If the patent holder has brought his patented product onto the market, he cannot use his patent to prevent the buyer from having this legally acquired product repaired by third parties or reselling it to third parties. This is the legal principle of exhaustion. But what happens if the patent only relates to part of the product? Can a third party renew the product for resale?

Canon sells printers and associated cartridges. In addition to the consumables, these also contain the drum with which the image can be printed electrophotographically. Canon is the owner of Patents EP 2 087 407 B1, which protects the “drum unit” of the cartridge. The patented special feature of the drum unit is the coupling with which the drum is connected to the drive of the printer. This coupling swivels when the drum is coupled or uncoupled to or from the printer motor.

A competitor has now specialized in recycling old Canon cartridges. He takes the cartridges disposed of by users, replaces the drum and refills the cartridge. He brings these cartridges onto the market at significantly lower prices than Canon. For the customers, these cartridges are actually as good as new.

Canon filed a Lawsuit against the competitor for patent infringement. Replacing the drum resulted in a new cartridge or drum unit being manufactured. The Higher Regional Court confirmed the patent infringement. In the appeal, however, the BGH concludes that there is no patent infringement because in the specific case, recycling is covered by the principle of exhaustion. The BGH states the following:

The principle of exhaustion ensures that the patented products placed on the market by the patent holder can circulate freely on the market. Any lawful acquirer is authorized to use and resell these copies as intended.

Intended use includes restoring the fitness for use if the function or performance of the specific specimen is fully or partially impaired due to wear or damage. The replacement of individual parts is permissible, even if these parts are “functionally individualized” in the claim. A distinction must be made between intended use and new manufacture. This remains reserved to the patent proprietor.

The product protected in the patent claim (the so-called overall combination) is decisive. This also applies if the product defined in the patent claim is placed on the market as part of a more comprehensive object. In previous jurisprudence, the “overall device” and the “protected product” were identical in each case. However, this is not the case in the present dispute.

If both the “overall device” and the “component” are protected by separate patent claims, then exhaustion must be assessed separately for each of the two claims. Measures that serve to restore the overall device thus exhaust the claim to the overall device, but not necessarily the claim to the component.

The same principle must apply if the overall device is not protected. In this case, the purchaser may use the entire device as intended or even manufacture it anew (because it is not protected by a patent). However, this does not result in the right to manufacture a new, patent-protected component.

The rights to the product are therefore not exhausted by the fact that the patent proprietor places the printer (with cartridge) on the market.

Whether the product is a repair or a new product must always be assessed from the customer’s perspective. Because the customers in the present case do not perceive the drum unit as a product (as only the entire cartridge is placed on the market), the Higher Regional Court constructed a fictitious market perception for the drum unit and then came to the conclusion that recycling constitutes an (impermissible) new manufacture.

The BGH contradicts this reasoning. No fictitious traffic perception may be constructed in connection with exhaustion.

For the question of exhaustion in the present case, it is not decisive that, from the consumer’s point of view, the replacement of the drum is equivalent to the manufacture of a new drum unit. The only decisive factor is whether the technical effects of the invention are reflected in the replaced parts.

The patent proprietor’s interest in the commercial exploitation of the invention must be weighed against the interest of the customer in the unhindered use of the acquired product. The patent-protected nature of the product must be taken into account.

The BGH does state that, in principle, the market perception must be taken into account when distinguishing between intended use and new manufacture. In the present case, however, the special feature is that consumers only know the printer and the replaceable cartridge, but not the drum unit. It is therefore not possible to form a market perception in relation to the drum unit.

The decisive factor in such constellations (i.e. in constellations where the new manufacture cannot be affirmed on the basis of the public perception) is whether the technical effects of the invention are reflected precisely in the exchanged parts.

The replacement of the image drum and the flange is not a new manufacture because the invention is not reflected in these parts. The image drum was known and the invention does not change the properties, functionality or service life of the drum. It is true that the coupling component according to the invention facilitates the assembly and disassembly of the drum unit in the cartridge. However, the drum is merely an object of the drum unit and does not participate per se in the effect according to the invention. The same applies to the flange of the drum. This leads to the result that the replacement of the drum and the flange is not an (impermissible) new manufacture, but only a (permissible) repair.

Note: In certain cases, the principle of exhaustion means that the economic benefit of the invention cannot really be exhausted. This is also the case in the present case. However, this BGH ruling shows that, in addition to the public perception, it can also depend on whether the repaired parts are part of the core of the invention or not.

Lnks: juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py