Introduction
Have you ever wondered if you might actually be infringing somebody’s intellectual property (IP) rights when you fill your bottle of hand wash from a particular sachet and this sachet belongs to one brand while the original bottle belongs to a different brand? Refilling and refurbishing of goods is not a new issue or one that has arisen recently but has actually been prevalent for a very long time now. There are different ways in which IP rights are usually infringed, one such situation involves re-filling and refurbishing goods or products. In this post, we will take a look at how the US courts have delved into the issue of refilling and refurbishing goods in the context of IP infringement.
Infringement of IP rights by refilling and refurbishing of goods in the USA
In the case of Impression Products v. Lexmark[1], the US Supreme Court had to consider the extent of rights available to a patent holder and if the patent law gave a right to the patent holder to restrict a party from tinkering/refilling or refurbishing goods once the product has been sold. Lexmark filed a suit for infringement against Impressions Products, a company that was involved in buying used cartridges of printers and re-filling such cartridges for sale. Lexmark approached the Court arguing that it had patented the cartridge, which had a special design, and that the cartridge could be filled only by Lexmark since the company was the legitimate patent holder.
On hearing the parties, the Court dismissed the contentions of Lexmarkand held that“When a patentee sells one of its products, the patentee can no longer control that item through the patent laws—its patent rights are said to “exhaust.”. That is to say that once a patented product has been sold, the patent holder can no longer claim rights over the sold product.
In yet another interesting case that discusses the extent of ownership rights of consumers, Ford filed a lawsuit in 2015 against Autel, a manufacturer of third-party diagnostics for automobiles, for creating a diagnostic tool that included a list of Ford car parts and their specifications. Ford claimed that Autel had copied Ford’s technology and Ford held copyright over the diagnostic tool. Ford submitted that the copyright over the product gave it the exclusive right to use the technology. Autel submitted that copyright infringement was only possible when a person repairs his or her car. While repairing the mechanic had options to use Autel’sdiagnostinc tools instead of Ford’s diagnostic tools. The US Supreme Court after hearing the parties held thatAutel infringed Ford’s copyrights and a user can not replace diagnostic tools with Autel’s diagnostic tools due to its infringing nature. [2]
Refurbishing of goods has not only proven to be a contentious issue in copyrights or patent disputes but also trademark disputes. An obvious question that arises in the context of trademarks is “does ownership of a product give you the right to refurbish/tinker/remodel or change the trademark and trade dress of a product and re-sell such a product with your trademark?
The answer to this lies in the first sale doctrine, which was first recognized in Champion Spark Plug Co. v. Sanders[3]in the year 1947. In this case Plaintiff, Champion Sparks Plug Company, a manufacturer of spark plugs sued theDefendant, Sanders Perfect Recondition Spark Plug Company which was engaged in the business of collecting used plugs and refurbishing them, and eventually selling them. Champion Sparks accused Defendant of selling refurbished spark plugs with Plaintiff’s trademark printed on the refurbished product. The trial court on hearing the parties found that Defendant was guilty of infringement and could not be allowed to sell refurbished plugs with the trademark of Plaintiff. The Court of appeals set aside the judgment of the trial court, leading the Plaintiff to approach theSupreme Court. The Supreme Court while ruling in favor of Defendant held that the use of words “used” or “repaired” on the refurbished plugs clearly showed that the plugs were used and reconditioned by Sanders and it was, therefore, unnecessary to remove the Plaintiff’s trademark.[4]
On the contrary, in Rolex Watch, USA v. Agarwal,[5] Melrose.com LLC (Defendant), a web-based retailer of luxury watches was accused of selling used Rolex watches by altering them and using Rolex’s trademark on these watches. Rolex filed a lawsuit contending that Defendant was infringing Rolex’s trademark by selling tinkered luxury watches with the trade mark ‘Rolex’. Melrose countered the allegations by stating that they were selling tinkered products with a disclaimer and were not infringing Rolex’s trademark in any manner. The US District Court for the Central District of California held that the first sale doctrine could not be applied in this case. The Court found that the use of a disclaimer would not change the result. The Court primarily checked if certain modification or change was material to the original product, in the affirmative, the First Sale Doctrine would not be applicable. However, when dealing with luxury products or a product with a well-known mark that has earned such a reputation that the public at large will associate the refurbished goods with being sold by the original manufacturer, could tarnish the image of the original trademark owner. Neither of the parties appealed the ruling and the matter was settled amicably with the Defendant agreeing to shut down its online retail business of selling luxury watches.
In the United States, the Courts have over time, recognized the rights of trademark owners. In the case of refurbished goods or refilling of goods where the original product has been tinkered with, there is always a possibility of a threat of trademark infringement and riding upon the original trade mark owner’s good will and therefore the owner has to be extra cautious to protect their IP rights.
Conclusion
Consumers can use refurbished goods and refilled goods in the USA provided it does not infringe any IP right. It depends on the facts and circumstances and as to whether refurbishing or refilling of goods amounts to IP infringement or not. If we compare the 1947 judgment in the case of Champion to that of Rolex in 2013 and that of Ford v. Autel in 2015 along with the judgment in Lexmark’s case in 2017, the person refurbishing or refilling goods/products shall refurbish goods carefully in such a manner that there is no infringement of any IP rights. With the continuing technological advancements, the question of IP infringement is only likely to increase with respect to refurbishing and refilling goods not only in the USA but around the world. The IP holder must build strategies to adequately protect their rights around the world in accordance with the Intellectual Property law in their local jurisdictions.
[1] https://www.washingtonpost.com/blogs/the-switch/files/2017/05/supreme_court_opinion_impression_products_v_lexmark.pdf?itid=lk_inline_manual_6
[2]https://law.justia.com/cases/federal/district-courts/michigan/miedce/4:2014cv13760/295187/36/
[3]Champion Spark Plug Co. v. Sanders ,331 U.S. 125 (1947)
[4]https://www.lexisnexis.com/community/casebrief/p/casebrief-champion-spark-plug-co-v-sanders
[5]Rolex Watch, USA v. Agarwal, 2012 WL 12886444 (C.D. Cal. 2012)
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