On 12 November 2020, Gilbert + Tobin client Calidad Pty Ltd succeeded in its appeal to the High Court of Australia, in one of the most important patent cases in Australia for decades.

Calidad is an Australian company specialising in the aftermarket of reconditioned printer cartridges. Calidad’s appeal concerned the scope of a patentee’s exclusive statutory rights to exploit an invention which is to a product.

In allowing Calidad’s appeal, the High Court found that the modifications made by Calidad to used inkjet printer cartridges, which allow for reuse of the cartridges by consumers, was not an infringing remaking of Seiko Epson’s patented product. In coming to its decision, the High Court was required to consider whether Australia should retain the principle that an ‘implied licence’ to use follows with the sale of patented goods or whether it should adopt a position in line with the US and EU that once a patentee sells its patented goods, all of its rights are ‘exhausted’.

In a win for all aftermarket players, the High Court adopted exhaustion as the correct principle, finding that unlike the implied licence principle, the exhaustion principle is consistent with the fundamental principle of the common law respecting chattels and an owner’s rights respecting use of its personal property. Going forward the High Court’s decision means that patentees who seek to restrict downstream use or resale of patented goods will be required to impose any restrictions on use by way of contract.

Gilbert + Tobin partner, Michael Williams, who led the team for Calidad, said: “We are very pleased with this decision. It provides a very important clarification of the rights of users of products to enable them to be repaired and reused patented products. By accepting the doctrine of exhaustion in Australia, for the first time in 112 years, the High Court has given consumers the opportunity to increasingly recycle and reuse, rather than to discard, products when they have the potential for further use. It will also allow the market for 3D printing of worn out components to flourish without the threat of patent infringement.”

Michael was supported by a team of lawyers, including Vanessa Farago-Diener, Sophie Chen, John Lee, Chris Williams, Annabelle Klimt and Paige Bisset.

A full case history and High Court judgment can be found at Calidad Pty Ltd & Ors v. Seiko Epson Corporation & Anor [2019] FCAFC 115. A summary of the Court’s decision be found at Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41.

Michael Williams was interviewed on ABC Radio National, The Law Report discussing the implications of the decision.  Listen here.

Gilbert + Tobin’s Intellectual Property (IP) team is one of Australia’s premier IP teams and was named as the 2020 Intellectual Property Team of the Year in the Australian Law Awards.

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