The Imaging Supplies Coalition (ISC), consisting of fellow OEMs, has filed an amicus brief in the case at the US Supreme Court between the OEM and the remanufacturer.
In a press release, the ISC stated that it filed the brief on behalf of members including Canon USA, Epson America, HP Inc, Lexmark, Samsung and Xerox, and that the “non-profit trade association” for “consumables imaging supplies and equipment” filed it because “both rights holders and consumers benefit from a rule of patent exhaustion that allows for valid use restrictions and respects the territorial boundaries of US patent law”.
In turn, the brief “urges” the Supreme Court to “affirm the decision below and maintain the stable and long-standing practices of patent holders and downstream users that contribute to a vibrant and healthy US economy”. The coalition is represented at the Supreme Court case by Burns & Levinson partners Mark Schonfeld and Sara Beccia.
The ISC added that “in asking the court to uphold the rules of patent exhaustion set forth by the Federal Circuit”, it argues that “to do otherwise would be inconsistent with long-standing and stable precedent with respect to the patent exhaustion doctrine”, as “the rules and limits on the patent exhaustion doctrine set forth in the decision below have been relied upon by rights owners” in a variety of different areas.
These include: “developing and investing in innovative new products; supporting the availability of products in less-developed countries through price differentiation and market segmentation; designing and executing programs against infringement and grey market exploitation; structuring and relying upon valid patent license use-restrictions that incentivise innovation and reward research and development; and developing important policies and programs that enhance consumer choice, quality control and OEM reputation, health and safety, and environmental preservation”.
Allen Westerfield, President of the ISC, commented: “Consumable imaging supplies and equipment are a repeat market with a ready supply of empty consumed units, which means infringers and arbitragers have relatively easy access to use patented goods to create an illegal aftermarket in imaging supplies.
“OEMs in the imaging supplies industry must wage a constant battle against unauthorised and infringing activity to protect their valuable intellectual property rights, to maintain the goodwill associated with their brands, and to protect their consumers from inferior products that trade off the OEMs’ well-earned reputations.”
Schonfeld added: “Patent right exhaustion of a first sale outside of the US and elimination of use restrictions would cause serious policy issues. The Federal Circuit said that foreign sales do not exhaust US patent rights, and that certain post-sale restrictions on patented items are permissible. If the Supreme Court overturns the Federal Circuit’s ruling, it will also have broad implications for many other industries like pharmaceutical companies that sell drugs at lower prices in foreign countries.
“Reversing current law could inhibit US pharmaceutical companies from pricing drugs in developing economies to meet the needs of these emerging markets.”
The ISC noted in turn that “in the case, Impression, which refurbishes, refills and resells Lexmark cartridges, argues that Lexmark’s patent rights were exhausted”, and that its brief “also lays out a cohesive argument about the importance of upholding a territorial rule of exhaustion, which the organisation argues properly incentivises innovation in the US”.
It also argued that exhaustion “supports economic development, allows for beneficial global price differentiation and market segmentation, enables patentees to meet the needs of underdeveloped markets, and aids in combating unauthorised grey markets and counterfeiting while supporting consumer protection”.