Implications of Supreme Court case outlined

December 9, 2016

A US law firm believes that the US case between Lexmark and Impression Products “will have important implications for secondary markets for patented products and global commerce”.

The US Supreme Court

The US Supreme Court

The original case was decided in Lexmark’s favour earlier this year, with the US Court of Appeals ruling that the US remanufacturer had “infringed Lexmark’s patents by marketing refurbished Lexmark cartridges that originally were sold with ‘single use’ or ‘no resale’ restriction in the US and abroad”.

The case began when Impression was named in an IP infringement case in October 2013 referring to the “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of a number of infringing remanufactured and cloned aftermarket cartridges. Impression moved to dismiss and overturn Jazz Photo, which impacts on patent exhaustion, or the “first-sale doctrine”, influenced by the Supreme Court’s ruling in the Kirtsaeng case, which prevented copyright owners from stopping imports and reselling content sold abroad.

The February ruling decided Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, and was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”. Recently however, the US government backed an “overturn” of the decision, and “urged” the Supreme Court to review it, with the court’s confirmation soon after.

Stefan M. Meisner and James Buchanan Camden, of US law firm McDermott Will & Emery, stated that the implications of the “ultimate outcome of this case” might include “important practical consequences for secondary markets for patented products and global commerce”. If the court upholds the ruling, then a patent holder “may be able to limit or even eliminate the secondary market in its patented goods by including a post-sale restriction on use or resale in its sales contracts”.

Instead of an “outright ban” on the use or resale, a patent holder “might be able to ‘demand royalties for the use or resale of articles embodying its invention at multiple downstream points in the channels of commerce, long after the first authorised sale” in the USA. They noted that even the district court in the original case “cautioned” that “such a holding” would “create significant uncertainty for downstream purchasers and end users who may continue to be liable for infringement even after an authorised sale to the consumer has occurred”.

Another implication might be that “companies seeking to import products” into the USA might nedd to “track the provenance of every sub-component and sub-sub-comoponent within its products” to avoid IP infringement when it is imported to the USA, and “this is particularly difficult in the global high technology industry where products are frequently covered by ‘thickets’ of patents”.

A patent holder may also be able to “twice extract royalties for its patent” and sell it “for use in a component”, as well as “sue for infringement once the finished product is imported”. Lexmark believes “such concerns are overstated”, the firm notes, but “regardless, given the potential implications” for “secondary markets and global commerce”, the lawyers advise to “closely follow” the case”, because it will have “significant implications on how patent holders either bring their products to market or license their rights to others”.

In turn, companies that “participate in markets where parts or consumable products are necessary to keep larger products or systems operational will need to assess their exposure to potential patent infringement assertions”, and in conclusion, they note that “this case will become the seminal decision on the application of the patent exhaustion doctrine under US law”.

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Lexmark launches Carbon Neutral Programme

December 7, 2016

The OEM and its channel partner Dalton Ellis have announced that their UK partnership will exclusively create the sustainable Carbon Neutral Programme.Lexmark_cartridge

The programme has been created to make sustainability easier and encourage businesses and other users to be a part of the environmental programme. Carbon emissions need to be reduced by 80 percent by 2050, scientific bodies have said, and this and climate change is “high on the agenda for governments and businesses”. Lexmark is a member of the Ellen MacArthur Foundation and is “continually looking to make environmentally conscious decisions”.

Lexmark and Dalton Ellis will provide consumers with a “package that consists of recycled woodland trust paper, a Lexmark printer [and MFP] and access to Lexmark’s Cartridge Collection Programme (LCCP)”. The OEM is also donating money to The Woodland Trust from each purchase of the programme, which offsets carbon emissions and is completely sustainable. Dalton Ellis also has additional environmental practices, which include “pull printing”, increasing efficient printing and reducing use of paper by 20 percent.

Chris Law, Supplies Director at Lexmark, said: “At Lexmark, we’re always working to empower businesses to not only save money but become sustainable at the same time, and the Carbon Neutral Programme that we’ve created in conjunction with Dalton Ellis, is living proof of this. Our goal is simple; we want to continuously provide our customers with innovative, high-quality products and services in an environmentally and socially responsible manner.

“From start to finish, the Carbon Neutral Programme provides customers with an easy option to do their part in helping the environment.”

Nick Munton, Managing Director at Dalton Ellis, stated: “We created the Carbon Neutral Programme specifically with our customers in mind. We’ve worked to create this initiative exclusively in partnership with Lexmark, who through established initiatives such as LCCP recognise the importance of having a first-rate CSR scheme in place. Not only are we offsetting the output of carbon into the environment through the Carbon Neutral Programme, we’re also saving our customers time and money.”

 

 

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Lexmark signs Australian distributor deal

December 7, 2016

The OEM has chosen Alloys as a distributer for its MFPs in Australia.Lexmark new logo

Channel Life reported that Alloys will be able to “provide resellers with greater choice” of Lexmark’s MFPs, and with over 30 years of experience in distribution and product demonstration, Alloys will be able to “offer Lexmark’s channel partners in-depth expertise”.

Innes Thomson, General Manger of Australia and New Zealand at Lexmark, said: “At Lexmark, we are extremely pleased about the next chapter in our strategic relationship with Alloys. With our award winning range of products featuring state-of-the-art technologies, Alloys’ expertise gives Lexmark partners more choice in sourcing the right solutions for their customers. We look forward to developing the new partnership to open the possibilities for our next phase of growth in the Australian market.”

Paul Harman, CEO of Alloys, said that the partnership with Lexmark is expanding and is a “natural extension of their four year consumables relationship”, also stating: “As Australia’s specialist printing and technology distributor it is important for Alloys to be able to offer the full range of software and printing solutions from key players in our specialist market.

“We are pleased to be able to bring our non-traditional distribution capabilities to Lexmark’s award-winning range of products and solutions and channel of customers.”

 

 

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Apex and Ninestar comment on Lexmark deal

December 7, 2016

apexlogoThe two companies were “delighted” with the acquisition, which they note have seen Apex take “a great step onto the global business stage”.

Lexmark revealed earlier this year that the merger had been approved by shareholders, though it “remain[ed] subject to certain regulatory approvals”, such as the CFIUS, as well as “other customary closing conditions”, though the CFIUS later approved it. The merger had been expected to be completed in the second half of the year, despite The Recycler reporting earlier this year that Lexmark employees were attempting to block the deal.

After it was officially completed earlier this week, Apex and Ninestar have now released a statement, noting that they “are delighted” with the deal, which has seen Apex take “a great step onto the global business stage”. They added that “this is not only a milestone development in Apex’s history, but a landmark event for the global printing industry as a whole”.

The acquisition “represents a historic and powerful partnership”, and Apex and Ninestar “are confident in reaching the next level of growth and innovation, to the benefit of all our suppliers and business partners, even faster than we could have achieved on our own”. For Lexmark meanwhile, the deal “not only enables its continual focus on high-end strategic initiatives in order to maintain its position as the leading printing solutions provider in the industry.

“It also provides Lexmark with new avenues to substantial market opportunities in China and the Asia Pacific region”. Both Apex and Ninestar noted their belief that the day the deal was agreed “is a day that all Apex and Ninestar staff, partners, suppliers and clients won’t forget, and one that deserves to be remembered […] from now on, Apex will have a role to play in every aspect of the printing industry, from software to hardware, from OEM to compatible consumables, and from components to microelectronic chips”.ninestar-logo

Both companies also pointed out that “it is a big possibility” that the merger will “mark the next step towards a global printing empire. That is our goal: to be a leading imaging solutions provider both for the aftermarket and OEM market throughout the world”. The two concluded by quoting psychologist Edith Lovejoy Pierce, who said in her book Opportunity that “we will open the book. Its pages are blank. We are going to put words on them ourselves”.

They stated that the deal is “chapter one of our book named ‘Opportunity’”, with Apex and Lexmark “not the only contributors to this book – we believe our partners and clients will no doubt have many chances in the future to fill chapters of their own”.

Jackson Wang, Chairman of Apex Technology, commented: “Lexmark’s passion for excellence and unwavering commitments to customers, employees and communities represent a tremendous cultural fit. We are excited to work alongside Lexmark as it continues to invest in advanced technologies and solutions to best serve its customers and business partners while simultaneously pursuing addition untapped opportunities for future growth.”

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Supreme Court to take up Impression-Lexmark case

December 5, 2016

The court confirmed that it has “agreed to decide” whether the OEM “can use patent law to stop companies from refilling and selling” its cartridges.

The US Supreme Court

The US Supreme Court

The case was decided in Lexmark’s favour earlier this year, with the US Court of Appeals ruling that the US remanufacturer had “infringed Lexmark’s patents by marketing refurbished Lexmark cartridges that originally were sold with ‘single use’ or ‘no resale’ restriction in the US and abroad”. The case began when Impression was named in an IP infringement case in October 2013 referring to the “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of a number of infringing remanufactured and cloned aftermarket cartridges.

Impression moved to dismiss and overturn Jazz Photo, which impacts on patent exhaustion, or the “first-sale doctrine”, influenced by the Supreme Court’s ruling in the Kirtsaeng case, which prevented copyright owners from stopping imports and reselling content sold abroad. The February ruling decided Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, and was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”.

Recently however, the US government backed an “overturn” of the decision, and “urged” the Supreme Court to review it. Now, the New York Times has reported that the court agreed to take on the case on Friday 2 December, noting that the case will “decide how much control patent holders have over how their products are used after they are sold”.

The Obama administration, in its plea, stated that “for more than 150 years, this court has held that, once a particular patented article has been sold in the United States by the patentee or with his authorisation, the patent laws do not constrain the subsequent use or resale of that article”. The article also referred to supportive briefs for Impression Products from advocacy groups including Public Knowledge and the Electronic Frontier Foundation (EFF), as well as Intel.

The International Imaging Technology Council (I-ITC) also reported on the development, noting that the decision was “a good sign that the highest court of the land will strike down Lexmark’s efforts to control cartridges” after sale, and “to overturn the precedents that Lexmark has based its activities on”. It also pointed out that the case “will be heard sometime in the new year”, and that it will “file another friend-of-the-court brief on behalf of cartridge remanufacturers”.

The association, pondering how the court might rule, noted that the Supreme Court “has routinely been overturning patent holders’ positions supported by the federal circuit”, including in the Kirtsaeng and Quanta decisions, and it pointed out that it “wants decision makers at all levels of government to know about the importance of our industry. These briefs convince judges of the importance of a fair and open marketplace for imaging supplies”.

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Supreme Court delays Impression case decision

November 30, 2016

The US Supreme court is taking more time to decide whether to begin the case on the dispute between Impression Products and Lexmark.

Reuters reported that the dispute is over the resale of single-use printer toner cartridges, and previously the case was decided in Lexmark’s favour earlier this year, with the US Court of Appeals ruling that the US remanufacturer had “infringed Lexmark’s patents by marketing refurbished Lexmark cartridges that originally were sold with ‘single use’ or ‘no resale’ restriction in the US and abroad”.

Impression Products' Eric Smith. Credit: Krista Belcher

 

The case began when Impression was named in an IP infringement case in October 2013 referring to the “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of a number of infringing remanufactured and cloned aftermarket cartridges. Impression moved to dismiss claims and overturn Jazz Photo, which impacts on patent exhaustion, or the “first-sale doctrine”, influenced by the Supreme Court’s ruling in the Kirtsaeng case in 2013, which prevented copyright owners from stopping imports and reselling content sold abroad.

The ruling in February decided that Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, as well as that it was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”. Recently however, the US government backed an “overturn” of the decision, and “urged” the Supreme Court to review it.

However, Reuters said that the delay could signal “a move that could signal the court’s interest in the extent to which patent owners can control the use of their products after sale”. Impression Products is appealing the decision made by the US Court of Appeals for the Federal Circuit in February which said that “Impression infringed Lexmark International’s patents by selling refurbished Lexmark cartridges that originally were sold with ‘single use’ or ‘no resale’ restrictions in the U.S. and abroad”.

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Apex-Lexmark merger completed

November 29, 2016

apexlogoThe OEM confirmed the “successful completion” of the deal, with President and CEO Paul Rooke stepping down.

Lexmark announced that the deal had been completed, noting that under the terms of the agreement, its shareholders “will receive” $40.50 (€38.15) per share in cash, with the deal having received “all of the necessary approvals” and “customary closing conditions”. The consortium that purchased Lexmark, led by Apex and a host of investment firms, will “maintain Lexmark’s corporate headquarters” in Lexington, Kentucky as part of the deal.

In turn, David Reeder, former Lexmark Vice President and CFO, is the new President and CEO, replacing Paul Rooke, while Lexmark’s Enterprise Software group “will be separated from Lexmark and rebranded” as Kofax, with both Lexmark and the consortium to “engage in a process to sell the business while focusing on growing the imaging business, particularly in China and the Asia-Pacific region”.

Rooke stated: “We are excited to have completed the transaction, which provides significant cash value to our shareholders, benefits our customers and provides new opportunities for our employees. I have had 25 fantastic years at Lexmark, the last six as chairman and chief executive officer. As the company enters its next phase, it is time for the next generation of leadership to continue the work to ensure Lexmark’s industry leadership.

“David Reeder is an extraordinary leader and has spent his entire career in technology. Since joining Lexmark, David has worked closely with me on transforming the business, and I believe he is well equipped to continue Lexmark’s transformation for our customers and employees.”LexmarkLogo_RGB_300

Reeder added: “I’m incredibly excited about Lexmark’s future. Lexmark has employees across the globe who are truly passionate about technology and helping customers better manage their imaging and output needs. We are now uniquely positioned to grow the company in China and greater Asia, along with continuing to deliver industry-leading products and services to customers in other regions of the world. I’m honoured to lead Lexmark into its next phase of opportunities and growth.”

Lexmark revealed earlier this year that the merger had been approved by shareholders, though it “remain[ed] subject to certain regulatory approvals”, such as the CFIUS, as well as “other customary closing conditions”, though the CFIUS later approved it. The merger had been expected to be completed in the second half of the year, despite The Recycler reporting earlier this year that Lexmark employees were attempting to block the deal.

The OEM had also previously discussed the merger and what it meant, while a host of law firms had started investigations into the deal. Sources had claimed that the Chinese consortium aimed to “shop” Lexmark’s software business, adding that Apex and PAG Asia Capital had been “exploring a sale” and were “in talks with a number of private equity firms”.

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Impression CEO gives background to case

November 24, 2016

In a profile by Forbes, Impression Products’ Eric Smith discussed how the Lexmark case began.

Impression Products' Eric Smith. Credit: Krista Belcher

Impression Products’ Eric Smith. Credit: Krista Belcher

The profile saw Smith discuss the business and its case against Lexmark. The case was decided in Lexmark’s favour earlier this year, with the US Court of Appeals ruling that the US remanufacturer had “infringed Lexmark’s patents by marketing refurbished Lexmark cartridges that originally were sold with ‘single use’ or ‘no resale’ restriction in the US and abroad”.

The case began when Impression was named in an IP infringement case in October 2013 referring to the “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of a number of infringing remanufactured and cloned aftermarket cartridges. Impression moved to dismiss claims and overturn Jazz Photo, which impacts on patent exhaustion, or the “first-sale doctrine”, influenced by the Supreme Court’s ruling in the Kirtsaeng case in 2013, which prevented copyright owners from stopping imports and reselling content sold abroad.

The ruling in February decided that Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, as well as that it was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”. Recently however, the US government backed an “overturn” of the decision, and “urged” the Supreme Court to review it.

Smith noted that since the “early 1990s”, the company has “bought used printer cartridges, refurbished and filled them with ink, and resold them to offices across West Virginia”, having started as a dealer in typewriter ribbons in 1979. He noted that its remanufactured cartridges “cost about half new brand-name cartridges”, and include “a warranty […] where we will service their machine as well”.

It employs 25 staff and generates between $10 million and $15 million (€9.4 million and €14.1 million) in sales, with the legal case putting “much of that business […] in jeopardy”, with its implications threatening “not just thousands of businesses in second-hand markets but also retailers and manufacturers of new products with sophisticated technologies”. Smith noted that in 2010, he began “finding cease-and-desist letters from Lexmark in his mail”, at first noting that he “just ignored the notes”.

He added that “I thought they were bluffing. I figured at the end of the day, they didn’t want the bad press — picking on other companies”, but “eventually, they sent someone out here to serve me papers”. Having been added to the case in 2012, every other remanufacturer named settled, but Impression “counter-sued”, with the case becoming a fight about “patent exhaustion”. The company previously spoke about the case to local press as well.

Impression’s lawyer, Paul Hughes, stated that “if you can lawfully restrict patent exhaustion, it applies to third party, downstream users who never entered into agreement with you. When Eric agreed to work with us, I was just thrilled because this was a problem in the law for some time and finally we have a chance to fix it once and for all”. His view was that should the Supreme Court take the case, it would be argued next March and a decision would be given in June.

Smith said that if the decision stood, the company “would survive” but “might lose as much as 30 percent of his business”, though he’d “also make a point of steering customers away from Lexmark printers and toward competitors”. He added that the case “has turned into something of a boon” for the company, using the attention “into new business opportunities […] particularly among other companies that have a stake in the outcome”.

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Impression Products discusses Lexmark case

November 21, 2016

Impression Products' Eric Smith. Credit: Krista Belcher

Impression Products’ Eric Smith. Credit: Krista Belcher

The US remanufacturer was interviewed about its potential case in the US Supreme Court against the OEM.

The Lexmark-Impression Products legal case was decided in Lexmark’s favour earlier this year, with the US Court of Appeals ruling that the US remanufacturer had “infringed Lexmark’s patents by marketing refurbished Lexmark cartridges that originally were sold with ‘single use’ or ‘no resale’ restriction in the US and abroad”.

The case began when Impression was named in an IP infringement case in October 2013 referring to the “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of a number of infringing remanufactured and cloned aftermarket cartridges. Impression moved to dismiss claims and overturn Jazz Photo, which impacts on patent exhaustion, or the “first-sale doctrine”, influenced by the Supreme Court’s ruling in the Kirtsaeng case in 2013, which prevented copyright owners from stopping imports and reselling content sold abroad

The ruling in February decided that Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, as well as that it was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”. Recently however, the US government backed an “overturn” of the decision, and “urged” the Supreme Court to review it.

WV Gazette Mail discussed the “small Charleston company” and spoke to President Eric Smith about the case, noting that Impression “could soon be defending itself before the Supreme Court”, Smith stating that “I think this is a very important case, and it affects everybody. It just so happens that a small West Virginia company was caught in the middle of it”. He added that the government’s intervention “doesn’t guarantee” a Supreme Court case, but “sharply increases the probability of it happening”.

The site notes that “what has given the case national attention is the question of if the first-sale doctrine applies to products that were bought outside the United States”, with “wide-reaching implications for numerous corporate giants” including Samsung and Google, who have “foreign supply chains that would have to jump through additional hoops if the first-sale doctrine did not apply for foreign purchases”.

Conversely, pharmaceutical companies like Pfizer “have supported Lexmark, with a Lexmark victory likely giving their own patents greater protection”. Smith noted that Lexmark has “threatened other small companies in Impression Products’ situation in the past”, but “believes his company is in the right”, adding “I never thought I would be in this situation. I just didn’t agree with what Lexmark wanted to do. They went after a lot of companies like ours in a couple of other states”.

The site contacted Lexmark which “did not respond to interview requests”, and added that Impression “is represented by Mayer Brown LLP and Avyno Law P”, while Lexmark is represented by “Sidley Austin LLP, Banner & Witcoff Ltd. and Stoll Keenon Ogden PLLC”.

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Lexmark wins US printer procurement contract

November 18, 2016

lexmarkwebThe OEM and Granite Data Solutions (GDS) will provide printers to the state of California.

Lexmark reported that it and GDS have partnered to win the printer contract, with GDS awarded the “state-wide” printer contracts to provide the OEM’s single-function printers, including its “award-winning monochrome and colour products”, while “enterprise-level hardware devices are available with Lexmark OEM warranty and supplies”. The contact is available to “state agencies” as well as “city and county government, K-12 schools and higher education institutions”.

GDS is a disabled veteran business enterprise (DVBE) as well as a small business enterprise (SBE), with Lexmark stating that it “holds contract status” in California to provide companies “that purchase select Lexmark printers” with a “100 percent DVBE and SBE expenditure credit”. GDS will also “provide value-added services” such as “basic installation, asset tagging, DoD data wipe” and “disposition and disposal services”.

Lexmark also noted that the contract’s terms “are environmentally friendly”, as they feature printers from the OEM that “meet the latest Energy Star requirements” as well as including a “take-back programme for end-of-life printers and consumables” to help “reduce waste disposal”. Scott Mitchell, Director of Sales and Operations at GDS, stated that “the cohesion between our organisation and Lexmark is tremendous. Our partnership focuses on the customer, their requirements and the process necessary to get their products up and running in their environment”.

Marty Canning, Executive Vice President of Lexmark and President of its Imaging Solutions and Services unit, added: “As partners, Lexmark and GDS understand the shrinking budgets and increasing demand for government services. Together, it’s our goal to unify print and digital information to help our government customers analyse business mission processes, do more with less and better serve their constituents.”

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