Recent supreme court case may protect gray market electronics sales

[Kit Lens Jockey]

*****Note, this is somewhat speculative because of the fact that the case did not directly have to do with this, but it seems to have implications related to gray market products.*****

https://www.nytimes.com/2017/05/30/business/supreme-court-patent-rights-lexmark.html?_r=0

Essentially it was ruled that Lexmark cannot stop a company from re-filling and re-selling their toner cartridges. But the article also states this...

But the court’s decision will have ramifications far beyond ink, particularly for the import and resale of products like smartphones and name-brand drugs.

The justices essentially ruled that once products are sold, buyers can do what they want with them unless other laws intervene. In theory, the decision will allow a retailer like Costco Wholesale, which filed a brief for the defendant in the case, to buy high-tech goods at the cheapest price it can find worldwide, bring them to the United States and resell them to customers.

The ruling on international sales is significant, legal experts said, because companies often sell their products abroad at lower prices on the condition that they will not be imported into the United States.

 

[unfocused]

The conclusion seems to be a stretch. This was a patent violation case. Camera manufacturers have not claimed that gray market sellers violate patent laws. Instead they've focused on trademark infringement and counterfeiting.

 

[LDS]

Lexmark attempted to use patent law to stop others buying and refilling cartridges. The court ruled:

"A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell."

"If the patentee negotiates a contract restricting the purchaser’s right to use or resell the item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit."

Lexmark also attempted to assert that the patent exhaustion doesn't apply to items sold abroad, but the court struck that down too.

Thereby as I read it, patent law can't be use to restrict sales - but if, say, Canon Europe has re-sellers sign a contract forbidding selling items to USA distributors, it can do so and it is enforceable. Just, it has to be in the contract, not violate other laws (i.e. EU common market ones...) and you can't simply assert you can do it because you hold a patent on the product.

 

[K]

They might be able to sell gray market all they want - but I don't think they can force manufacturers to honor the warranties...

While exchange rates do play a role in price differences -- the biggest part is how a country or region handles warranty. Repairs and replacements are built into the price...

 

[Mt Spokane Photography]

There are a number of Supreme court cases that directly apply to gray market, and they seem to contradict each other, but really there are very fine points involved.

In the USA, the "First Sale Doctrine" is usually used in defense to gray market lawsuits. Technically, the gray market items have been purchased from a authorized supplier, and now can be resold wherever law allows it (USA). Its not that simple, of course, since lawyers twist things around, and since big companies can drive up your legal expenses to the point where you fold.

As you may know, Canon and Get It Digital settled, and Get It Digital no longer sells gray market Canon cameras.

The simple fact is that Big companies like Canon can decide to spend huge amounts of money on litigation such that smaller companies cannot afford to fight them, and then settle their suit to get over it. Expect the same to happen with other gray market sellers. Only a very few are still selling them on ebay, and once their inventory is sold, they may settle as well.

Here is another suit settled out of court: http://www.equipmentworld.com/yanmar-settles-gray-market-lawsuit-2/

The Fujii suit is still ongoing?

https://www.digitaltrends.com/photography/fujifilm-sues-fro-gray-market-cameras/