Recycling or Remaking – Exhaustion of Patent Rights
In the case Seiko Epson Corporation v Calidad Pty Ltd  FCA 1403 (29 November 2017), Seiko sold various Epson inkjet printer cartridges for use with its printers. Ninestar collected used cartridges in Malaysia, made modifications to facilitate their reuse, and refilled them with ink. Calidad purchased the cartridges in Malaysia from Ninestar, then imported and sold them in Australia.
Seiko sued Calidad for infringement of two patents for printer cartridges. Calidad defended the claim on the basis that an implied licence ran with the cartridges, alternatively Seiko’s patent rights had been exhausted when Seiko first put the cartridges on the market.
Ninestar modified some cartridges more than others in order to make them suitable for re-use. Justice Burley found that the defence was available in some cases but not others. It was a question of degree, but the Judge considered that in some cases Ninestar so materially altered the cartridges that “the licence implied by a sale without restriction of the original Epson cartridge does not apply”.