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Patent Infringement Suit Being Closely Watched By Silicon Valley

Patent Infringement Suit Being Closely Watched By Silicon Valley

If you've ever purchased a color printer to use in your home office, the following scenario is likely a familiar one. You were pleasantly surprised at how inexpensive the printer was, only to be shocked by the steep price of replacement ink cartridges. Manufacturers may have thought this was a clever way to improve profits, but the business model soon spawned a market for refurbished and refilled ink cartridges.

For a variety of reasons, Americans tend to simply buy new items rather than repair or buy used. But ink cartridges have been one of the few exceptions to the rule, and manufacturers of these products have been none too happy about it. Now, a legal battle over patent rights to refurbished ink cartridges has major companies worried about how the ruling could impact sales in a variety of industries.

The plaintiff in the case is Lexmark International Inc., which sued a West Virginia company called Impression Products Inc. Lexmark alleged that Impression violated its ink cartridge patents by refilling empty ones and reselling them. A trial judge ruled in favor of Impression but limited the ruling only to ink cartridges that had originally been sold in the United States. Lexmark is appealing the original ruling and Impression is appealing in order to expand the ruling to also apply to cartridges sold overseas.

The implications of this case are broader than most people may realize. Tech companies here in California are hoping that Impression ultimately prevails. Google and other companies fear that limits on resale of patented items could cause an increase in the price of consumer electronics and complicate negotiations between companies. Electronic devices like cellphones often contain parts from dozens of manufacturers.

On the other side of the argument are companies that manufacture pharmaceuticals, medical devices and biotech. Companies like Johnson & Johnson and Pfizer want to maintain exclusive resale rights. They cite concerns over product safety and "re-importation" of domestically produced drugs (which are often sold more cheaply in other countries due to government price controls and other factors).

This case obviously has implications beyond the refurbishment and resale of ink cartridges. Patent rights are some of the most important legal protections businesses have. Any court decisions that could change or weaken those protections will be highly scrutinized.

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