International printer Company Lexmark is trying to create a legal benchmark in a move that could also affect several other industries including the automotive industry who often trade refurbished automotive parts.
The Lexmark case was argued before a dozen judges of the U.S. Court of Appeals for the Federal Circuit on Friday.
The dispute involves inkjet cartridges initially sold by Lexmark International, and then refilled and sold by Impression Products.
Lexmark claimed Impression was infringing its patents for the cartridges. Impression claimed Lexmark already got paid once for use of its patented inventions, when the cartridges were first sold, and had exhausted its patent rights.
"It's part of a multifront effort to scale back manufacturer's rights to control who repairs and refurbishes products after sale," said Jacob Kramer, an antitrust lawyer, who is not involved in the case.
Drug, biotech and medical device industries representing such companies as Pfizer and Johnson & Johnson have weighed in on the case, filing briefs saying they put restrictions on the resale of their products for safety reasons.
Smartphone and computer manufacturers including Google and Samsung Electronics also jumped in, arguing that limits would cause confusion over who gets paid in supply chain for complex electronics.
Refurbished goods appeal to consumers because they can find lower prices and more choices, but "the long-term cost is innovation," said Kramer said of the case.
A trial judge in Ohio agreed with Impression's argument, but only when it comes to cartridges initially sold in the U.S. For those sold overseas, the refurbished cartridges were effectively deemed a new product that infringed the U.S. patent rights.
Each side is appealing the argument they lost.
Impression, is banking on a 2013 Supreme Court decision that allowed the resale of copyrighted materials initially sold abroad. The company contends there is no difference between patent and copyright law.