Private property takes precedent over monopoly
This Tuesday, the U.S Supreme court struck down a rather important lower court decision. The decision gave patent holders the ability to sue customers who paid for an item and then used it in any way the patent owner did not want it used. Specifically, the case involved the refilling and reselling of printer company Lexmark’s printer cartridges, but the decision will have much more reaching benefits to consumers.
First, some background. Printer companies are well known for selling printers on a loss-leader model. They sell their printers at a loss, instead making most of their money through selling proprietary printer ink cartridges. Because of this, the companies have an interest in locking down their printers so that consumers have to go to them to keep using their printer.
"Companies have an interest in locking down their printers so that consumers have to go to them to keep using their printer."
Some companies offer ink refilling services for much cheaper than the cost of an official cartridge, cutting into the manufacturer’s profits. Last year, HP went as far as sabotaging third-party ink cartridges, and had to rethink the decision only weeks later. Features like HP’s instant ink service or discounts for returning empty cartridges try to disguise the flawed business model.
Our case in question, Impression Products v. Lexmark International was an appeal from the Fifth Court of Appeals. In March, the court affirmed an earlier precedent allowing patent owners to restrict how consumers may use the products they buy, but the decision has now been struck down. Consumers always assume that any physical products they own are theirs, and the bulk of consumer protection laws tend to agree.
"The decision allowing patent owners to restrict how consumers may use the products they buy has now been struck down."
The court stated that when the patent owner "chooses to sell an item, that product is no longer within the limits of the monopoly and instead becomes the private individual property of the purchaser, with the rights and benefits that come along with ownership." They further explained that people who purchase things are allowed to use and resell them without being sued through copyright and patent law.
Another key effect of the decision is supporting the rights to tinker and repair. Some may remember that Apple is lobbying against a pending Nebraska bill requiring electronics manufacturers to sell repair parts to consumers and independent repair shops. The bill would also require manufacturers to make diagnostic and service manuals available to the public. Monopolies on repairs are anti-consumer, preventing competition and keeping parts and repair prices absurdly high.
This decision is important, and major players joined in on both sides of the dispute. Companies on the side of Impression Products included Visio, Dell, Intel, LG Electronics, HTC, Costco and Western Digital. Supporting Lexmark’s side of the dispute were major patent holders like Qualcomm, IBM, Nokia, and Adobe. We’ve made a step in the right direction, and I hope that we can reach a similar conclusion once we get to digital goods.