For our weekly SoCal IP Institute meeting on Monday, June 19, 2017, we will discuss the following cases:
Impression Products, Inc. v. Lexmark International, Inc. (Supreme Court, May 30, 2017) (available here). Lexmark makes and sells certain printer toner cartridges. To prevent third parties from reselling used toner cartridges, Lexmark instituted a “buyback” program. Customers received a discount on new cartridges when they agreed to return the cartridges to Lexmark once used. Third parties began reselling used cartridges purchased under the program prompting Lexmark to sue for patent infringement. The Court looked at two issues (1) “whether a patentee that sells an item under an express restriction on the purchaser’s right to reuse or resell the product may enforce that restriction through an infringement lawsuit”, and (2) “whether a patentee exhausts its patent rights by selling its product outside the United States, where American patent laws do not apply.” The Court held (1) such an agreement may be enforced through contract law, not a patent infringement lawsuit and (2) a sale outside the United States exhausts the patent holder’s right in the physical product.
Design Basics, LLC v. Lexington Homes, Inc. (7th Circuit, June, 6, 2017) (available here). Plaintiff Design Basics LLC holds copyrights to over 2000 home designs, and sued Defendant Lexington Homes Inc. for copyright infringement. Defendant’s motion for summary judgment arguing it had no access to the designs was granted by the district court, and affirmed by the Seventh Circuit. Judge Hamilton focused on evidence from a deposition which revealed (1) Plaintiff’s purchase of the copyrights was based on the potential for future copyright lawsuits, (2) proceeds from litigation were an important revenue stream for the company.