Antitrust Suit Widens Cartridge Battle

Computerworld - A North Carolina company that remanufactures toner cartridges has filed an antitrust lawsuit against printer maker Lexmark International Inc., broadening a legal fight that could affect the availability of low-cost cartridges.
Sanford, N.C.-based Static Control Components Inc. (SCC) claims that Lexmark is trying to monopolize the cartridge market. SCC's allegation comes after Lexington, Ky.-based Lexmark filed a suit in December charging that the remanufacturer illegally copied some of the chips used to mate cartridges to Lexmark's printers (see story).
Lexmark won the first round in a Feb. 28 ruling by a U.S. District Court judge in Kentucky. The judge issued a preliminary injunction that bars SCC from making the chips used in replacement cartridges for two of Lexmark's laser printers. SCC filed its antitrust claim that same day in Greensboro, N.C.
Congress Takes Notice
The legal battle is getting congressional attention because of Lexmark's attempt to protect its toner cartridges by citing the Digital Millennium Copyright Act (DMCA), a 1998 law aimed at stopping music and movie piracy.
In an interview, Rep. Rick Boucher (D-Va.) said the case illustrates the law's shortcomings and charged Lexmark with using the DMCA to "thwart competition" -- a charge that Lexmark denied.
One of Lexmark's key complaints is that SCC, in reproducing the printer chips, violated the DMCA by circumventing "secret handshake" authentication software built into the devices by Lexmark.
But DMCA critics contend that such authentication protections could be applied to a range of software and hardware products. In January, Boucher reintroduced legislation that aims to change the DMCA's circumvention restrictions, and last week he sent a letter to House members citing his concerns about Lexmark's use of the DMCA.
In its suit, SCC claims that Lexmark's alleged anticompetitive practices are squeezing companies that remanufacture toner cartridges out of the market. To buttress that claim, SCC argued that about 35% of the toner cartridges sold for use with Hewlett-Packard Co.'s printers are remanufactured, compared with about 14% for Lexmark's.
Roger Rydell, a Lexmark spokesman, said the company "provides more choice in cartridges for laser printers" than any of its rivals.