The real world impact of a Supreme Court decision on ink cartridges

Supreme Court decisions on patent policy are, at best, usually esoteric affairs. But the May 30 decision in Impression Products, Inc. v. Lexmark International, Inc. could have a real impact on your company’s bottom line – and change your approach to patent strategy.

In short, Lexmark tried to leverage a combination of contract and patent laws to prevent the reuse and refilling of patented (but spent) Lexmark  printer cartridges. In a unanimous decision, the justices effectively repudiated that approach and signaled to patent owners that the first sale of a patented article is the best, and perhaps only, opportunity to extract a premium price.

It’s tempting to characterize this decision as a win for consumers. Costs for printer cartridges will probably come down in the near future, as Lexmark – and other producers of similar patented but potentially reusable commodity items – will need to rework their business models to combat lower cost, reuse schemes.

However, the broader impact might be less encouraging. Patents are premised on a fundamental trade-off: a temporary, government-sanctioned monopoly in exchange for developing and disclosing a new invention. As the reward side of that trade-off is diminished, inventors may be less interested in developing commodity-type products that lend themselves to the same types of reuse as spent printer cartridges.

For example, fuel cells have been held out as a “green” alternative to disposable batteries. Fuel cells are small, portable power supplies, but they are specifically designed to have replaceable fuel supplies (rather than being thrown out, as most batteries are today). If entities can collect, refill, and then resell spent fuel casings without incurring the initial innovation costs, it probably forecloses an attractive (and, from a venture capital perspective, necessary) revenue model and creates a challenge to commercializing these and other, similar systems.