Lexmark gets first-round ruling in printer suit

Computerworld - A U.S. District Court has issued a preliminary ruling in favor of Lexmark International Inc. in a case that analysts have said could affect the future availability of low-cost replacement toner cartridges for printers.
Judge Karl Forester, chief judge for the Eastern District of Kentucky, issued a preliminary injunction that bars Static Control Components Inc. (SCC) from making or selling chips used in replacement cartridges for two of Lexmark's laser printers, the companies said in separate statements yesterday.
SCC's components are used by thousands of vendors to "remanufacture" toner cartridges by refilling, refurbishing and repackaging them. Such cartridges typically sell for around 30% less than replacement cartridges offered by the major printer vendors.
Lexington, Ky.-based Lexmark filed suit against SCC in December, charging it with violations of the Copyright Act and the Digital Millennium Copyright Act. It argued that SCC's Smartek chips include Lexmark software that is protected by copyright and that they allow the unauthorized remanufacturing of toner cartridges for two of its printers (see story).
The software, which was introduced by Lexmark last year, handles communications between its printers and toner cartridges. Without it, replacement toner cartridges won't work with Lexmark's printers. Sanford, N.C.-based SCC developed the Smartek chips to allow the continued remanufacturing of Lexmark cartridges.
Forester determined that Lexmark is likely to prevail at trial on the merits of its case and issued the temporary injunction against SCC, Lexmark said. The injunction means SCC must refrain from shipping the Smartek chips until the case has been decided.
"We are disappointed in his order and feel that after he or a jury has heard a full exposition of the facts that we will prevail," SCC said in its statement.
SCC is still studying Forester's 53-page order but said it thinks the judge has "given us guidance in this matter so that we will be able to offer a replacement Lexmark 520/620 chip that fully complies with the order." The company didn't return a call seeking further explanation.
Lexmark said in a statement that it is pleased with the ruling. The company spends hundreds of millions of dollars a year on research and development, said Vincent Cole, Lexmark's general counsel. "We believe that our printing solutions and services make us unique, and we intend to vigorously protect the intellectual property that helps to set us apart from our competition," Cole said.
It also said it offers users a choice in toner cartridge, including a cartridge that can be remanufactured by others without the need of a third-party microchip.It also offers a cartridge-return program that provides customers with an upfront discount if they agree to return their used cartridges directly to Lexmark.
Analysts have said the case could have a wider impact than on Lexmark alone. If Lexmark succeeds, those analysts said, other printer vendors may adopt similar technologies to prevent their printer cartridges from being remanufactured.

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