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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, custom

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.
- deleted 9y ago
  [deleted]
- LukeShu 9y ago
  No. Lexmark can negotiate a contract with its customers (this is unrelated to patent rights). But, if the customer sells the item to a 2nd customer (possibly in violation of the contract), then that 2nd customer is not subject to the contract, as the contract was between Lexmark and the initial customer. SCOTUS is saying that they can't use patents to say you may not sell to anyone else. You can instead use contracts to say these things, but those contracts are with the initial customers only, and don't "flow through the market" with the item.
  - bluGill 9y ago
    It is quite likely that Lexmark sold the cartridge to a reseller (think walmart) who sold it to the consumer. Thus Lexmark may not be able to sue the end users successfully because there was no contract - though they could sue the reseller (walmart in this example). Of course suing your customers is a PR disaster even if you would win. Suing resellers is a bad idea as they will never carry anything you make again which means you might win one round but you can declare bankruptcy. Even if sue OfficeMax with a promise to not sue Walmart, expect that walmart drop you anyway as they cannot afford that risk.
    - aaron_m04 9y ago
      What they could do is make the cartridge inoperable without online activation, in which the customer has to agree to terms of use. Damn, that's evil...
      - LoSboccacc 9y ago
        they do already with the printer it'd be interesting if that could cover usage of purchased accessory
- smw 9y ago
  I think this is a bad read. See the other two sibling comments.
LukeShu 9y ago
I only skimmed the Opinion of the Court, but AFAICT: The contract was between Lexmark and the consumer. If the consumer violates that contract and sells to a re-manufacturer, then the re-manufacturer may refill the cartridges, as the re-manufacturer never entered in to a contract with Lexmark. To the degree that the contract is enforceable, then it is with individual consumers. No individual consumers were parties to the case, so the validity of the contract wasn't ruled upon.
mbreese 9y ago
Yes, assuming the contract was valid. Lexmark could in that case sue their customers that sent cartridges to a re-manufacturer. The only one with a relationship with Lexmark is their customer, so that's the only entity they could sue. (However, given that this isn't a case involving Lexmark and a customer, the court didn't rule on that contract, just acknowledges the possibility.) "If the patentee negotiates a contract restricting the purchaser’s right to use or resell the item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit." Although, this brings up an interesting idea, which may be the logical conclusion to all of this. The patentable parts at play here are in the cartridge, and it was the sale of that that exhausted their patent rights. Now if Lexmark decided that it was only going to sell you the toner, but maintained ownership of the cartridge, then they'd be able to sue any re-manufacturer, regardless of their source (domestic vs abroad end users). Because (a) it would be patent infringement and (b) it would be selling stolen goods.
- bluGill 9y ago
  Maybe, but the remanufacturer would argue back that they didn't take ownership of the cartridge, they just added toner which never transferred ownership.
  - AnimalMuppet 9y ago
    When I take my car in for an oil change, the shop doesn't take ownership for an hour...
    - jmcdiesel 9y ago
      They also don't sell your car to another person... Its not quite analogous
      - AnimalMuppet 9y ago
        True. A "refill while you wait" service would be analogous, however. And one could make an argument that, since printer cartridges are more fungible, the difference matters for cars but not for printer cartridges. IANAL, so I don't know if it makes any legal difference.
asr 9y ago
Yes, the contract is (presumably) enforceable. The reason it matters is that Lexmark has to sue its customers --the ones who signed the contract--in order to enforce a contract right. In the case that the Supreme Court just decided, Lexmark sued its competitors, the cartridge remanufacturers. For Lexmark to sue its customers would be administratively difficult and is also generally not very good PR. So my guess would be Lexmark will never file that lawsuit.
gpm 9y ago
IANAL, likely not, it sounds very similar to Morton Salt Co. v. G.S. Suppiger Co. [0] which found that since Suppiger "is making use of its patent monopoly to restrain competition in the marketing of unpatented articles, salt tablets, for use with the patented machines, and is aiding in the creation of a limited monopoly in the tablets not within that granted by the patent." it was barred from enforcing the patent and contract. The risk of being barred from enforcing their patents probably encourages Lexmark to not even attempt to bring such a suit. [0] https://en.wikipedia.org/wiki/Morton_Salt_Co._v._G.S._Suppiger_Co https://en.wikipedia.org/wiki/Morton_Salt_Co._v._G.S._Suppig.... Edit: HN seems to strip the trailing "." from the URL
- howard941 9y ago
  1942...A golden oldie!
torstenvl 9y ago
The court didn't directly address that point. The Lexmark contract likely has a choice of law provision, e.g., "this contract will be interpreted and enforced in accordance with the laws of the State of California." It would be inappropriate for the U.S. Supreme Court to rule on an issue of state law unless it also posed a question under federal law. The case is limited to the question of whether Lexmark has the right under patent law to prevent resale, refurbishment, and refilling of its cartridges. The Court ruled that it does not.

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.

deleted 9y ago
[deleted]
LukeShu 9y ago
No. Lexmark can negotiate a contract with its customers (this is unrelated to patent rights). But, if the customer sells the item to a 2nd customer (possibly in violation of the contract), then that 2nd customer is not subject to the contract, as the contract was between Lexmark and the initial customer. SCOTUS is saying that they can't use patents to say you may not sell to anyone else. You can instead use contracts to say these things, but those contracts are with the initial customers only, and don't "flow through the market" with the item.
- bluGill 9y ago
  It is quite likely that Lexmark sold the cartridge to a reseller (think walmart) who sold it to the consumer. Thus Lexmark may not be able to sue the end users successfully because there was no contract - though they could sue the reseller (walmart in this example). Of course suing your customers is a PR disaster even if you would win. Suing resellers is a bad idea as they will never carry anything you make again which means you might win one round but you can declare bankruptcy. Even if sue OfficeMax with a promise to not sue Walmart, expect that walmart drop you anyway as they cannot afford that risk.
  - aaron_m04 9y ago
    What they could do is make the cartridge inoperable without online activation, in which the customer has to agree to terms of use. Damn, that's evil...
    - LoSboccacc 9y ago
      they do already with the printer it'd be interesting if that could cover usage of purchased accessory
smw 9y ago
I think this is a bad read. See the other two sibling comments.

LukeShu 9y ago

I only skimmed the Opinion of the Court, but AFAICT: The contract was between Lexmark and the consumer. If the consumer violates that contract and sells to a re-manufacturer, then the re-manufacturer may refill the cartridges, as the re-manufacturer never entered in to a contract with Lexmark. To the degree that the contract is enforceable, then it is with individual consumers. No individual consumers were parties to the case, so the validity of the contract wasn't ruled upon.

mbreese 9y ago

Yes, assuming the contract was valid. Lexmark could in that case sue their customers that sent cartridges to a re-manufacturer. The only one with a relationship with Lexmark is their customer, so that's the only entity they could sue. (However, given that this isn't a case involving Lexmark and a customer, the court didn't rule on that contract, just acknowledges the possibility.) "If the patentee negotiates a contract restricting the purchaser’s right to use or resell the item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit." Although, this brings up an interesting idea, which may be the logical conclusion to all of this. The patentable parts at play here are in the cartridge, and it was the sale of that that exhausted their patent rights. Now if Lexmark decided that it was only going to sell you the toner, but maintained ownership of the cartridge, then they'd be able to sue any re-manufacturer, regardless of their source (domestic vs abroad end users). Because (a) it would be patent infringement and (b) it would be selling stolen goods.

bluGill 9y ago
Maybe, but the remanufacturer would argue back that they didn't take ownership of the cartridge, they just added toner which never transferred ownership.
- AnimalMuppet 9y ago
  When I take my car in for an oil change, the shop doesn't take ownership for an hour...
  - jmcdiesel 9y ago
    They also don't sell your car to another person... Its not quite analogous
    - AnimalMuppet 9y ago
      True. A "refill while you wait" service would be analogous, however. And one could make an argument that, since printer cartridges are more fungible, the difference matters for cars but not for printer cartridges. IANAL, so I don't know if it makes any legal difference.

asr 9y ago

Yes, the contract is (presumably) enforceable. The reason it matters is that Lexmark has to sue its customers --the ones who signed the contract--in order to enforce a contract right. In the case that the Supreme Court just decided, Lexmark sued its competitors, the cartridge remanufacturers. For Lexmark to sue its customers would be administratively difficult and is also generally not very good PR. So my guess would be Lexmark will never file that lawsuit.

gpm 9y ago

IANAL, likely not, it sounds very similar to Morton Salt Co. v. G.S. Suppiger Co. [0] which found that since Suppiger "is making use of its patent monopoly to restrain competition in the marketing of unpatented articles, salt tablets, for use with the patented machines, and is aiding in the creation of a limited monopoly in the tablets not within that granted by the patent." it was barred from enforcing the patent and contract. The risk of being barred from enforcing their patents probably encourages Lexmark to not even attempt to bring such a suit. [0] https://en.wikipedia.org/wiki/Morton_Salt_Co._v._G.S._Suppiger_Co https://en.wikipedia.org/wiki/Morton_Salt_Co._v._G.S._Suppig.... Edit: HN seems to strip the trailing "." from the URL

howard941 9y ago
1942...A golden oldie!

torstenvl 9y ago

The court didn't directly address that point. The Lexmark contract likely has a choice of law provision, e.g., "this contract will be interpreted and enforced in accordance with the laws of the State of California." It would be inappropriate for the U.S. Supreme Court to rule on an issue of state law unless it also posed a question under federal law. The case is limited to the question of whether Lexmark has the right under patent law to prevent resale, refurbishment, and refilling of its cartridges. The Court ruled that it does not.