Last week the U.S. Court of Appeals for the Ninth Circuit ruled that opening an inkjet cartridge labelled "single use only" creates an enforceable contract between the customer and the cartridge manufacturer, and that refilling the cartridge could constitute a violation of contract and patent law.
The decision comes in a case between printer and cartridge manufacturer Lexmark and the Arizona Cartridge Remanufacturers Association (ACRA), and appears to be an extension of the so-called "shrinkwrap license" which appeared on software products to patented goods available for sale. By opening the product, customers are agreeing to the single-use terms specified by the manufacturer. If they then turn that product over to another party—such as a cartridge remanufacturer—they are violating that agreement and would be subject to action under contract and patent law. Moreover, companies which offer to remanufacture or enable customers to re-use such products in ways prohibited by the customer agreement could be subject to legal action for inducing customers to violate patent and contract law.
Lexmark previously tried to shut down inkjet cartridge remanufacturers using the Digital Millennium Copyright Act (DMCA); the U.S. Sixth Circuit court did not side with Lexmark, specifically finding the DMCA could not be used to create monopolies on manufactured goods.
The Ninth Circuit’s ruling could conceivably open the door to many different types of on-box contracts consumers tacitly accept by opening the package of a patented product. Agreements could forbid or restrict or forbid repair, alteration, resale, or certain applications of the products. For instance, a contact could specify that a product could only be serviced by the manufacturer, could not be sold by the customer, or could not be modified by the customer or a third party.
If the ruling stands, the implications could be widespread. Manufacturers could seek to restrict what customers can do with patented products, both to make certain types of activities illegal (e.g., developing and selling modifications to video game systems, for instance) or lock in revenue streams by preventing third parties from refurbishing, repairing, or upgrading products (e.g., printer cartridges, adding storage capacity, selling systems on eBay, etc.).
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