Patent owners have the right to prevent their goods, first sold overseas, from being refurbished and resold in the US, an appeals court ruled on Friday.
Ruling in a dispute brought by Lexmark International Inc over refurbished printer cartridges, the court said patent law enables limits to be placed on the resale of products that are first sold overseas.
Those sales do not exhaust US patent rights, the US Court of Appeals for the Federal Circuit in Washington ruled in a 10-2 decision.
The closely watched inkjet printer case hinged on the question of whether a patent owner can restrict what happens to its products after they are sold. It pitted the biotechnology, drug and crop industries against major Silicon Valley firms and sellers of refurbished auto parts and medical devices.
In siding with patent owners, Circuit Judge Richard Taranto cited drugs, which are often sold overseas at lower prices because of price constraints or medical needs.
“The practice could be disrupted by the increased arbitrage opportunities that would come from deeming US rights eliminated by a foreign sale made or authorized by the US patentee,” Taranto wrote for the majority.
Alphabet Inc’s Google, Intel Corp and Samsung Electronics Co were part of a group that argued that it should not matter where the product was originally sold.
“Development of new products frequently involves new combinations of existing components and technologies from around the world,” they said in a court filing.
Lexmark’s position “benefits the few US patentees engaging in impermissible rent-seeking” by getting paid multiple times for the same product, they said.
Not all tech companies agreed. Qualcomm Inc and Nokia Oyj, which have large numbers of patents and rely on licensing royalties to boost profit, backed Lexmark.
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