Medical companies with Indiana ties take interest in SCOTUS patent case

March 21, 2017

Pharmaceutical and medical device manufacturers, including an orthopedic product maker in Indiana, have weighed in on a patent case that came before the Supreme Court of the United States Tuesday.

The central issue in Impression Products, Inc. v. Lexmark International, Inc., 15-1189, is on patent exhaustion and how far does a patent-holder’s rights extend when the product is resold.

Impression, a family-owned business in West Virginia, was sued for patent infringement for refurbishing and then selling Lexmark toner cartridges for computer printers. These cartridges are expensive, but Lexmark offers customers a discount as part of a special program which prohibits the buyers from reusing and reselling the devices. Instead, it requires them to send the cartridges back to the manufacturer. Impression was purchasing the spent cartridges and then cleaned, refilled and resold them.

In federal court, Impression argued Lexmark had exhausted its patent rights to the cartridges when it first sold them to the customers. The U.S. District Court for the Southern District of Ohio agreed and granted Impression’s motion to dismiss. However after an en banc hearing, a split U.S. Federal Circuit Court of Appeals reversed, finding a patent-holder does not lose its rights when it makes a conditional sale.
Arguments were Tuesday before the eight justices.

The case has attracted a lot of attention, drawing numerous amici curiae briefs from businesses, trade associations and legal scholars.

Orthopedic device manufacturer Zimmer Biomet Holdings Inc., based in Warsaw, Indiana, and medical equipment maker Medtronic PLC, headquartered in Ireland and Minneapolis but with a facility in Warsaw, Indiana, jointly submitted a brief in support of Lexmark. Also the Pharmaceutical Research and Manufacturers of America and the Medical Device Manufacturers Association filed briefs arguing for Lexmark.

Impression, asserting that the patent exhaustion doctrine bars post-sale restriction, argued that following the Federal Circuit’s ruling would “dramatically expand the scope of patent monopoly” by giving patent-holders the means to eliminate all competitors.

Lexmark countered the Patent Act bestows distinct rights to patent-holders to exclude others from making, selling, using or importing their invention.

In its brief, Medtronic and Biomet contend that patent remedies help ensure patient safety with single-use medical devices. The companies explain third parties that refurbish the products may not have the knowledge needed to clean and update the equipment such as a vessel sealer, cardiac catheter or optical trocar.

In addition, a problem with a reprocessed single-use device can harm the original manufacturer’s reputation since customers could wrongly assign blame.

“The continued availability of patent remedies to enforce single-use restrictions is important to original manufacturers for guarding against these risks and protecting their reputations,” Medtronic and Biomet argue in their brief. “Removing the protections that patent law provides to enforce clearly conveyed, single-use restrictions on medical devices would likely cause reprocessing of single-use medical devices to increase, leading to more confusion in the marketplace and potentially eroding the original manufacturer’s reputations and goodwill.”


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