Academic journal article Washington International Law Journal

No Refills: The Intellectual Property High Court Decision in Canon V. Recycle Assist Will Negatively Impact the Printer Ink Cartridge Recycling Industry in Japan

Academic journal article Washington International Law Journal

No Refills: The Intellectual Property High Court Decision in Canon V. Recycle Assist Will Negatively Impact the Printer Ink Cartridge Recycling Industry in Japan

Article excerpt

I. INTRODUCTION

Imagine you have saved money to buy a new car, and one day you see an advertisement for a new model of car from a well-known, respected automobile manufacturer. The car is perfect-it has everything you have dreamed that you want in a car, at a price so low that you can hardly believe it. You ask yourself, "How can anyone sell a new car so cheaply?" The next day you go to the local dealership to look at the car. It does not disappoint, and after a short conversation (involving suspiciously little haggling) you drive away excited in your brand-new car. Over the next week you drive it everywhere, showing it to friends, family, co-workers, casual acquaintances, and strangers who you wish to make envious. With so much driving you soon run out of gas and make your way to a gas station. To your amazement you cannot find the opening to the gas tank. You dig out the owner's manual and it tells you something strange: your new car runs on a specially formulated, high-performance fuel that is only available from the dealership. For a fee, the dealership will happily replace your fuel tank (because the fuel is only sold as part of a replacement tank), and any attempt by you the owner to otherwise refuel the car will infringe the manufacturer's patent and open you up to a lawsuit. Suddenly, you realize how the car company is able to sell their new cars so cheaply. The manufacturer makes its margins on the replacement gas tanks.

While this hypothetical is far-fetched, it illustrates a key business strategy employed by printer manufacturers. They sell the printer at a low price and then make money by selling replacement ink cartridges.1 The difference between the car hypothetical and this business practice is largely in the perception of consumers. If a car maker tried to treat a car's gas tank the way printer makers treat the ink cartridge, consumers would be shocked and outraged. However, we have become accustomed to buying printer cartridges from the printer maker and from no other source. Recently, certain companies have tried to give consumers another option by refilling and reselling used ink cartridges to consumers at a lower price than that of a new ink cartridge.2

On January 31, 2006, a court in Japan frustrated the business plan of one such cartridge reseller. In Canon v. Recycle Assist,3 the Japanese Intellectual Property High Court ("IP High Court"), sitting in Grand Panel,4 held that defendant Recycle Assist had infringed on patents owned by printer manufacturer Canon by reconditioning, refilling, and reselling used ink cartridges.5 The court rejected Recycle Assist's defense that its activities constituted repair and were permissible because Canon's patent rights were exhausted by the sale of cartridges to consumers.6

Exhaustion is a feature of the patent systems of Japan and the United States.7 Under this doctrine, the first sale of a patented product exhausts or limits the patent holder's rights in the product.8 The purchaser of a product may then use or resell the product without permission of the patent holder.9 The purchaser also has the right to repair the product, but this right to repair does not include the right to construct a new article in place of the original.10

In its ruling in Canon, the IP High Court failed to provide a clear test to distinguish between repair and infringing reconstruction. The court stated that repair of a patented product is not allowed if the elements being repaired are "essential" elements of the invention described in the product patent.11 The court defined an "essential element" as one designed to solve a "technical problem" present in previous inventions.12 However, the court did not give any guidance to help future courts determine the "technical problem" that an invention is designed to overcome.

Given this lack of guidance, the Canon decision will negatively impact consumers and the environment. Because the IP High Court failed to provide a clear standard defining when repair of a patented cartridge is permissible, Japanese courts deciding similar cases in the future may apply the ruling so broadly as to find any act of cartridge reconditioning to be not permissible repair, but impermissible, infringing remanufacture. …

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