Supreme Court Ruling Reignites ‘Right to Repair’ Debate

Posted June 6, 2017

A Supreme Court decision involving the resale of printer toner cartridges could have far-reaching implications on the technology industry. In the case, Impression Products, Inc. v. Lexmark International, Inc.,the court held 7–1 that Lexmark’s patent rights were exhausted with the first sale of its toner cartridges, despite restrictions it tried to impose, dealing a blow to companies that use patent law as way to defend against other companies refurbishing and reselling their products.

“We conclude that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale,” Chief Justice John G. Roberts, Jr. wrote in the court’s majority opinion.

The biotechnology, drug, and agricultural industries had backed Lexmark in the dispute, calling for a broad application of patent rights.

According to Binseng Wang, director of quality and regulatory affairs at WRP32 Management, Inc. and Greenwood Marketing LLC, it is not uncommon for manufacturers to use patents to protect their service tools and replacement parts.

“In this case, the Supreme Court’s decision reaffirming the ‘patent exhaustion’ doctrine frees the buyers of these tools and parts to do whatever they wish with them without the fear of being sued for patent infringement,” Wang said, reflecting his personal views and not those of his employer or any other organization.

But because the court distinguished patent rights from licensing rights, “it remains unclear as to how licensing agreements may affect the resale of patented products,” Robert J. Kerwin, general counsel for the International Association of Medical Equipment Remarketers and Servicers, pointed out.

“Some device manufacturers have taken the position that they sold only the device and not the software necessary to operate the device. They take the position that the software is 'licensed' and that there is a separate licensing agreement which controls the ability to transfer or restrict the license,” Kerwin said. “We will be watching whether some manufacturers may be using licensing provisions really as 'disguised sales.'”

The use of patent protections and licensing agreements to attempt to control the marketplace is just one battle in a larger war that’s being waged in individual states and among various industries over what some experts refer to as the “right to repair.”

At stake are issues related to liability, efficiency, safety, and, most of all, money.

Medical device service has become big business as healthcare delivery organizations look for ways to contain rising costs and original equipment manufacturers (OEMs) look for solutions to revenue and profitability challenges. As a result, the global medical equipment maintenance market is expected to grow by 16.7% between 2015 and 2020, topping $2,240 million by 2020, according to a forecast by market research firm MarketsandMarkets.

Backed by consumer advocates, repair professionals, and other interested stakeholders, the goal of the “right to repair” movement is passing legislation that would make it harder for manufacturers to keep repair information proprietary—something healthcare technology management (HTM) professionals have complained about for years despite the NFPA 99 Health Care Facilities Code requiring manufacturers to provide service manuals.

“Some manufacturers have resisted providing equipment manuals, training, service keys, schematics, etc. [for their devices], taking the position that this information is proprietary and that service personnel from their organizations know best how to undertake this work,” Kerwin said. “An owner of a medical device should have the right to choose who repairs the device.”

According to Wang, the privileged information and trade secret “excuses” will still hold following the Lexmark decision, as they are not based on patents.

For their part, manufacturers say there is sometimes a problem of unqualified personnel working on medical devices. Without the right training, these technicians can damage a device, compromise patient safety, and expose the manufacturer to liability claims.

Bills are circulating in at least 11 states―New York, Nebraska, Minnesota, Missouri, North Carolina, Massachusetts, Kansas, Wyoming, Illinois, Iowa, and Tennessee―that would make it easier for people to repair broken electronic equipment, such as cell phones, computers, and appliances. In addition, a group called The Repair Association is interested in pursuing similar legislation at the state level for medical device repairs, according to a 2016 article in 24x7 magazine.

“The ‘right to repair’ or ‘digital right to repair’ movement is gaining ground in many states and has already gotten the attention and opposition of some medical imaging manufacturers," Wang said "It is likely to be a good way for the HTM community to gain some bargaining power, although this fight probably will have to be taken to the federal level, as federal laws and regulation supersede state ones in case of conflict. Ultimately, we need a federal statute, like what already exists in the European Union, requiring manufacturers to release service instructions and schedules, as well as service tools and parts.”

At the same time, medical device manufacturers are pushing for additional regulation of third-party service organizations. Representatives for AdvaMed, an advocacy organization for the medical device industry, and the Medical Imaging & Technology Alliance (MITA), a division of the National Electrical Manufacturers Association, which represents medical imaging companies, declined to comment for this article. However, in earlier forums and meetings about the service and support of medical devices, they have emphasized their belief that the Food and Drug Administration (FDA) needs to have greater regulatory oversight over repairs performed by third-party service providers.

For example, at an October 2016 workshop organized and hosted by the FDA, Tara Federici, vice president of technology and regulatory affairs at AdvaMed, said that Quality System Regulation requirements that apply to OEMs should also apply to third-party service providers. In general, she said that OEMs and their “qualified partners” are “better equipped to limit the risks associated with service.”

Months later at a hearing held by the House of Representative’s subcommittee on health, MITA representative Joe Robinson, senior vice president of health systems solutions for Philips North America, called on third-party servicers to “step out of the dark and register with the FDA, file adverse events reports, and maintain a complaint-handling system,” as “these are minimum requirements that will give the agency information about how many businesses are engaging in servicing medical equipment.”

With tensions continuing to mount over the service and repair of medical devices, this issue is expected to be a hot topic of discussion at the AAMI 2017 Conference & Expo, which begins on Friday.