High Court Agrees to Hear Calidad Appeal

High Court Agrees to Hear Calidad Appeal

The High Court of Australia granted an application for special leave on November 15, 2019, to consider an appeal by aftermarket cartridge sales company Calidad.

There are relatively few cases for which special leave is granted by the High Court. Tellingly, the court rarely grants special leave for patent cases.

But the case between OEM Seiko-Epson and aftermarket Calidad is different.

History:

There has been a long-running dispute between Seiko-Epson and Calidad. Seiko is the manufacturer and original seller of Epson branded printer cartridges. Calidad is the Australian distributor of remanufactured printer cartridges including the refilling of empty Epson cartridges collected from consumers.

Seiko-Epson has always alleged that the distribution and sale of remanufactured cartridges in Australia infringe several Australian patents for printer cartridges held by Seiko. In response, Calidad argues the printer cartridges were acquired from consumers who had legitimately purchased Epson branded printer cartridges and there can be no patent infringement by those consumers who decided to pass on those printer cartridges, that have become empty, to be remanufactured, re-filled and subsequently resold.

Initially, Justice Burley (pictured) in the Federal Court of Australia found that some of Calidad’s printer cartridges infringed Seiko-Epson’s Australian patents, while some did not. Neither parties in the case were satisfied with that decision and both appealed to the Full Federal Court. However, in a subsequent decision, Justices Greenwood, Jagot and Yates of the Full Federal Court gave their decision on July 5, 2019 and found that all of Calidad’s printer cartridges were infringing. Consequently, Calidad was found liable for patent infringement, having distributed the offending cartridges within Australia.

What Happens Now?

In other countries, including the United States, the law recognises that once a product has been sold “to a legitimate purchaser,” the patentee, or in this case the printer OEM has no further claim on that product. The patentee’s rights in relation to the purchased product are exhausted. The purchaser is free to do whatever they like with the product. This means the patentee, or printer OEM in this case, cannot bring patent infringement proceedings if that same product is subsequently repurposed, remanufactured or reused by the legitimate purchaser (or a subsequent person who has legitimately taken ownership of the product).

Firstly, the High Court has agreed to hear the matter. This sends a very clear message that it sees merit ion reviewing the matter about the exhaustion of patent rights once a product has been legitimately sold. Secondly, this is, potentially, going to provide a significant change to existing laws handed down to Australia by Britain 110 years ago. The current Patents Act 1990 reflects the current state of the law.

The case is expected to be heard at the end of May 2020.

Related:

• August 1, 2019: Epson Wins Against Aftermarket Calidad in Australia
• December 22, 2017: Will Epson and Calidad Go Back to Court in Australia?
• December 11, 2017:  MinterEllison defends Calidad against claims by Epson

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