Why The Supreme Court’s Ruling In Toner Cartridge Case Is A Win For Consumers

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“Patent exhaustion” isn’t exactly a thrilling pair of words. But that was the crux of a case the Supreme Court ruled on today that answered one incredibly important question for consumers: Can a company that sold you something use its patent on that product to control how you choose to use after you buy it?

Happily for consumers, the Court’s answer is, basically, “nope.”

The Court heard the case, Impression Products, Inc v Lexmark International, Inc, in March and issued a final ruling on the matter today.

The key question at play in the Lexmark case was one of patent exhaustion. Precedent has held that a patent-holder’s rights are used up — legally, exhausted — at the moment that it sells the thing it has a patent on to someone else. But in the modern era of microchips and DRM, some usage restrictions are suddenly enforceable long after an original item is sold. So question the Court was setting out to answer was: Can the company that sold you something it holds the patent on determine what you do with it after you’ve bought it, or do they exhaust their patent and therefore relinquish control?

That case was, basically, a dispute between a company that makes printers (Lexmark) and a third-party company that makes and refills ink and toner cartridges for use in printers (Impression Products).

READ MORE: Why You Should Care About the Supreme Court Case on Toner Cartridges

Printer companies make most of their money from selling cartridges, not from selling printers. So Lexmark basically said, “our patents say you can’t do this third-party thing; you have to use our refills.”

Impression then more or less countered with, “Nuh-uh; once you’ve made it and sold it this is none of your business anymore, but the new owner’s.”

As happens, chain of lawsuits, appeals, and re-hearings followed and ultimately the case ended up before the Supreme Court.

In its opinion [PDF], the Court has ultimately sided 7-1 (Justice Gorsuch did not participate) with Impression’s argument.

“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,” the Court held. “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.”

Chief Justice John Roberts, writing the opinion, points out that “an illustration never hurts,” and suggests we consider all of the technology that goes into cars.

“Take a shop that restores and sells used cars,” Roberts writes. “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.”

But, he continues, “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.”

Either actual lawsuits or the threat of them “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,” Roberts notes.

And so, after explaining his thinking about the legal history, Roberts writes, “We conclude that this well-settled line of precedent allows for only one answer: Lexmark cannot bring a patent infringement suit against Impression Products to enforce the single-use/no-resale provision accompanying its Return Program cartridges. Once sold, the Return Program cartridges passed outside of the patent monopoly, and whatever rights Lexmark retained are a matter of the contracts with its purchasers, not the patent law.”

Justice Ginsburg, the lone dissent, concurred with the part of the Court’s ruling regarding exhaustion domestically, but disagreed that U.S. law could necessarily hold when it comes to foreign sales.

This ruling is good news for consumers. For starters, it means that you can go ahead and use all those third-party printer cartridges — at least as far as patent law is concerned.

But more importantly: It means, ultimately, that patent law recognizes that when you buy a thing, it’s yours, and the entity that made it doesn’t get to control it or you in perpetuity.

Of course, patent law isn’t the only law in play. Companies use copyright law and DRM to control your purchases after you make them all the time, from digitally-distributed books, movies, and music to much more tangible goods, like your car. And, as the Supreme Court points out several times, contract law — terms and conditions you agree to — is still enforceable, apart from any patent exhaustion restrictions.