Tag Archives: embedded software

Impression Products v. Lexmark International

On May 30, 2017, the Supreme Court of the United States issued its opinion in Impression Products v. Lexmark International, a case involving patent exhaustion. By an 7-1 margin, the Court found that a patent holder cannot enforce contractual restrictions on downstream sales through a patent infringement case and that international exhaustion applies to patents, just as the Court confirmed international exhaustion to apply to copyright in Kirtsaeng v. Wiley.

Lexmark essentially tried to restrict the refill of its cartridges by third parties by selling cartridges that restricted further use or resale. Lexmark then tried to enforce these restrictions through patent infringement cases against the downstream purchasers/third party resellers. The Court ultimately found that while Lexmark could potentially bring a breach of contract case against the initial purchasers for violating these restrictions, it could not bring a patent infringement suit to assert these claims. Relying on long-standing precedent, the majority opinion (authored by Chief Justice Roberts) notes “even when a patentee sells an item under an express restriction, the patentee does not retain patent rights in that product.”

Additionally, Lexmark asserted that exhaustion did not apply to cartridges sold abroad. The Court “conclude[s] that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.” The Court notes that the question of the first sale doctrine came up in the context of copyright in Kirtsaeng v. John Wiley & Sons, which ruled that the first sale of a copyrighted product exhausts the rights whether made in the United States or abroad. The majority opinion also points out that while differential pricing may occur, this fact has no bearing on patent exhaustion: “The patentee may not be able to command the same amount for its products abroad as it does in the United States.  But the Patent Act does not guarantee a particular price, much less the price from selling to American consumers.”

One of the more interesting passages in the majority’s opinion is an illustration on the dangers that would occur without exhaustion:

Take a shop that restores and sells used cars. The business works because the shop can rest assured that, so long as those bringing in the cars own them, the shop is free to repair and resell those vehicles. That smooth flow of commerce would sputter if companies that make the thousands of parts that go into a vehicle could keep their patent rights after the first sale.  Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement. And even if they refrained from imposing such restrictions, the very threat of patent liability would force the shop to invest in efforts to protect itself from hidden lawsuits.  Either way, extending the patent rights beyond the first sale would clog the channels of commerce, with little benefit from the extra control that the patentees retain.  And advances in technology, along with increasingly complex supply chains, magnify the problem.

The use of auto repair as an example of the problems created through overzealous claims of intellectual property protection is compelling given the issues of embedded software in automobiles and anti-circumvention measures. With a growing number of vehicles containing embedded software, some rightholders are claiming that purchasers of these vehicles should not be free to modify, repair or tinker with these items. An article in Wired in 2015 highlighted the fact that John Deere (and other automakers) opposed an exemption to allow circumvention of technological protection measures in order to repair purchased vehicles during the DMCA 10201’s triennial exemption process.

Ultimately, exhaustion of copyright and patent rights serves a critical purpose in ensuring that purchasers can freely repair, re-sell, and lend legitimately purchased items just as they would for goods that are not encumbered by intellectual property rights.

Finding Fair Use in Unexpected Places

We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

Today’s theme is: 21st Century Creators: Copyright law should account for the interests of all creators, not just those backed by traditional copyright industries. YouTube creators, remixers, fan artists and independent musicians (among others) are all part of the community of creators that encourage cultural progress and innovation.

*This is a guest blog post by Jonathan Band, policybandwidth*

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In December 2016, strong endorsements of fair use appeared in somewhat unexpected places.

First, the Joint Strategic Plan (“JSP”) released by the Office of the Intellectual Property Enforcement Coordinator on December 12, 2016, stated that nothing in the JSP

should be interpreted as limiting the scope of exceptions and limitations, such as fair use, under U.S. copyright law. To the contrary, the basic principles that have permitted the Internet to thrive must be safeguarded, and the Strategic Plan expressly recognizes and celebrates advancements in technology. The way people use and access content – which has led to new and innovative uses of media (e.g., remixes and mashups involving music, video and the visual arts), and fair use, for example – will undoubtedly continue to evolve. We must work to foster creativity, understanding the role of exceptions and limitations as not only part of our body of laws, but as an important part of our culture. Indeed, it is the combination of strong copyright rights with a balance between the protection of rights and exceptions and limitations that encourages creativity, promotes innovation, and ensures our freedom of speech and creative expression are respected.

The JSP concludes this discussion by observing that “IP enforcement options must be crafted to allow for effective measures against actors that unlawfully prey on the works of rights holders, while ensuring that enforcement activities do not affect lawful activity.”

Second, the Copyright Office, in its December 15, 2016 report on software enabled consumer products, noted that “courts repeatedly have used the fair use doctrine to permit copying necessary to enable the creation of interoperable software products.” In support of this declaration, the report discussed the decisions in Atari v. Nintendo, Sega v. Accolade, and Sony v. Connectix, where the courts found that fair use excused the copying performed during the course of reverse engineering. The report added that “the case law generally holds that intermediate copying for purposes of reverse engineering and creation of interoperable products is, in most cases, a fair use.”

The report concluded its discussion of fair use by stating that “proper application of these principles should ensure that copyright law preserves the ability to create interoperable products and services.” In support of this statement, the report quoted the Ninth Circuit in Sega v. Accolade stating that “an attempt to monopolize the market by making it impossible for others to compete runs counter to the statutory purpose of promoting creative expression and cannot constitute a strong equitable basis for resisting the invocation of the fair use doctrine.”

Third, in an amicus brief it filed in Georgia State University electronic reserves case on December 9, 2016, the Copyright Alliance stated that it “is a staunch supporter of fair use principles, which allow for copyright to achieve it purpose without undermining the incentive to create. Its members regularly rely on these principles to create new, expressive, transformative works, consistent with the Copyright Act’s inherent purpose.”

Fair use is often referred to as a “user’s right.” But as these statements correctly indicate, fair use is a creator’s right as well. Fair use is essential to the creation of new works in all forms, including books, films, music, and software.