By Tearing Open That Cardboard Box, Are You Also Signing?

By Tearing Open That Cardboard Box, Are You Also Signing on the Dotted Line?


Pay attention next time you rip open a cardboard box -- you may be entering into a contract without realizing it.

A recent decision in the Ninth Circuit Court of Appeals reinforced the right of companies, in this case Lexmark International, the printer maker, to legally limit what customers can do with a patented product, given that the company spells out conditions and restrictions on a package label known as a box-top license.

Clickable license agreements are common practice in software, where the buyer agrees not to tamper with the code or copy the program. But slapping postsale regulations on patented goods could deny buyers the ability to make modifications or seek repairs on other products as well. Box-top licenses could also theoretically hinder third parties from offering replacement parts or supplies for fear of a patent-infringement lawsuit (meaning, for example, that a lighter might have to be refueled only with the manufacturer's brand of butane).

In the lawsuit, the Arizona Cartridge Remanufacturers Association, a trade group of companies that sell refilled printer cartridges, claimed that Lexmark was engaging in unfair and deceptive business practices by promising price discounts on its laser cartridges if the customer promised to return the empty cartridge to Lexmark.

Lexmark's packaging for laser cartridges sold under this system (called the Lexmark Cartridge Rebate, or the Prebate program) includes a label on the outside of the box stating: "Opening this package or using the patented cartridge inside confirms your acceptance of the following license agreement." Cartridges that are not part of the Prebate program and not subject to the restriction are available to customers as well, but without the discount. At the time of the case, Lexmark estimated that cartridge returns had increased 300 percent since the Prebate program began.

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Monty Solomon
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