IP NEWS:SOEI Patent & Law Firm

The Intellectual Property High Court decided whether sales of refilled ink cartridges infringed a patent that covers the ink cartridges (Canon Inc. vs. Recycle Assist Co., Ltd, H17 (ne) 10021, January 31, 2006). The Enlarged Panel of the IP High Court heard the case because this case will have a powerful effect on the industrial world.

1. Background
  Canon manufactures ink jet printers and ink cartridges for the same, and selling them in the global market and owns a patent covering the ink cartridge and manufacturing method for the ink cartridge that it sells. Recycle Assist collects ink cartridges manufactured by Canon after use, refills them with ink at its subsidiary in Macau, re-imports to Japan and sells them.
  Canon sued Recycle Assist before the Tokyo District Court seek to enjoin the sales of the refilled ink cartridges based on their rights under the patent. But Recycle Assist argued that once the patent owner legitimately sells the ink cartridges, refilling and selling them is not patent infringement but, under the theory of exhaustion, refilling is simply repairing the patented product.
  Tokyo District Court agreed that the theory of exhaustion applied and ruled that Recycle Assist does not infringe Canon’s patent. Canon appealed to the IP High Court.

2. The IP High Court Decision
  The IP High Court reversed the Tokyo District Court decision. The IP High Court said:
There are two situations in which the theory of patent right exhaustion cannot be applied:
(1) If patented products are reproduced and reused after their normal durable period and no longer function, or
(2) If a third party processes or replaces all or part of an essential element of the patented invention in patented products.
If either of these conditions are met, the patent right is not exhausted and patent owner can enforce the patent right.
  The court reasoned that refilling ink into ink cartridge is not an instance of (1) because it cannot be said that the ink cartridge no longer functions after its normal durable period when ink has been consumed. Refilling the cartridge with ink is simply replacement of consumable goods like installing fresh batteries in electric products, and there is no law or common consensus which restricts the use of ink cartridges to only those that contain the original ink.
  However, refilling the cartridge is an instance of (2) because the amount of ink added to the cartridge meets a specific, patented condition in order to avoid leakage of the ink, and this condition is an essential element of the patented invention.
  As a result, the patent right is not exhausted and Canon can enforce its patent right.
  Recycle Assist appealed before the Supreme Court.