Lexmark Int'l, Inc. v. Ink Techs. Printer Supplies, LLC
| Decision Date | 27 March 2014 |
| Docket Number | Case No. 1:10–cv–564. |
| Citation | 9 F.Supp.3d 830 |
| Parties | LEXMARK INTERNATIONAL, INC., Plaintiff, v. INK TECHNOLOGIES PRINTER SUPPLIES, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Anthony J. Phelps, Steven B. Loy, Stoll Keenon Ogden PLLC, P. Douglas Barr, Lexington, KY, Audra Carol Eidem Heinze, Jason Shull, Matthew P. Becker, Timothy C. Meece, V. Bryan Medlock, Banner & Witcoff, Ltd., Chicago, IL, William J. Hunter, Jr., Stoll Keenon Ogden PLLC, Louisville, KY, for Plaintiff.
Gregory Frederick Ahrens, Glenn Dean Bellamy, Gregory Frederick Ahrens, Wood, Herron & Evans, David Graham Kern, David Graham Kern, Roetzel & Andress, LPA, Cincinnati, OH, Jon Hokanson, Thomas S. Kidde, Lewis Brisbois Bisgaard & Smith, LLP, Los Angeles, CA, Andre A. Gibson, Andre Gibson, Chartered, North Miami Beach, FL, Crystal L. Maluchnik, Janik L.L.P., George H. Carr, Janik LLP, Cleveland, OH, Edward F. O'Connor, The Eclipse Group, LLP, Irvine, CA, Andrew B. Chen, Saeid Mirsafian, Sang N. Dang, Blue Capital Law Firm, P.C., Costa Mesa, CA, for Defendants.
This matter is before the Court on the Motion to Dismiss of Defendant Impression Products, Inc. (Doc. 335). Plaintiff Lexmark International, Inc. has filed a response in opposition (Doc. 367) and Defendant Impression Products, Inc. has filed a reply (Doc. 368).1 Defendant Impression Products, Inc. subsequently filed a Notice of Additional Authority (Doc. 485) to which Plaintiff Lexmark International, Inc. filed a response (Doc. 488). Defendant Impression Products, Inc. then filed a reply in support of its notice of additional authority. (Doc. 491). This matter is now ripe for review.
This case concerns the alleged infringement of Plaintiff Lexmark International, Inc.'s (“Lexmark”) patented toner cartridges. Lexmark alleges that it first sold the patented inkjet cartridges at issue outside of the United States. It claims that those patented inkjet cartridges were acquired and remanufactured by one or more foreign defendants that then sold the remanufactured inkjet cartridges to other defendants. Those defendants, in turn, sold the remanufactured inkjet cartridges to others, including customers in the United States. Lexmark contends that Defendant Impression Products, Inc. (“Impression Products”) was one of those defendants that sold in the United States remanufactured inkjet cartridges that had originally been sold outside of the United States thereby infringing Lexmark's patent.
In reviewing a motion to dismiss for failure to state a claim, this Court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir.2008) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.2007) ). “[T]o survive a motion to dismiss[,] a complaint must contain (1) ‘enough facts to state a claim to relief that is plausible,’ (2) more than ‘a formulaic recitation of a cause of action's elements,’ and (3) allegations that suggest a ‘right to relief above a speculative level.’ ” Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir.2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 1974, 167 L.Ed.2d 929 (2007) ). A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although the plausibility standard is not equivalent to a “ ‘probability requirement,’ ... it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). However, the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ; see also In re Sofamor Danek Grp., 123 F.3d 394, 400 (6th Cir.1997) () (quoting Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987) ).
The patent exhaustion doctrine generally provides that once a patentee has made an unrestricted sale of a patented article, the patentee loses its right to control the sale, offer for sale, or use of the article. Bowman v. Monsanto Co., ––– U.S. ––––, 133 S.Ct. 1761, 1764, 185 L.Ed.2d 931 (2013) ; Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617, 128 S.Ct. 2109, 170 L.Ed.2d 996 (2008). According to a 2001 decision of the Federal Circuit, the patent exhaustion doctrine is territorial. Jazz Photo Corporation v. International Trade Commission, 264 F.3d 1094, 1105 (Fed.Cir.2001). That means that in order for patent exhaustion to apply, the authorized first sale must have occurred in the United States. Id. ( ). The Jazz Photo decision relies upon a United States Supreme Court decision from 1890 in which the Court held that an authorized sale of a good patented by another under the laws of a foreign country does not exhaust the patent rights of the United States patentee, and the United States patentee may sue for infringement when that good is imported into the United States for sale. Id. (citing Boesch v. Graff, 133 U.S. 697, 701–03, 10 S.Ct. 378, 33 L.Ed. 787 (1890) ). Thus, under Jazz Photo, an initial authorized sale of a patented product outside of the United States would not exhaust the patent rights of the patent holder. See id.
Recently, the Supreme Court addressed the parallel “first sale” doctrine under copyright law. Kirtsaeng v. John Wiley & Sons, Inc., ––– U.S. ––––, 133 S.Ct. 1351, 1354, 185 L.Ed.2d 392 (2012). The Supreme Court's decision was rooted in interpretation of a statutory provision of copyright law. Id. at 1357–71. Specifically, the Supreme Court considered whether the phrase “lawfully made under this title” restricts the scope of the first sale doctrine geographically. Id. at 1357 (citing 17 U.S.C. § 109(a) ). The plaintiff contended that “lawfully made under this title” imposed a geographical limitation that prevented the first sale provision from applying to its books first manufactured and sold overseas. Id. at 1357–58. The defendant, however, read the phrase as imposing a non-geographical limitation that required only that the book be made in compliance with the Copyright Act such that a first manufacture and sale abroad would extinguish the rights of the copyright owner. Id. at 1358. The Supreme Court determined that the plain language of the provision said nothing about geography and that interpreting the provision not to provide a geographical limitation made linguistic sense and did not present the same difficulties as an interpretation that included a geographical limitation. Id. at 1358–71.
However, the Supreme Court's analysis did not end there. It next considered the context of the statutory provision. Kirtsaeng, 133 S.Ct. at 1360. According to the Supreme Court, the legislative history of the statutory provision indicates that Congress did not have geography in mind when writing the present version of section 109(a). Id. Additionally, it determined that other provisions of the current statute supported a non-geographical interpretation. Id. at 1361–62. For example, the “manufacturing clause,” which limited importation of many copies printed outside the United States, was phased out in an effort to equalize treatment of copies made in America and copies made abroad. Id. The Supreme Court had difficulty squaring that “equal treatment” principle with a first sale doctrine that imposed geographical limitations. Id. at 1362.
The Supreme Court also considered whether canons of statutory interpretation favored a geographical limitation. In particular, it considered the common law history of the first sale doctrine by applying the cannon of statutory interpretation that “[w]hen a statute covers an issue previously governed by the common law,” it is presumed that “Congress intended to retain the substance of the common law.” Kirtsaeng, 133 S.Ct. at 1363 (citing Samantar v. Yousuf, 560 U.S. 305, n. 13, 130 S.Ct. 2278, 176 L.Ed.2d 1047 (2010) ). Applying that canon, the Supreme Court traced the doctrine back to the Seventeenth Century where Lord Coke explained the common law's refusal to permit restraints on the alienation of chattels. Id. The Supreme Court noted that a law permitting a copyright holder to control the resale or other disposition of a chattel once sold is “ ‘against Trade and Traffi[c], and bargaining and contracting.’ ” Id. (quoting L.E. Coke, Institutes of the Laws of England, § 360, p. 223 (1628)). It further recognized the same principle of freedom to resell can work to the advantage of the consumer and frees the courts from the administrative burden of trying to enforce restrictions upon difficult-to-trace, readily movable goods, and avoids selective enforcement inherent in any such effort. Id. (citing Leegin Creative Leather Prods. v. PSKS, Inc., 551 U.S. 877, 127 S.Ct. 2705, 168 L.Ed.2d 623 (2007) ). Accordingly, the Supreme Court determined that common law of the first sale doctrine “makes no geographical distinctions.” Id.
The Supreme Court then considered the practical difficulties of placing geographical limitations on the first sale doctrine. Kirtsaeng, 133 S.Ct. at 1364. The libraries, in particular, would have difficulty maintaining their collections of foreign books that do not contain a copyright holder's present address or in negotiating fees for those copyrights...
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