drwex: (Troll)
[personal profile] drwex
The Supreme Court just issued a really important ruling that, at first glance, looks to be about obscure issues in patenting. In reality it affects all of us who have ever re-sold an item we purchased, including things like cars, phones, etc.

tl;dr SCOTUS[1] unanimously slapped down yet another wrong-headed ruling from the CAFC[2] and as a result you do not have to worry about being sued by some random corporation just because you resell something you own.


The US is nearly unique in the world in having something that's called "First Sale Doctrine", generally applied to copyrighted works. This doctrine holds that the owner of a copyright - a government-granted limited monopoly - "exhausts" those monopoly rights as soon as they sell the item. You are free to resell, donate to a library, or trash, copyrighted items that you own such as books, CDs, photographs, etc.

You are not allowed to do some other things with them, such as making additional copies, using them in other creative ways (creating derivative works) and so on. But in general you buy a book and it's yours. This may seem obvious to you but it has not been well settled or uniformly applied. For example in a famous 2013 case generally known as Kirtsaeng SCOTUS ruled that First Sale Doctrine applied to items manufactured abroad and brought into the US.

This was incredibly important in the age of global commerce because, frankly, very little is manufactured in the US anyway. Imagine if you had a different set of rules governing books you bought from amazon.com versus amazon.co.uk - it would be nuts but that's what CAFC said should be the law until SCOTUS overruled them.


The manufacturer Lexmark tried to use patents - another form of government-granted limited monopoly - it has on toner cartridges to control what buyers could do with those cartridges once purchased. Lexmark wanted to be able to restrict consumer behaviors such as re-sale and reuse. The question was whether the initial sale of the item by Lexmark "exhausted" its patent rights.

If the answer is "yes" then consumers are (generally, but see below) free to do as they wish with the items they legally own. Imagine a world in which you could not resell your used printer because it contained cartridges that were patented and couldn't be resold. Imagine if you could not freely sell your used car to whomever you want because of the zillions of patented things inside it. Crazy, right?

Well, first-sale has never been a thing for patents before so when the case got to the CAFC they ruled that no, patent owners did not exhaust their rights with the sale and could continue to use their patents to control buyer behavior. SCOTUS just unanimously reversed, stating clearly that:
A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose.



First, sane people breathe a sigh of relief. Secondary marketplaces for consumer goods can continue to flourish. However, SCOTUS did leave open a remedy in contract law - if you sign a purchase agreement that restricts your post-purchase behavior with the item then you can still be held to that contract. You just can't be sued for patent violations.

My guess is that some manufacturers will move to enact these purchase agreements and the battle will shift to other areas. Many businesses, particularly those operating on thin margins such as printers, toner, etc. claim that secondary markets hurt their profits and should be restricted. Other businesses (cars being the best example I can think of) have wholeheartedly embraced secondary markets.

I'm sure that later today will bring more bad news from the dumpster fire in Washington but it was nice to get a big chunk of something good this morning so I figured I'd write about that.

[1] Supreme Court of the United States. Highest court of the country.
[2] Court of Appeals for the Federal Circuit. Was set up to relieve some of the load on SCOTUS in dealing with intellectual property cases. It ought to be the final stop for such cases, but CAFC has been issuing decisions that have leaned heavily toward more restrictions and more favoritism to big rights-holder interests. They also have a long history of getting slapped down because their decisions can be appealed to SCOTUS and they almost always get reversed. Which they then proceed to ignore, but that's another story entirely.
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