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FROM BOARDROOM TO COURTROOM, JACOBSON TAKES CARE OF BUSINESS

New Patent Law Ruling Allows Refurbishing and Reselling

Last week, the US Supreme Court dealt a major blow to all corporations and manufacturers that frequently used the patent law as a weapon against individuals and other companies. The Supreme Court has ruled that companies and firms can only be sued for patent infringements in the geographic location where they actually do business. In other words, once a company has sold a product, it cannot prevent other firms from selling that service or product just because it has a patent for it.

The US Supreme Court has handed a major victory to all consumer groups who brought on the case after printer cartridges, specially toner cartridges sold by the firm, Impression, became the issue. However, this is a major ruling that will have repercussions way beyond printer cartridges.

The case started after Lexmark, the printer company, made it harder for people to get cheap used cartridges in the second-hand market. The company wanted everyone to buy their own expensive cartridges. While there is nothing wrong with this business model, what the company did was that it used the patent law to stop other companies like Impression from reselling its old cartridges.

What Impression was doing was simply buying old toner cartridges, refilling with more toner and selling them at a lower price. Lexmark argued that reselling and refurbishing its cartridges without permission was against the law. It claimed that Impression was violating the patent that Lexmark held on the cartridges. In other words, the company argued that that it had patent rights that extended beyond the initial sale of the cartridge to cover future sales. The US Supreme Court disagreed and ruled that once a product is sold, the company can no longer prevent others from reselling by using the patent law. So what does it all mean?

This ruling has enormous implications for the economy. This Supreme Court decision is not limited to cartridges only but almost every type of product manufactured in the US. For example, if you own a car, is that your car and can you do whatever you want with it? So far, according to the US Supreme court, that is your car and you can sell it as is or modify it that way you want and sell it.

Lawyers are now asking if this ruling applies to other products as well. There are 100s of software programs, computers, iphones, etc. that one can just buy, modify and sell at a lower price. And what about pharmaceutical medications? Can a company simply buy pills, modify them and resell them? The answer to these questions are not available but rest assured, big time corporations are not just going to let their innovations and hard work just be given away for free. It is expected that there will be more court battles related to this ruling in the near future.

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