Australia: Toner low! Intellectual property and patented recycled printer cartridges

Last Updated: 19 February 2018
Article by Deborah Polites and Richard Hoad

In any case where modification and resale of a patented article is proposed, a careful technical analysis will need to be made to assess the extent of the modifications and the extent to which they alter the elements of the article that are the subject of the patent claims.

An Australian standard patent gives the inventor of new technology a 20 year monopoly on the "exploitation" of that technology in Australia. This includes both the manufacture and sale of patented articles. But does a patent - or indeed any other intellectual property right - allow the patentee to prevent the activities of a business that legitimately obtains a patented article, alters it, and then resells it second hand in competition with the patentee's product?

This was the question for the Federal Court in Seiko Epson Corporation v Calidad Pty Ltd [2017] FCA 1403 (29 November 2017). Seiko sold EPSON branded printers and printer cartridges. Calidad (a competitor of Seiko) refurbished EPSON cartridges that had originally been sold by Seiko. These were obtained as spent cartridges, refilled and modified by a third party overseas so that they would work again, and then sold in Australia as refills. Calidad claimed, in essence, that the sale of refurbished cartridges did not infringe Seiko's patent rights because, once a patented article is sold, the purchaser has the right "to treat it as an ordinary chattel".

Seiko alleged that the sale of the refurbished cartridges not only infringed its patent rights but also infringed its trade marks, involved an offence under the Trade Marks Act relating to unauthorised tampering with trade marked goods, and contravened the Australian Consumer Law. In a detailed judgment considering all these issues, Justice Burley held that some, but not all, of the refurbished cartridges infringed Seiko's patent rights - the difference was in the extent of the changes made to the technology in the cartridges. In reaching this conclusion, the decision addresses questions about the alteration and resale of patented articles that had not previously been the subject of extensive consideration by an Australian court.

In Seiko Epson, Justice Burley held that, when a patentee sells a patented article, the patentee also grants a licence to the purchaser, as part of that sale, to use and deal with the product in future as the purchaser sees fit. This is referred to as an "implied licence" from the patentee to the purchaser. (A slightly different approach is taken in US law, where the doctrine of "exhaustion of rights" sets out when the patentee's exclusive rights are "exhausted" upon the sale of a product or obtaining of a royalty.) An implied licence may be overridden by imposing contractual obligations on the purchaser, but in most cases it will be difficult to show that any such conditions passed to a subsequent purchaser.

A further question to be answered was what (if any) limits exist on the scope of the permission given by the implied licence. In other words, could the refurbishment of a product for reuse be so extensive that it would be outside the terms of the implied licence? If so, this would effectively mean that a new, infringing product was taken to be created in the course of the refurbishment - in which case, the act of refurbishment may infringe the patent (since it would involve "making" a patented article).

Refurbishment = extinguishment of implied licence

After a comprehensive review of the authorities, Justice Burley held that the refurbishment of the product could be so extensive as to extinguish the implied licence.

In deciding whether a refurbishment is significant enough to extinguish the implied licence, Justice Burley held that "to assess whether or not the implied licence continues after modifications are made one must consider the significance of modification work done on a product and how the modifications in question relate to the features of the patented product that are defined by the claim". So, the question to be answered is whether the refurbishment is such that it "results in a material alteration to the product, insofar as it is an embodiment of the invention as claimed".

In Seiko Epson, the refurbishment took place outside Australia, so there could be no infringement by "making" a patented article in Australia. However, the subsequent importation and sale of the refurbished cartridges in Australia could still constitute an infringement. The Court considered a number of different categories of potentially infringing articles and concluded that in some cases the modifications were sufficiently material to amount to an infringement, whereas others were not. By way of example, a modification that resulted in the licence being extinguished consisted of the replacement of an inbuilt memory chip that had (among other things) operated to prevent the cartridge from being refilled and reused. However, where alternation involved changing the data on the memory chip, or the physical interface patterns changed to allow operability with different printers, those changes were not sufficient to result in the implied licence being extinguished (and were therefore non-infringing).

The assessment of the significance of the various categories of alteration was made by close reference to the claims of the patent. This is because the exclusive rights of the patentee can only ever extend to the invention as defined in the patent claims. Justice Burley said:

"In my view the threshold question to consider is whether or not the modified product is materially the same embodiment of the invention as claimed as the product that the patentee sold without restriction. That is not an inquiry that is at large. The right of the patentee to impose restrictions upon sale arises because the product is an embodiment of an invention as claimed. The question is not whether or not the product was altered or repaired, but whether the product, insofar as it is an embodiment of the invention as claimed, was materially altered, such that the implied licence can no longer sensibly be said to apply."

So what does this mean in practice?

In practice, this will mean that in any case where modification and resale of a patented article is proposed, a careful technical analysis will need to be made to assess the extent of the modifications and the extent to which they alter the elements of the article that are the subject of the patent claims. For patentees, the extent to which their patent rights can be relied on to restrict any "after market" for refurbished products will depend very much on the particular technology that is claimed in the patent, and how it interacts with the way the refurbishment is done.

In our next edition, we will look at the other aspects of the case - the allegations of trade mark infringement and contraventions of the Australian Consumer Law.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions