In a 7-1 ruling last week, the United States Supreme Court struck down a ruling by a lower court that had a direct bearing on patent holders and third-party companies. The case in question involved Lexmark International and Impression Products, a “remanufacturer” of Lexmark ink cartridges.
The Case and What Was at Stake
The case centered around Impression Products, as well as other third- party companies, buying used Lexmark printer cartridges, refilling and reselling them. Initially, Lexmark threatened most of the companies, forcing them to settle. The exception was Impression Products, a small firm in Charleston, West Virginia that refused to settle, opting to take the issue to court.
The basis of Impression Products’ case was the principle of “patent exhaustion,” or the idea that once the patent holder sells the product, the buyer is legally free to use the product as they see fit, without being bound by further patent considerations.
While a lower court initially sided with Lexmark and struck down the patent exhaustion argument, the Supreme Court overturned the decision and sided with Impression Products, not only opening the way for continued remanufacturing and resale of used printer cartridges but conceivably impacting a wide range of after-market industries.
How Companies Benefit
There are two main ways companies benefit from this ruling:
In their decision, the Supreme Court refuted the argument that Lexmark’s customers should forever be bound to use the company’s services and support, thereby opening the way for more competitive and, perhaps, less expensive options.
Diverse Support Options
A client’s interest in using a Third Party Maintenance company (TPM) may be driven by a vendor management initiative to employ a single source to handle all of a company’s support needs rather than relying on agreements with multiple Original Equipment Manufacturer (OEMs) service companies. The net result: potential costs savings, a vendor-neutral view of the operating environment, streamlined contract administration and improved control over access to risk-sensitive operating environments.
Clearly, the Supreme Court’s ruling has further strengthened the value proposition of TPMs in corporate operating environments.