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Lexmark US case ruling will have industry impact

April 16, 2015

The case between Lexmark and US remanufacturer Impression Products moved to a panel hearing in the US Court of Appeals for the Federal Circuit, with the eventual 2000px-US-CourtOfAppeals-FederalCircuit-Seal.svgruling set to significantly affect the US remanufacturing industry.

The legal case began when Impression Products was named in an IP infringement case in October 2013 in the US District Court Southern District of Ohio (Cincinnati Division). The case referred 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’s legal team moved to dismiss claims as well as overturn the Jazz Photo decision that impacts on patent exhaustion, or the “first-sale doctrine”. This was also 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.

Impression’s case with Lexmark went to the appeals circuit, with Lexmark opposing a ruling that it had exhausted patent rights in its Prebate programme. Impression Products meanwhile wished to overturn a ruling that it had infringed Lexmark’s patents relating to remanufactured cartridges that used empties from outside the USA.

Now, Patently-O has featured a piece written by Dennis Crouch, Law Professor at the University of Missouri School of Law, which outlines the implications. The case is heading for an en banc hearing, which means that a full panel of judges will decide whether to overturn either Jazz Photo or Mallinckrodt, another decision addressing an “unrestricted first sale”.

Impression argued that Lexmark’s overseas sales “precluded” it from suing for infringement of US patents if the cartridges were “imported, remanufactured or resold” in the USA, acknowledging that this contradicts Jazz Photo which holds “a foreign sale does not exhaust US patent rights”. However, it believes that Jazz Photo had been “implicitly overruled” by the Kirtsaeng decision, with the District Court disagreeing.

What Impression Products is seeking is for both rulings to be overturned, as the removal of Jazz Photo would mean companies selling remanufactured cartridges in the USA could use empties from across the world, rather than needing to prove first-use in the USA. The removal of Mallinckrodt would mean Lexmark would have exhausted patent rights in the Prebate cartridge return programme – the centre of cases between it and Static Control.

This would mean that while Lexmark disagreed with the previous rulings in its cases with Static Control, a Federal Circuit decision would be legally binding. However, if Lexmark was to win the case then Jazz Photo would remain with little change to the present situation, but if Mallinckrodt remained in law, then Lexmark may have more options to file IP infringement suits pertaining to Prebate cartridges.

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