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Will we become slaves to corporations? It's more than you may think.


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2017 Apr 8, 9:24pm   3,559 views  18 comments

by GNL   ➕follow (1)   💰tip   ignore  

http://www.triplepundit.com/2017/04/refillable-printer-cartridge-battle-change-patent-law-know/

What’s the value of a lowly printer cartridge? Huge, in today’s startup market.

Last month, the Supreme Court heard oral arguments in a suit between printer manufacturer Lexmark and a small business that makes its money refilling printer cartridges. The issue, on the surface, if fairly boring: Printer giant Lexmark sued small-time printer cartridge refiller Impressions Products on the basis of patent violation.

Lexmark’s argument went like this: The manufacturer puts a shrink wrap on its cartridges, informing the consumer that the cartridge belongs to Lexmark. Opening that wrap implies the consumer agrees with the terms of use and that Lexmark is the sole authorized source for refilling those cartridges.

Up to now, Lexmark hasn’t had a lot of joy in winning cases on this point (and it’s sued a lot of resellers arguing various viewpoints). But last year that changed when a U.S. Court of Appeals found that Impressions violated Lexmark’s patent.

Impressions, of course, appealed the ruling, and last month the Supreme Court began the laborious process of sorting out the issues of this onerously complex case. As the SCOTUS Blog explains, the issue at hand is what’s called patent exhaustion, in which “a patentholder’s rights to enforce its patent ordinarily are ‘exhausted’ with regard to any particular object at the moment the patentholder sells the object.”

Normally, that might seem pretty straightforward: The manufacturer of blue widgets sells a widget to a consumer, at which point the buyer is free to do whatever she/he chooses to do with it, including “repair” it.

But Lexmark’s argument is that it has the right to set conditions, and what’s more, the right to devise different types of contracts according to the product sectors it designs. Ergo, it has the right to say whether the consumer can resell the cartridge, and whether the refilling store can then refill and resell the item to other customers.

As several observers noted, the justices seemed a bit frustrated and confused about elements of this case. Justice Anthony Kennedy wanted to know why the issue of patent exhaustion hadn’t been codified already (with definitions and limitations under the law), as copyright exhaustion had been.

Justice Stephen Breyer, on the other hand, appeared somewhat skeptical of Lexmark’s argument, noting: “[Any] monopolist, including a patent monopolist, would love to be able to go to each buyer separately and extract from each buyer and user the maximum amount he would pay for that particular item. …. But by and large, that’s forbidden under many laws.”

So, you’re probably wondering: What’s the big deal when it comes to a seemingly boring debate over the rights to a printer cartridge? Whether or not Impressions can continue refilling Lexmark cartridges and selling them for, say, half the price Lexmark may charge its customers? That has limited impact on commerce at the end of the day, right?

Well, actually, no. The outcome of whether patent exhaustion can be affected by a manufacturer putting a shrink wrap on its product and defining what a customer can and can’t do with the new purchase can have monumental impact on many products we buy on a daily basis.

Obvious examples include the various replacement parts for cars or the repaired components in a computer. A ruling giving Lexmark contractual control over its products could conceivably define what thrift stores can accept, fix and resell. It could have huge implications on assumptions we, as consumers, have formed our purchasing habits around. As Costco stated in an amici curiae brief in support of Impressions:

“Goods of all kinds — computers, smartphones, automobiles, and even medicines — incorporate innumerable components made throughout the world. Each product developer and manufacturer would be required to trace to origin the patent rights of every single component it purchases. If it turns out that any individual component was first sold abroad—or even domestically, but subject to a condition on future reuse or resale—the manufacturer would then be required to negotiate an appropriate licensing agreement.”

One perceptive writer dubbed this the “Citizens United of products” to highlight the fact that an equally banal case about whether companies have a constitutional right to make political contributions morphed into an issue that is now defining political elections.

But it also points to something else: The common assumptions upon which Western society bases its behaviors are being constantly upended by craftier arguments designed to circumvent practicality – and often in lieu of the consumer’s understanding.

One would think the main reason a printer manufacturer sells ink cartridges is to complement the use of its key product, the printer. But in fact, the printer manufacturer really makes its money from the hefty price of ink cartridges – not the printers.

As Caroline Said of SFGate points out, the exorbitant price tag of a toner cartridge has spurred a no-holds-barred business marketplace from startups who know they can beat the shelf price and still make money.

I can’t help but wonder the implications for innovation if Lexmark wins this case. So often it’s the little guy’s ingenuity that brings about smarter, more ecologically-friendly answers to things. Stifling that input means competition will have less say in how “smart” a product design is, and a harder and more costly time arguing the case for resource-friendly change.

There probably won’t be any further discussion on this case by the Supreme Court until it rules in June.

Comments 1 - 18 of 18        Search these comments

1   GNL   2017 Apr 9, 6:23am  

The ruling will have a significant impact on millions of products. It could affect the relationship between sellers and buyers...contractually. Image every product you buy includes a contract between you and the manufacturer.

2   Shaman   2017 Apr 9, 6:47am  

We really should have laws about this already that define how far a manufacturer can reach to protect their patent. Right now it's being assumed that's unlimited, and there are major problems with that assumption.

4   Y   2017 Jun 10, 6:41pm  

We already are and have been since the creation of lobbyists.
Where have you been?
WorkInProgress says

Will we become slaves to corporations? It's more than you may think.

5   Strategist   2017 Jun 10, 8:13pm  

WorkInProgress says

Will we become slaves to corporations? It's more than you may think.

We the citizens control the corporations. They don't control us. Therefore, we can never be slaves to corporations.

6   FortWayne   2017 Jun 10, 9:46pm  

Slaves to government more like it if liberals get their way.

7   Patrick   2017 Jun 11, 2:30am  

Strategist says

We the citizens control the corporations. They don't control us. Therefore, we can never be slaves to corporations.

In theory, yes, we have a democracy and can make laws that control corporations.

In reality, corporations pay our elected lawmakers to make laws that extract the maximum money from consumers, forcing all of us to labor for the corporations. Which is part way toward slavery.

I like @justme 's idea to change our electoral system to have larger congressional districts with multiple candidates elected per district according to the proportion of the vote, instead of just one winner in each district. Then you could have representation of smaller parties too, not just Democrats and Republicans, and it might be harder for the corporations to control all of them.

8   georgeliberte   2017 Jun 11, 6:08am  

Patrick says hen you could have representation of smaller parties too, not just Democrats and Republicans, and it might be harder for the corporations to control all of them.
Or maybe just more expensive.

9   GNL   2022 Feb 19, 8:46am  

Strategist says

WorkInProgress says


Will we become slaves to corporations? It's more than you may think.


We the citizens control the corporations. They don't control us. Therefore, we can never be slaves to corporations.


Still feel this way?
10   Onvacation   2022 Feb 19, 9:03am  

Strategist left after he was done investigating Turtledove's murder. He was actually a detective from SoCal. Right @Strategist?
11   Patrick   2022 Feb 19, 12:21pm  

If so, I did not know this.
12   Misc   2022 Feb 20, 5:02pm  

I believe he left after making some very public bad timing calls on certain Home Builder stocks.

Sorry to have seen him go, he left good comments in general.
13   Patrick   2022 Feb 20, 5:39pm  

"Will we become slaves to corporations?" has become quite relevant once again.
14   RC2006   2022 Sep 21, 5:42pm  

https://martyrmade.com/22-whose-america-ep-1-rough-extraction/

Great podcast on coal industry in late 1800s early 1900s. How corporate America created thier own fiefdoms within the US. They controlled everything and had no regard for the constitution.
15   PeopleUnited   2022 Sep 21, 8:58pm  

Patrick says

"Will we become slaves to corporations?" has become quite relevant once again.

Try living one day without phone, internet, gas, grocery store food, etc...

The question becomes, was there ever a time in your lifetime that corporations didn’t run the show?

Not unless you lived before Teddy Roosevelt.
16   gabbar   2022 Sep 22, 3:56am  

Maybe unrestricted capitalism is not a good thing.
17   richwicks   2022 Sep 22, 8:51am  

gabbar says


Maybe unrestricted capitalism is not a good thing.


Sure it is.

But we're not in capitalism. This is fascism. We've been in a fascist economic system for 20 years. The pandemic was great for fascism, small independent businesses had to close "for the good of the community", but Walmart didn't, nor Amazon, McDonalds, anybody large enough to bribe a congressman.

The lower classes are in capitalism, but they're rapidly moving us toward communism.
18   NuttBoxer   2022 Sep 22, 9:57am  

Capitalism has lost all meaning, so I'm going to replace your supposition with the word free-market. In this case, Lexmark's suit is directly a result of free-market operations. A company figures out how to do something better. Communism seeks to stifle competition in favor of the state, and state sponsored corporations, like Lexmark.

So how much communism would you advocate for comrade?

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