know what is patented and what is not? Do you know every patent that covers every part of your phone? Do you know what parts of any of these things you can copy? Patent Law is just like that- 'academic' as you describe it, I suppose. (I realize none of those things self-replicate like your seeds... but I think my point still holds.)
      - rabboRubble 9y ago
limeyx 9y ago
So now the companies will start selling "leases" to printer cartridges ?
stevespang 9y ago
Patent Holders will step around this nuisance by "leasing" their products using a contractual lease whereby they maintain full ownership of the property. A large payment up front approx. the same price as they are collecting now, with scheduled micro payments just to insure the lease is legally a true lease. If the micro payments are not ponied up, they will have preconstructed further legal pitfalls for the lessee in the terms and conditions with skyrocketing interest, etc. (The "double dip").

884 points by beefman 9y ago

Some context for this consequential decision: http://www.npr.org/2017/04/06/522826514/supreme-courts-decision-about-printer-cartridges-could-have-big-consequences http://www.npr.org/2017/04/06/522826514/supreme-courts-decis...

euyyn 9y ago
Thanks! The usage being litigated (and confirmed lawful) was this: > A Lexmark refill toner cartridge costs about $130. It's not cheap. So there are businesses that have sprung up that take empty Lexmark printer cartridges, refill them and then resell them for a lot cheaper.
Steko 9y ago
I wonder if this will affect the various Qualcomm suits. Qualcomm tries to collect patent royalties from (say) Foxconn based on the sale price between (say) Apple and the carrier/consumer. Edit: moved long commentary from FOSS blog to separate thread: https://news.ycombinator.com/item?id=14448205 https://news.ycombinator.com/item?id=14448205
- test6554 9y ago
  If Apple purchased Qualcomm chips and then resold them as part of the iPhone, then it might affect those suits, but this is not the case. Apple licenses proprietary Qualcomm technology from Qualcomm. Apple uses the technology, but builds its own chips.
  - Steko 9y ago
    No Qualcomm's licenses are with Foxconn et al. Apple has been negotiating for a direct license but they haven't reached any agreement: http://www.reuters.com/article/us-apple-lawsuit-qualcomm-idUSKCN18D1EC http://www.reuters.com/article/us-apple-lawsuit-qualcomm-idU... Qualcomm apparently filed an amicus brief in support of Lexmark in this case: http://www.scotusblog.com/wp-content/uploads/2017/03/15-1189_amicus_resp_qualcomm.pdf http://www.scotusblog.com/wp-content/uploads/2017/03/15-1189...

deleted 9y ago

[deleted]

jasonlfunk 9y ago

The Planet Money podcast recently did an episode about this case: http://www.npr.org/sections/money/2017/03/31/522226226/episode-762-the-fine-print http://www.npr.org/sections/money/2017/03/31/522226226/episo...

dangerboysteve 9y ago
I listened to this podcast yesterday. Planet Money is well produced and entertaining as heck!
reledi 9y ago
Also http://www.npr.org/2017/04/06/522826514/supreme-courts-decision-about-printer-cartridges-could-have-big-consequences http://www.npr.org/2017/04/06/522826514/supreme-courts-decis...

pitaa 9y ago

> Gorsuch, J., took no part in the consideration or decision of the case. Does anyone know why this is?

frandroid 9y ago
Because the case got before the court before he was confirmed, likely.
rhino369 9y ago
He wasn't sworn in before oral arguments.
snerbles 9y ago
Justices typically recuse themselves from cases that pre-date their nomination.
- frandroid 9y ago
  But they could decide to jump in?
  - sowbug 9y ago
    The "could" in your question implies that anyone would be able to stop them. More likely it's a convention they've chosen to follow.
  - roywiggins 9y ago
    The Justices pretty much set their own rules, so sure, probably.
  - bluGill 9y ago
    Possibly, but why? He has to learn everything there is to know about being on the supreme court (including things like where to park in DC), and all the other work he is expected to do. All this to weigh in on a case that was 7-1 (and the 1 was a minor dissident), so his voice would mean nothing to the result, and it would inflame the Democrats (in this case - if a Democrat did the nomination the Republicans would be inflamed) who would look extra hard for a reason to impeach him. If congress is close such a thing along might be enough to impeach. If this ever happens it will probably be a 4-4 decision where the other justices - knowing they are tied - ask for a tie breaker. Expect there to be a lot of publicity: they will want to make it clear to everything that everything is being done right. This probably includes redoing the oral hearings for the benefit of the new member.

ryandamm 9y ago

This is really similar to the concept of 'first sale' in copyright law, which similarly prevents the copyright holder from using copyright to restrict what a buyer does with the object. Glad to see it extended to patent law as well.

DannyBee 9y ago
Yes they both stem from common law disfavouring restraints on alienation.
- _delirium 9y ago
  Something I've searched for but not found a layperson introduction to: any idea why that doesn't apply to real estate? Deed restrictions that purport to put conditions on how property can be resold have repeatedly been upheld, except for a really narrow, somewhat recent carve-out for no-selling-to-black-people deed restrictions, which were held unenforceable, but specifically because they were racially discriminatory [1], not because of any general principle that covenants can't restrict alienation of property. [1] https://en.wikipedia.org/wiki/Shelley_v._Kraemer https://en.wikipedia.org/wiki/Shelley_v._Kraemer
  - zerocrates 9y ago
    Restrictions and covenants and so on are very common, but actual restraints on alienation or sale itself aren't so much, at least not enforceable ones; they're heavily disfavored in the realm of real estate as well.
  - toast0 9y ago
    Many restrictions may be implicitly time limited by the common law rule against perpetuities; but different rules apply to real estate and retail sale because of the process to buy either one. If I buy a book, I'm not bringing my lawyer to review the contract and objecting to terms in the purchase agreement; if I buy real estate, it's a major investment and I'm expected to examine the title for encumbrances and carefully consider the consequences of them; and there's a customary process (escrow) which provides for time to ensure any defects in title or other condition are remediated or compensated for to the agreement of both parties.

3JPLW 9y ago

The text is the same, but I find the official PDF better typeset and much more readable: https://www.supremecourt.gov/opinions/16pdf/15-1189_ebfj.pdf https://www.supremecourt.gov/opinions/16pdf/15-1189_ebfj.pdf

zeeveener 9y ago
What an amazing waste of space on the paper... I mean, yes margins are good, but when you lose 60% of the page to them they might be overbearing.
- cooper12 9y ago
  It's possible that the margins are meant to be cropped by the printer. Though more likely it's just an optimization of line-length, font size, and ink usage. (since ink costs more than paper)
- rkangel 9y ago
  My guess is that it is typeset for a particular journal of law - whatever is used to officially document SCOTUS decisions, with an appropriate column size for that. The additional electronic publishing is just using the same format but slapping it in the middle of A4/Letter.

roywiggins 9y ago

When you can cite Lord Coke in your opinion, I guess it's practically mandatory to do so. > As Lord Coke put it in the 17th century, if an owner restricts the resale or use of an item after selling it, that restriction “is voide, because . . . it is against Trade and Traffique, and bargaining and contracting betweene man and man.” 1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628)

theandrewbailey 9y ago
https://en.wikipedia.org/wiki/Edward_Coke https://en.wikipedia.org/wiki/Edward_Coke
owenversteeg 9y ago
Semi-off-topic: I've noticed that Coke's writings are a bit more similar to "modern English" than other things I've read written in the 1600s. This surprised me, because he was a judge and probably wrote in formal language for the time. Formal language, to me, seems perpetually set back to the way people talked about 60-100 years previously. Thus you'd expect Coke to sound like he's writing in the 1500s, but instead he sounds like an 1800s writer. Perhaps I've caught a time-traveler? If so, to Coke: I'm having some friends over for dinner tonight, and you're welcome... email's in my profile if you need directions ;)
- mayoff 9y ago
  I don't know anything about Coke, but my impression of SCOTUS opinions is that they often use language I wouldn't consider formal. Consider the first sentence of section II-A of this decision: > First up are the Return Program cartridges that Lexmark sold in the United States. I often find the decision to be more readable (if much longer) than the syllabus.
- dragonwriter 9y ago
  Formal writing probably was influenced by the move to standardization of grammar and spelling (which was, after all, elite-driven) sooner than informal writing, so that may be part of the reason for the results you describe in that particular time frame.

awjr 9y ago

In short, the sale of a product does not allow you to control what is done with the product afterwards through patent law. I'm assuming this is almost similar to attempts to use copyright law to stop the sale of products on the grey market. http://www.bipc.com/court-rebuffs-attempt-to-use-copyright-law-to-prevent-grey-market-imports http://www.bipc.com/court-rebuffs-attempt-to-use-copyright-l... I do wonder though, if they changed the underlying software on the cartridges they would get into trouble. I do not see this stopping John Deere's practice of locking up their hardware through copyright laws. https://www.wired.com/2015/02/new-high-tech-farm-equipment-nightmare-farmers/ https://www.wired.com/2015/02/new-high-tech-farm-equipment-n...

tr1ck5t3r 9y ago
Tell Microsoft, Intel, AMD, Apple, Samsung, HP, Dell, GM, Volvo, Ford, VW, in fact any company that makes things. What a little stick in a wasps nest!
balls187 9y ago
Interesting that even with importation fees, it was cheaper for Costco to import watches.
- schoen 9y ago
  That's especially likely to happen when manufacturers are deliberately trying to charge very different prices in different markets (like you see in a lot of parallel importation cases). https://en.wikipedia.org/wiki/Market_segmentation#Geographic_segmentation https://en.wikipedia.org/wiki/Market_segmentation#Geographic... https://en.wikipedia.org/wiki/Price_discrimination#International_price_discrimination https://en.wikipedia.org/wiki/Price_discrimination#Internati... https://en.wikipedia.org/wiki/Parallel_import https://en.wikipedia.org/wiki/Parallel_import
- icantdrive55 9y ago
  On the right day, you can get a high end watch for a lot less than going into a boutique. I bought a Omage Aquaterra, with the big white dial for $1400 years ago. This watch was going for $3500 in the authorized retail stores. Swatch took Costco to court, and lost. There's no factory warranty, but most of these new high end watches will keep perfect time for 10 plus years. Oh yea, Costco does have some watchmaker that supposedly repairs watches. I can repair, so I don't trust anyone anymore. It's too bad companies continually screw Americans on price, on so many products--the medication cost difference really bothers me.

baltimore 9y ago

Does this mean that printer prices are about to go up since HP/Brother/Lexmark will no longer be able to make as much money on the ink?

euyyn 9y ago
The writing's on the wall for the whole business anyway.
- tuwtuwtuw 9y ago
  Lexmark did attempt to move to new markets some years ago due to this. They sold off their consumer/inkjet business and have been buying a bunch of software companies. This attempt to "softpivot" failed miserably. Lexmark was sold to a Chinese business some time ago. Now the software business is being split up and sold.
ocdtrekkie 9y ago
Perhaps, but how often do you really need to buy a printer? And they're so cheap a mild price increase wouldn't harm much. The Canon MG2520 (I think there's a newer version now) is a printer/scanner/copier combo that often retails for $20. (And comes with ink.) Price of ink would fall in exchange, since they have to compete with the off-brand folks.
- owenversteeg 9y ago
  Hmm, cheapest I found the MG2520 was $30 shipped including ink. Not bad, and still pretty low. I'd expect the minimum for a wireless printer-scanner with ink, shipped, to be $40 or so. $9 shipping, $3 wireless chip, $5 ink, $9 plastic/frame, $5 motors/print heads, that's already $31. (I could be off, of course.) I wonder how much, if anything, Canon loses on the printer, and how many people buy replacement ink.
  - ocdtrekkie 9y ago
    The $20 price comes and goes. Micro Center was where you could easily pick it up for that regularly. And it's not wireless, FYI. The new version is the MG2522, which is currently $25 at Micro Center, and a wireless model, the MG3620, is $40.

DannyBee 9y ago

In practice it means people will still be able to stop you from doing things with stuff you own. Just not using patent rights. Lexmark's real problem here is that its enforceable contracts are usually with the resellers, and so enforcing against a third party purchaser is trickier, so it tried to use patent law instead. (It has plenty of contracts, including on the wrapping of the printer cartridges, I'm just sticking with the ones that are easy to enforce)

Analemma_ 9y ago
They'll always be looking for new ways, but fortunately for the moment SCOTUS has been productive about shooting them down as they come up. Kirtsaeng v. John Wiley prevented bizarre applications of copyright exhaustion, and now they've done the same to patent law. This is an encouraging sign that, whatever its other faults, SCOTUS seems to take the first-sale doctrine pretty seriously.
Glyptodon 9y ago
All they really need to do is make cartridges rentals instead of sales, no?
- gist 9y ago
  Perhaps also by a clever rebate scheme. Product price is $180. Rebate is $40. Applying for and getting the rebate necessitates signing of a 'contract' which prohibits certain action. [1] [1] May not hold up in advanced legal cases but enough of a leg to stand on to get the ball rolling.
  - dsp1234 9y ago
    FTD: "The other is to buy a cartridge at roughly 20-percent off through Lexmark’s “Return Program.” A customer who buys through the Return Program still owns the cartridge but, in exchange for the lower price, signs a contract agreeing to use it only once and to refrain from transferring the empty cartridge to anyone but Lexmark." Note that because the contract is with the purchaser, and not with the refiller/reseller, Lexmark can only use the original purchaser. Which is why they turned to patent law in order to try to and stop the refiller/reseller.

AdmiralAsshat 9y ago

Outside of the narrow case involving printer cartridges, what other implications and precedents can we expect this to set? Can it stop smartphone makers from being able to blacklist devices that are resold, for instance?

euyyn 9y ago
> smartphone makers from being able to blacklist devices that are resold What is that blacklist?
- AdmiralAsshat 9y ago
  http://www.howtochoosealaptop.com/silent-circle-is-blocking-the-blackphone-2-unauthorized-sellers/ http://www.howtochoosealaptop.com/silent-circle-is-blocking-...
- blacksmith_tb 9y ago
  I am guessing this is a reference to some Google Pixel phones that were resold when they first hit the market[1]. 1: http://wccftech.com/google-blacklist-pixel-project-fi/ http://wccftech.com/google-blacklist-pixel-project-fi/
- elipsey 9y ago
  Verizon denied my activation of used phones a couple of times due to a blacklisted IMEI, so apparently they (at least used to) keep an internal blacklist also.
  - tooltalk 9y ago
    I thought the blacklist was for only stolen or lost devices reported by the first owner.
  - twoodfin 9y ago
    Verizon owns their network, so I'd imagine they have pretty broad discretion (FCC-willing) on restricting the specific devices they'd allow on it. Blacklisting IMEI's seems like a pretty reasonable theft deterrent.

mmastrac 9y ago

Wasn't apple using patents to stop modding of their magsafe cables?

djrogers 9y ago
Not modding, but production of alternatives. Most (all?) products that were magsafe compatible that actually made ti to market were hacked up magsafe adapters.

bhhaskin 9y ago

This is a pretty big deal. It is great to finally start to see what patents where supposed to be, which was to protect the inventor until they could become established in the market. Not as a tool to stifle innovation. Very interesting outcome.

conistonwater 9y ago

Can somebody explain, what does the word ‘exhaust’ mean? It doesn't seem like it's being used in the plain-English sense here.

schoen 9y ago
One meaning of exhausting is "using up" (like exhausting a resource). In copyright and patent law, there is an idea that the rights of the copyright holder or patent holder only extend so far, and can be in effect "used up" in certain contexts so that they don't have further rights to restrict other people's activities. This case related to such a situation. Edit: Wikipedia describes this at https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_property_rights https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_pro... and in a lot more detail at https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S._law https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S....
geofft 9y ago
The decision has this definition in the first paragraph, which I think is reasonably clear: "When a patentee sells one of its products, however, the patentee can no longer control that item through the patent laws—its patent rights are said to 'exhaust.'" (It sounds to me like the plain-English sense of "run out": there are no more patent rights left after the sale, they have been used up in the process of getting the product on the shelves and sold in preference to a competitor's product.) Wikipedia has some articles about it: https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_property_rights https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_pro... https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S._law https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S.... If I'm reading the decision right, the question is not whether patent rights "exhaust" in the common case when you sell things (everyone agrees that they do). The question is whether Lexmark, by putting conditions on the sale, can prevent their rights from exhausting. The federal circuit's interpretation was, yes, the rights would exhaust, except that when Lexmark put conditions on the sale that the toner-cartridge purchaser agreed to, Lexmark retained its rights because that's a legal and valid contract between the buyer and seller. SCOTUS said, no, it doesn't work that way, the rights were definitely exhausted: "Lexmark exhausted its patent rights in the Return Program cartridges that it sold in the United States. A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell."

kevin_b_er 9y ago

You better be glad it went this way, or you would have no reasonable property rights. All objects may have contained an unknowable restriction on their use or ownership. Everything could have what is tantamount to an easement and you wouldn't know what it was unless you found out how it was first sold. Fortunately sanity on basic notion of property rights remains within the SCOTUS.

jvandonsel 9y ago

Could Lexmark argue that they're not really selling the cartridges to you, but are instead leasing them for an indeterminate period of time?

distances 9y ago
I think you'd then have to enter some kind of a lease agreement, which would be a big turn-off for customers that would like to just buy a replacement cartridge without signing a contract.
- jawns 9y ago
  1) As with many of the tricks that printer companies use to dissuade people from buying off-brand inks, if enough printer manufacturers did it, consumers might find that they have few other options -- especially if they've had poor luck with third-party inks. 2) I pay $3 a month for HP's Instant Ink program. It allows me to print up to 50 full-color pages a month with my inkjet printer, and when one of the cartridges is running low, it automatically sends a replacement. It's not significantly more expensive, in my case (low-volume usage), than buying the ink cartridges directly, but it's a lot more convenient. I'm not quite sure if it technically counts as a leasing program, but it follows a similar ethos. So I wouldn't so easily dismiss the idea that a leasing program would lead to a consumer backlash.
  - stale2002 9y ago
    And then what happens if the consumer just ignores the lease and sells it anyway? They tell the company "I threw it away". People throwing used printer cartridges away would probably happen a lot, anyway, right? Technically it would break the contract but the issue is that it would be very difficult to enforce.
  - rhizome 9y ago
    1. This seems like collusion would be necessary 2. I have to think it's pretty hard to establish that a consumable is subject to a lease. What is returned at the end of the lease?

guelo 9y ago

This is another in a series of necessary smackdowns of the Federal Circuit.

touchofevil 9y ago

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 software b/c you aren't considered to own it. In the EU however, if a company sells you a permanent life-time license in exchange for a one-time fee, the courts determined that you aren't merely licensing that software, you own it and you are allowed to resell it. I think these different rulings haven't been fully appreciated yet. For example, if you buy Apple's Final Cut X for $299, you should be allowed to resell that software if you live in the EU, but there is currently no way to transfer licenses between users, preventing users from reselling it. It seems to me that by preventing users from reselling their software, Apple (and the Google Play Store) are probably violating EU law on this matter.

joshuak 9y ago
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.
- chmod775 9y ago
  In the EU it is impossible for normal consumers to sign away most rights intended to protect the consumer. Misleading the consumer in any way about that can even end in fines.
- phkahler 9y ago
  >> 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.

SeanDav 9y ago

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.

ghaff 9y ago
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.
- HarryHirsch 9y ago
  Now you're paying $500 for the printer whether you use it heavily or just now and then. That's how it ought to be, if a printer is USD 500 perhaps quality will rise. I hate replacing equipment every other year because product quality for home use is that abysmal.
- gech 9y ago
  Why can't they just accept lower margins
  - PeterisP 9y ago
    Why should they? After all, margins is the only reason why they're producing printers at all; if the margins are bad then it would be better for them to stop producing these products as they can get more profit manufacturing something else.
- moduspwnens14 9y ago
  I got this color laser printer [1] at $179.99 in 2013 and it's still going strong. I got it specifically as a long term investment because I don't print very often and was tired of having dried-out ink every few months when I did go to print. I'm curious how close to that price point inkjets will get if they have to turn a profit without proceeds from ink cartridge sales. We might be moving toward a point where it makes less and less sense to buy an inkjet at all. [1] http://a.co/2kJojV2 http://a.co/2kJojV2

geofft 9y ago

I'm a little surprised that Ginsburg dissented here, and also dissented from Kirtsaeng v. John Wiley: naively, she's "liberal", and (at least in my bubble) being "liberal" is associated with wanting less strong IP protection. But I see also that she wrote the majority opinion in Eldred v. Ashcroft, saying that the 28-year extension to copyright terms was constitutional. What's the right way to understand her legal thinking here? Is she known as an IP maximalist? Or are there other principles she's using to reach these conclusions? (I don't completely follow her logic that, because US patent law doesn't provide any protection in other countries, US patent rights are preserved across a sale in some other country.)

schoen 9y ago
Justice Ginsburg is definitely known as an IP maximalist. Some people have wondered if she's been influenced by her daughter's views on IP, since Jane Ginsburg (a colleague of Eben Moglen's at Columbia!) is one of the most influential copyright law professors and has taken a maximalist view in many copyright controversies. https://en.wikipedia.org/wiki/Jane_Ginsburg https://en.wikipedia.org/wiki/Jane_Ginsburg > (at least in my bubble) being "liberal" is associated with wanting less strong IP protection And that's also much less true in regions with major media industries, like New York and Los Angeles.
- ab5tract 9y ago
  I wish I could go back in time to ensure that Americans never started using "liberal" to mean anything other than "one who advocates for liberalization of trade and economics". This is what it means in Europe. It took me a good long time after moving to start hearing it with its international meaning, but now I find the Americanized form absurd in its conflation. In other words, liberals--in the international sense of the word--absolutely 100% endorse IP maximalization and indeed all forms of corporate ownership, rent, and public infrastructure transfer.
ckozlowski 9y ago
I think she's trying to say specifically that patent rights are preserved in the U.S., because that's where U.S. patent law applies. Her dissent is brief and only partial; and so I think she's only calling attention to a minor point that nonetheless has legal ramifications. Remember that the court's can also be to clarify the laws, and in this case, it seems to me that she took the opportunity to point out a gray area that might come up in the future. I see this "dissent" (if it can really be called that) as a footnote of sorts. "Watch out for these situations here", she's saying. It's not a political stance, but rather pointing out a technicality.

joshuak 9y ago

Good, but the tip of the issue is licensing. Autodesk[1] has set precedence that all an organization must do to limit the resale of anything is institute a EULA. Simply by asserting that an offer is for a license not the thing being licensed the seller can bypass common law, Lord Coke, and the first sale doctrine. P.S. This also means that expensive professional software like Autodesk's, or anything with such an EULA, cannot be considered an asset since it has no dollar value after purchase. 1: https://www.wired.com/2010/09/first-sale-doctrine/ https://www.wired.com/2010/09/first-sale-doctrine/

Shivetya 9y ago
well I am curious how it will play out in the long run because unlike printer cartridges you have no physical object with software since almost all is done via digital distribution. I do know our commercial software at work on about every platform is by license only. we don't own any of it. didn't microsoft do this with Office, give you a "low" monthly rate instead of selling out right? Perhaps the plan is, buy it for 299 or license it for 9.99 a month or 99 a year? so this would skirt the issues presented with physical items?
- joshuak 9y ago
  I do not believe that mechanism of delivery is a relevant feature of any of these laws. The copyright of a book is not contingent on its delivery via a binding of paper. One could argue a subscription is different than a purchase (of anything license or otherwise), but if you subscribe to a magazine you can legally resell any issues you receive. I see no reason you shouldn't be able to re-sell your Office 360 subscription. The law as decided in the Autodesk case seems to indicate that you can restrict the sale even of physical items if you assert that the items contains 'licensed' software, and state the terms of the license do not allow resale. The owner of the product could sell the physical item, but only if they could remove the 'licensed' software.
Omniusaspirer 9y ago
There seems to be a logic gap here if I'm understanding the possibilities correctly. What stops me from founding a company through which I get paid, leveraging that company to purchase 100% of my "assets", then instituting a EULA and selling (at no cost) a lifetime license to use anything I want to myself? As per your logic (as I understand it), I could then declare myself utterly destitute and owning $0 worth of assets. My company could also claim $0 worth of assets. At that point, could I not play any number of games to increase eligibility for government assistance programs or reduce tax burden? (This is a quick thought, so if there's any glaring flaws in this idea please do point them out.)

gameshot911 9y ago

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 and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell. There are two issues at play here, right? One is Lexmark's patent rights, and the other is the contract between Lexmark and the consumer. The Supreme Court held that Lexmark can't use patent rights to prevent refilling the cartridges, but what of the contract? Is that enforceable?

deleted 9y ago
[deleted]
HappyTypist 9y ago
I don't see any reason why that would be unenforceable, but resellers are not a party to that contract, and there is no contract if you just buy new cartridges and refill those ones.
colinbartlett 9y ago
The court doesn't rule on that contract issue. It is not in play in this case at all, as it would require that Lexmark sue its own customers for contractual infringement. The ruling mentions: > even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law > and whatever rights Lexmark retained are a matter of the contracts with its purchasers, not the patent law
tbirrell 9y ago
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, Lexmark relinquished its rights to the physical product in question when they sold it. Then on the basis of patent law (the idea that they own the rights to the "idea" of the toner), they tried to say that you may not sell it to anyone else. What SCOTUS is pointing out is that Lexmark's patent does not grant them control of a product they made and sold. To be clear here, the patent prohibit others from making (and subsequently selling) these toners, but if Lexmark made the toner, all bets are off.

sova 9y ago

An excellently subtle line of English text to say "yeah your friend can refill your printer cartridges for you, without facing penalties of patent infringement"

ChuckMcM 9y ago

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 possible to easily find ink cartridges at 1/2 to 1/3 the price that the printer manufacturer sells it for. 3) The manufacturers will reduce prices on their ink cartridges in order to support their revenue stream. I also expect more counter measures like ink cartridge chips that 'self destruct' when the cartridge is exhausted to prevent refilling. And aggressive prosecuting under the DMCA people who reverse engineer cartridge chips to create work alike versions.

gnicholas 9y ago
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.
- socalnate1 9y ago
  Isn't this a good thing? I'd rather not companies obfuscate the true cost of the things I buy.
  - gnicholas 9y ago
    You make a good point that it is good for consumers to be informed. But it is also a good thing for sellers to be able to price discriminate between high-volume and low-volume users, which is made possible by making more profit on the ink than on the printer. If they could not do this then printers would be more expensive than most people would want to pay, even though the cost of production is actually less. So there would be a lost opportunity from gains from trade, which results in decreased total social welfare. But to reiterate, yes it would be good if we all knew how much cartridges would cost up-front. I've even heard of some printer companies (Samsung, if memory serves) selling printers with half-full toner cartridges, to make the up-front cost even lower. This gives consumers the (false) impression that toner will be cheaper than it is, on the thinking that "I just bought printer + toner for $80, therefore toner obviously costs much less than this". Unfortunately, this isn't true when it's a half-full toner cartridge.

doodlebugging 9y ago

This case sounds similar to the ruling back in the 1980's (I think) that came from a suit by the makers of Warn winches against a North Texas trailer maker/seller. From flawed memory, the trailer sales business offered the Warn product line at prices well below those of other Warn dealers and below the suggested retail prices from Warn. He was sued by the manufacturer in an attempt to get him to raise the prices and he prevailed I think based on first sale doctrine since the court ruled that Warn had already been paid for the product and that ownership and control of the winches passed to the trailer manufacturer who was thus free to advertise and sell them at any price he desired even if it meant he took a loss on each one sold. They belonged to him and he could do as he pleased with them. He had been using them as a kind of loss leader where one of the incentives of buying a trailer allowed you to purchase a winch at a large discount. EDIT: The case was not Warn winches, it was Ramsey winches and the ruling was: (http://openjurist.org/753/f2d/416/pierce-v-ramsey-winch-company-a http://openjurist.org/753/f2d/416/pierce-v-ramsey-winch-comp...) Briefly - I have a bad memory. The case was a lot more involved since Ramsey tried to terminate the distributor agreement and was thus sued by Pierce Sales. Pierce was a high-volume winch dealer and due to the high volume of sales he was able to buy the winches from Ramsey at the lowest price available to dealers. He then used that buying power to advertise the lowest prices for the winches and even offered other dealers the opportunity to buy hard-to-find winches directly from his stock at prices lower than they could buy directly from Ramsey if that particular winch was even available from Ramsey stock. Pierce alleged price-fixing by Ramsey and ultimately won the case. I remembered the court case but almost none of the pertinent details. Sorry.

optimiz3 9y ago

Couldn't find the vote without teasing it out of the text - It was an 8-0 decision, with a minor dissent from Ginsburg on what happens when a product is sold in a foreign territory.

test6554 9y ago
Where did they land on the foreign territory scenario? I only saw that the lower courts thought foreign territories did not cause patent rights to expire.
- sbuttgereit 9y ago
  They said those rights were exhausted as well. That was the point on which Ginsburg dissented; in my non-lawyerly paraphrasing it sounded as though she saw foreign patent law as something that could not be exhausted on the same grounds as domestic patent law (being foreign and all). I saw some citations of trade-treaties and such (Bern Convention) in her dissent, but didn't go farther. She joined on the the domestic point.

01572 9y ago

Will companies now save more money on toner? Is there anyone selling a reverse-engineered, refillable pod for the coffee machines that only accept pre-filled proprietary ones? Do these coffee machine vendors seek to use patents to protect their sales of coffee? Edit: I know Keurig and Nespresso are the well-publicised examples, but I was thinking of the others. I assume with reasonable confidence there are others still using non-refillable proprietary pods.

lallysingh 9y ago
You can get a refillable pod for kuerigs. I think it's even kuerig branded. Is there another vendor you're thinking of?
cromulent 9y ago
Lidl sell Nespresso compatible capsules.
vmarsy 9y ago
> Do these coffee machine vendors seek to use patents to protect their sales of coffee? A couple years ago this was a debate in France, Nespresso lost but it was because of anti-competitive behavior[1]. There's apparently[2] plenty of 3rd party nespresso pods : around 50 brands worldwide. [1] https://arstechnica.com/business/2014/04/nespresso-open-sources-coffee-pod-business-under-government-pressure/ https://arstechnica.com/business/2014/04/nespresso-open-sour... [2] http://www.beveragedaily.com/Processing-Packaging/Coffee-capsule-maker-sues-Nestle-Nespresso-for-150m http://www.beveragedaily.com/Processing-Packaging/Coffee-cap...

post_break 9y ago

Apple really pissed me off about this. Magsafe is not licensed. Buy Magsafe bricks, cut the end off, and make a battery that can charge MacBooks? See you in court. http://appleinsider.com/articles/10/11/01/hypermac_to_be_rebranded_hyperjuice_after_apple_legal_action http://appleinsider.com/articles/10/11/01/hypermac_to_be_reb...

PascLeRasc 9y ago
Apple hasn't made a similar product in the seven years since this case. That's ridiculous that they would discourage accessories for their product. That's free R&D for them.

test6554 9y ago

So a company signs a contract for cheaper ink that requires them to return the cartridges to Lexmark and only Lexmark. Then companies willfully break the contract and send their cartridges to a 3rd party. Lexmark sues the third party and courts throw out the suit. Lexmark can either tighten enforcement and restrictions on their own customers as well as sue them, or stop the program all together. I assume they will just stop the program and only sell the more expensive new cartridges going forward.

EGreg 9y ago

What's new precedent has been set by this decision? It seems it upholds an existing doctrine.

Steko 9y ago

Florian Mueller (yes, [1]) says this is very bad news for Qualcomm. He quotes Roberts' decision: "The problem with the Federal Circuit's logic is that the exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is a limit on the scope of the patentee's rights. The Patent Act gives patentees a limited exclusionary power, and exhaustion extinguishes that power. A purchaser has the right to use, sell or import an item because those are the rights that come along with ownership, not because it purchased authority to engage in those practices from the patentee." Then recaps FTC v Qualcomm: Presumably, some people in another Washington DC building are now reading the Supreme Court decision: the lawyers working on the FTC's case against Qualcomm. The FTC argued in its January complaint, under a headline that describes Qualcomm's "no license-no chips" policy as "anomalous among component suppliers," that "when one of Qualcomm's competitors sells a baseband processor to an OEM, the OEM can use or resell the processor without obtaining a separate patent license from the competitor—just as a consumer buying a smartphone does not have to obtain a separate patent license from the seller of the smartphone." The FTC went on to explain that "Qualcomm is unique in requiring an OEM, as a condition of sale, to secure a separate patent license requiring royalty payments for handsets that use a competitor's components." For example, this would apply to a situation in which a device maker is a customer of Qualcomm and, say, Intel or Samsung's component business. And Apple v Qualcomm including relevance of overseas sales portion of today's decision: Count XXIII of Apple's antitrust complaint against Qualcomm is a request for judicial "declaration of unenforceability [of Qualcomm's patents in certain contexts] due to exhaustion." Apple alleged in its January complaint that "Qualcomm has sought, and continues to seek, separate patent license fees from Apple's [contract manufacturers] for patents embodied in the chipsets Qualcomm sells to Apple's CMs, a practice that is prohibited under the patent exhaustion doctrine." ... Apple's complaint already anticipated that Qualcomm would point to its corporate structure: "Qualcomm has attempted to evade the patent exhaustion doctrine by selling baseband processor chipsets to Apple's [contract manufacturers] through QTC, which is operated by QTI, which is in turn a wholly owned subsidiary of Qualcomm." Apple then points to Qualcomm's 2012 restructuring, which I already blogged about back then with a focus on open-source licensing issues. The Supreme Court's broad and inclusive approach to exhaustion simply doesn't allow any kind of end-run around the exhaustion doctrine through a first sale outside the United States as in one of the two issues relevant in the Lexmark case. http://www.fosspatents.com/2017/05/supreme-court-rules-against-lexmark-on.html http://www.fosspatents.com/2017/05/supreme-court-rules-again... [1] Yes it's FM but his analysis here seems better than it did 6+ years ago. I don't remember him saying things like this in the oracle case: "The good news is that the Supreme Court has once again overruled the Federal Circuit in a way that strengthens those defending themselves against attempts to gain excessive leverage and extract overcompensation from patents."

CalChris 9y ago

There's a certain obviousness to this decision. Indeed it's hard to read the rest of the opinion after it explains what it is to exhaust patent rights in the first paragraph. There's plenty of precedent, indeed when you're quoting Coke, you're going back to the 17th century and his decision doesn't seem different from the opinion. This all begs the question how did this ham handed attempt to abuse patent rights even end up in court and then how did it get appealed to the Supreme Court and moreover why did the Supremes bother to hear it? Because it seems obvious at least to this NL and obvious stuff usually isn't on their docket.

Angostura 9y ago

That's a fascinating judgement and the hypothetical case that they use to illustrate things seems interestingly chosen: >But an illustration never hurts. Take a shop that restores and sells used cars. The business works because the shop can rest assured that, so long as those bringing in the cars own them, the shop is free to repair and resell those vehicles. 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. Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement. And even if they refrained from imposing such restrictions, the very threat of patent liability would force the shop to invest in efforts to protect itself from hidden lawsuits. Either way, extending the patent rights beyond the first sale would clog the channels of commerce, with little benefit from the extra control that the patentees retain. And advances in technology, along with increasingly complex supply chains, magnify the problem. See Brief for Costco Wholesale Corp. et al. as Amici Curiae 7–9; Brief for Intel Corp. et al. as Amici Curiae 17, n. 5 (“A generic smartphone assembled from various high-tech components could practice an estimated 250,000 patents”).

wordsarewind 9y ago

As opined here the justification for the exhaustion of the patent after sale is that the patent holder has in the sale been granted the price desired, fair compensation, for the patented item, and thus cannot demand further use of the patent with respect to the item. However, this desired price can only be set by the patent holder in the monopoly granted through the patent in the US. Therefore, this price cannot be set outside of the US where the patent holder has no patent monopoly, and thus competition. Consequently, the patent holder will not receive the desired price and remain uncompensated by the patent, and thus may still require further use of it. Surely the Supreme Court shouldn't disqualify the patent holder's right to fair compensation for the invention in sales outside of the US?

rabboRubble 9y ago

How does this case compare to Monsanto vs Bowman? If you recall, this case pertained to a farmer that bought seeds from a local farmers association, then applied Roundup guessing that some/all of the seeds were GMO. Monsanto argued he violated their patent. Bowman argued that the GMO patent was exhausted after the first sale. He lost. This Lexmark case seems to undermine the Monsanto case. I don't understand this inconsistency between the two cases. Anybody able to clarify why these are different?

delecti 9y ago
Because using the resulting soybeans as seeds constituted creating unauthorized copies of a patented object.
- rabboRubble 9y ago
  Thank you... I guess that makes some sort of sense. Now if Lexmark can modify their printer cartridges to print and replicate themselves, Lexmark might might find cover under the Bowman case! I wish I could hand the SC justices 10 seeds each, with each 10 seed packet comprised by 5 GMO seeds and 5 non-GMO seeds. If the justices could visually sort the GMO and non-GMO seeds correctly, their ruling is actually "followable". If the product in question appears on the surface to be a natural object without patentability, extending patent protections to something that is indistinguishable from a non-patented object and self replicates seems incredibly academic.
  - ensignavenger 9y ago
    When you go to the store and buy anything, do you know what is patented and what is not? Do you know every patent that covers every part of your phone? Do you know what parts of any of these things you can copy? Patent Law is just like that- 'academic' as you describe it, I suppose. (I realize none of those things self-replicate like your seeds... but I think my point still holds.)
    - rabboRubble 9y ago

limeyx 9y ago

So now the companies will start selling "leases" to printer cartridges ?

stevespang 9y ago

Patent Holders will step around this nuisance by "leasing" their products using a contractual lease whereby they maintain full ownership of the property. A large payment up front approx. the same price as they are collecting now, with scheduled micro payments just to insure the lease is legally a true lease. If the micro payments are not ponied up, they will have preconstructed further legal pitfalls for the lessee in the terms and conditions with skyrocketing interest, etc. (The "double dip").