Epson loses in the high court
November 13, 2020
In the long running dispute between Epson and Calidad the Australian High Court finds against Epson and affirms the first sale doctrine.
The Australian High Court has allowed an appeal from Calidad concerning the scope of a patentee’s (Epson) exclusive statutory rights to exploit an invention which is a product, and whether modifications made to a product to enable its re-use amounted to a making of a new product and infringed the patentee’s exclusive rights on that basis.
Ninestar collects empty used Epson cartridges a number of sources and modifies them to be refilled and re-used. Calidad acquired the modified cartridges from Ninestar and import them into Australia for sale to the public.
Seiko Epson claimed commenced proceedings alleging that Calidad had infringed their rights as patentee. In the first action the primary judge found that the modifications made to certain categories of the original Epson cartridges were such as to extinguish any implied licence. On appeal the Full Court of the Federal Court, in separate judgments, found that in none of the categories of the original Epson cartridges were the modifications authorised by any implied licence, and that the modifications to the original Epson cartridges constituted a making of a new embodiment of the invention claimed in the patents.
Calidad appealed from the Full Court’s decision and asked that the High Court hold that, in cases of this kind, a doctrine that a patentee’s monopoly rights of use and sale with respect to a product arising from statute are exhausted upon the first sale of that product (the “exhaustion doctrine”) should be applied instead of the implied licence doctrine.
Allowing the appeal, a majority of the High Court found that the modifications to the original Epson cartridges did not amount to an impermissible making of a new product and that the exhaustion doctrine should be accepted.
The refilled and restored cartridges were merely modified versions of the products sold by Seiko. The modifications were within the scope of the rights of an owner to prolong the life of a product and make it more useful.
Costs were awarded against Seiko Epson.
Editors Opinion: Congratulations to Calidad on the successful outcome of years of litigation. This ruling aligns strongly with US and European rulings and endorsed the first sale doctrine. You can read the full judgement here.
Categories : World Focus
