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Impression Products v. Lexmark: Chalk One Up for the Underdog

Friday, August 31, 2018 - 17:00
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Among the attributes that I have come to admire in people are courage, commitment and determination. To me, these three characteristics represent individuals who are willing to put it on the line for an issue or cause that they believe in. Individuals that have these attributes do not always benefit financially from their causes, but they often (not always) result in benefits for the greater good, whether that is in an industry, community or the nation. 

A person who has exhibited these attributes to the benefit of not only his business but the auto care industry as well is Eric Smith, founder and CEO of Impression Products. Impression Products is located in West Virginia and sells printer cartridges, competing head-to-head with some of the largest copier companies. While the replacement printer cartridge industry might seem a world away from the issues facing the vehicle replacement parts market, they are in fact closer than they may seem.

In the 1990s, Lexmark attempted to eliminate the competition for replacement cartridges from companies like Impression that sold remanufactured used toner cartridges at about half the price of Lexmark. Among the tactics employed by Lexmark were placing computer chips on their cartridges and offering consumers a 20 percent discount for agreeing in advance not to reuse or resell the cartridges; using what is known as a shrink-wrap license where the terms appear on the cartridge box and the consumer accepts the terms by opening the box. Of course, consumers took the discount, but the cartridges ended up through wholesalers at a remanufacturer like Impression. Impression disabled the chip which allowed the remanufactured cartridges to work with the Lexmark copiers. 

Lexmark did not go after their customers, but instead chose to sue the remanufacturers. While nearly all of the remanufacturers settled with the printer giant, Eric chose not to give in. In fact, he counter sued, stating that Lexmark could not restrict what consumers did with their cartridges based on the legal theory of “patent exhaustion.” Patent exhaustion states that while a patent holder has the right to exclude others from making, using, offering for sale or selling an invention throughout the U.S. or importing the invention into the U.S., once the product is sold, the new owner of the patented product can do whatever they like, including reselling the product.

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