U.S. Court: Lexmark Can Tie Rebates To Refills

SteveOU writes "Lexmark won a favorable judgement in its attempt to prevent competitors from refilling its cartridges. The judgement, issued by Judge Saundra Brown Armstrong of the U.S. District Court for the Northern District of California, was a big loss for 'the rest of us,' reading in part "Because of its patents, Lexmark has the right to impose conditions on the sale of its patented product. It may restrict a purchaser's ability to repair it, which is what in essence the single-use condition does." What now? Will GM prohibit unauthorized repairs of its patented car components?"

Comments

So, America...

[nordicfrost]

Has your patent legislation done any good for you lately?

(Not that ours has)

Re:So, America...

[Anonymous Coward]

Adrian,

You always spout nonsense like "In short: Patents help stimulate innovation." but provide nothing to back this up.

Software patents are a new thing, comparitively speaking, and oddly enough most of the interesting software was produced *before* software patents.

You defend the RIAA, you defend the MPAA, you defend this whole idea of expansive patents and copyrights and I can't figure it out. You seem smart, you can write coherent messages, but ultimately, you're just so wrong on this.

Software patents are a dumb idea because everything I've seen in the software field is obvious to anyone qualified in the field of programming and development. Please don't even think of backing this ridiculous notion of expansive patent protection.

Re:So, America...

[macdaddy357]

Here is an answer. Boycott lexmark. You need a printer? May I suggest Brother, Canon, HP, Xerox, the list goes on and on. Boycott Lexmark into bankruptcy for this insult! Don't buyanything they make.

Market can solve this, buy Canon

[astrashe]

The market has a solution for this. Buy Canon printers instead of Lexmarks. Canon lets you refill their cartridges, and they let other people sell compatible cartridges. Consequently, even genuine Canon cartridges are cheap.

Everyone always says that the printers are sold at a subsidized price so the company can get the money back on cartridges, but my Canon i320 only cost me $40 at MicroCenter. I can buy black replacement cartridges for $6.50 at Wal-Mart. That's cool because Wal-Mart is open 24/7 - if I run out of ink at 2am, I can buy more, and buy it for a very reasonable price.

Lexmark's behavior would be a serious problem if we didn't have any options. But we do, and instead of trying to litigate them into submission, it probably makes more sense to encourage people to check out the prices of cartridges and to examine the policies on cartridges from various manufacturers, and to buy from the good guys (i.e., from Canon).

I'm always amazed that magazines don't talk about cartridge costs in their printer reviews, but I think that if everyone just got in the habit of including operating costs in any discussion of printers, the problem would go away on its own. For me personally, operating costs are more significant than print speed or even print quality. It's a huge aspect of printing that many reviews ignore completely. And stores have a vested interest in pushing the machines that are expensive to refill - they get a taste of that money as well.

My i320 was very cheap, although it's not super fast, the output does look very good. So I didn't have to trade off quality. The speed, I think, was sacrificed for the $40 printer cost and not for the low cartridge cost. I'm sure if I had spent more, I would have gotten a faster Canon that would allow me to use cheap ink.

The market really does tend to solve many of these problems. I'm not sure that litigation is necessary. Just remember, when you go to buy a printer, that Lexmark went to court for the ability to screw you on refill prices. Don't be a sucker, buy from somone else.

Re:Market can solve this, buy Canon

[ponxx]

I think in this case you're right. The market will solve such problems as there are plenty of competitors, and while the entry barriers to any market are high, the startup cost for making printers is not as expensive as some other products (e.g. processors).

In general, I still think it is good if the legislature makes some rules as to how businesses are allowed to conduct themselves. One cannot propagate free trade but then allow companies to keep markets seperate by DVD region encoding, or by forcing exclusive agreements on dealers.

The EU has recently ruled against Volkswagen who priced their cars differently in different european countries and then made sure the italian dealers would not sell to german customers.

So hey, i'm all for free trade, but make sure it applies to all. Let me re-import Nike shoes from China if I want to, let me buy my DVDs where I like, give the consumers the transparency the corporate players demand from their suppliers.

Re:Market can solve this, buy Canon

[GregWebb]

How many hundred full-colour pages a year do you print that you can make your money back on a $1500 printer over a $100 on the cost of the ink refils?

Have to agree with the parent, though - just got a Canon i350 and it's great. The one piece of printer advice I always give people is to avoid Lexmark because of their astronomical running costs.

Re:Market can solve this, buy Canon

[ScrewMaster]

Absolutely. There really is no such thing as a totally free market, of course, nor should there be: the government does serve a valuable role in this context. However, if the laws governing business tactics aren't applied with a fairly even hand, then we don't have anything even remotely resembling a a free market. The trouble with the DMCA is that it allows companies that are willing to spend enough money on lawyers to put themselves on higher ground, playing-field-wise. That, among other things, is why the DMCA deserves repeal and the officials responsible for it booted from office. The fact that such a sweeping, totally anti-consumer (and, ultimately, anti-business) law could ever have made it on the books just shows how far out of touch and corrupt Congress has become. All the DMCA is doing is giving businesses enough rope to hang themselves, and us too, by allowing the marketplace to revert to an approximation of lessaiz faire.

An enlightened capitalist (assuming there are any still living in the U.S.) would recognize that, at the core, laws and policies which are anti-consumer are also anti-business. There's X amount of income to be spent on products: if one company pigs a larger share of the goodies by questionable or illegal tactics then others in the same market will suffer. If they all do it then the consumer suffers, and other unrelated businesses will suffer. That's what is meant by a "level playing field" and is why we have laws governing such things. The buying public is supposed to decide which products deserve success and which fall by the wayside: companies abusing the DMCA to damage legitimate competition are trying to insulate themselves from the normal risks of doing business. My response to that is: TOUGH. If you can't stand the heat get the hell out of my kitchen.

I'm dead-set against the idea of manufacturers placing arbitrary restrictions on the post-sale uses of their products, with the force of law behind those restrictions. DVD region coding is bad enough, but at least it doesn't affect the average consumer much here in the US (I don't know about Europe.) But blatantly anti-competitive moves like Lexmark's directly hit the consumer's pocketbook. Essentially, this goes to the core of what is considered "property." If an object is your "property" then you control it: you can do with it what you wish. When a vendor tries to force its customers to use products in a certain way (either directly, or indirectly by attacking a third party) then, in effect, that vendor is trying to maintain some level of ownership of that product. I don't buy it, and I won't buy anything from any company that tries to play that game. You want to keep control? Fine, then lease or rent your products, don't sell them.

The parent is right. Time to kick Lexmark squarely in the wallet. I've never bought a Lexmark product (my personal opinion hovers somewhere between "low end" and "cheap junk") and now I probably never will. It would appear that overall poor quality extends to the very top of their corporate ladder. I'll stick with my HP Deskjet for now, thank you very much.

Re:Market can solve this, buy Canon

[JayBlalock]

When a vendor tries to force its customers to use products in a certain way (either directly, or indirectly by attacking a third party) then, in effect, that vendor is trying to maintain some level of ownership of that product.

Exactly. I can *only* imagine what Adam Smith would say if he found out about the legalistic games that manufacturers use today to screw over their customers. Of course, people like to hail him as the Objectivist Patron Saint - folks tend to forget that even he conceeded that government intervention is sometimes necessary to prevent monopolies from taking root.

As far as enlightened capitalists, there aren't any left in major US businesses. Why? Two words: Stock Prices. Companies today are concerned with nothing but keeping their stock prices high, and making their money off the stock market. As long as they can lie to investors and make their company appear stronger than it is, they can do whatever they want to the consumers and it doesn't really matter. It takes spectacular, over-the-top abuses to bring a company down. (ever stop to wonder what Enron could have done had they NOT gone down the path of full-blown evil, and had instead limited themselves to less obvious things?)

So I'm sure Lexmark will turn around and issue a bunch of glowing press releases and stock reports speaking of how they just won a major legal battle to protect their endangered intellectual property rights, and profits are expected to rise in Q1 (thanks to the further jacking up of cartridge prices), and people will flock to buy their stock.

Re:Market can solve this, buy Canon

[JayBlalock]

Well, it goes deeper than that. Some days I seriously play around with (in my head, of course) the idea of making stockholders directly responsible for the actions of them company they invest in. No, I'm not kidding. Think about it.

If I were to give you $500 and say, "Go rob that house. I don't care what you do, just get me their goodies," and you turned around and killed the homeowners, I'd be an accessory to murder at least, if not up on First Degree charges myself. Whenever a stock investor buys stock in a company with a known track record for abusing the customers, the environment, third world labor, etc, that's EXACTLY what they're doing. "I'm going to give you money (my investment) and in return, you are to make me MORE money. I don't care how you do it."

Furthermore, due to the general inability of the court system to properly fine corporations, there is at present NO incentive whatsoever for a shareholder to NOT do this. For example:

Electric Company A is a good, responsible Corporation. They go above and beyond EPA requirements, only use clean-burning sources, and have a steadily-growing customer base among those who care about such things. They aren't making bushels of money, but their profits are steady and rising.

Electric Company B is Evil. They ignore EPA regulations whenever they can, pollute the water sources of small towns, and screw the customers on the prices. However, by not putting any environmental controls in place, they can take a tiny fraction of the money saved and funnel it into a massive ad campaign guaranteed to trick customers into believing they are a good company. Most people fall for it, their profits skyrocket.

To an investor, unless he is possessed of incredible conscience, there's no pressure at all to select A. Company B virtually guarantees him a higher return on his investiment, and anyway, will likely buy out Company A the moment they become a threat. Given he has nothing to lose BUT the initial investiment, there's no reason not to invest in B over A.

It's become a cyclical problem. Those companies which are the most abusive are often the ones with the best stock prices. Companies which attempt to play fair get buried. (look at Ben & Jerry Ice Cream - for years they were the definition of a Good Corporation. Then one day they got bought out thanks to a loophole in "shareholder protection laws" which says if a buyout offer is made which is significantly high enough, you CANNOT refuse. Now they're a corporate subsidiary and just like everyone else)

Somewhere the system has to be changed. It's getting increasingly unstable, as the Stock Market continues to further divorce itself from any sort of economic reality. I'm not making doomsday predictions that there'll be a huge crash next month or something, just the simple statistical fact that no system in this sort of shape can continue indefiniately. If things don't change, it WILL crash one day, and far more disasterously than in the 30s thanks to us being the economic Rome of the modern age.

Yea but.

[Pharmboy]

From the original article:
The rebate program by the Lexington, Ky.-based company offers an upfront discount to consumers who agree to return used cartridges only to Lexmark for refilling or recycling.

This doesn't change anyone's ability to refill their own cartridges, and ties the rebate to the promise to use only Lexmark authorized supplies. HP has sensors in its newer printers that can tell if you use their supplies or others, which affects your warranty, similar. This is not as big of a deal as it is played out to be here, since you can always choose to not buy Lexmark. They don't have an monopoly, after all.

This said, its still a crappy ruling, and it IS being appealed. Unfortunately, here in the States, most cases like this are finally settled on appeal, seldom at the first trial. Case in point is the recent attempt to put off the California recall. Our legal system may have plenty of flaws, but eventually it works (most of the time).

other patented items I won't be repairing

[HealYourChurchWebSit]

Yup ... guess I'll have to do as them ads say ... use only original AC/Delco parts

Same with my John Deer lawnmower ... no more generic Home-Depot replacement parts for me.

Same goes for the little screws that hold the legs on my Webber Grill.

Oh, and I guess I can forget about using them 3rd party vacuum cleaner bags on my Hoover.

Hmmm ... I can see it now. Whenever I want to burninate a DVD, I'll have to use original Dell media.

But let's get real here. Does this mean I can't use some indescript spool of thread repair the patented stitching on my ThinkGeek shirt?

Kidding aside. It almost sounds like this judgement essentially says I'm either 'leasing' or 'licensing' the daggone Lexmark printer. In which case, I'll just buy something else.

Re:BMW does it

[Karamchand]

Right, the choice is in the consumers' hands and the open market could theoretically solve this. The problem many people tend to miss: People are dumb. Very dumb indeed. No, they don't inform themselves about patents, they don't think about refills when buying the printer. Forget it.

oh, this is BS

[erc]

This is nonsense. The original poster obviously didn't read the ruling. "The rebate program by the Lexington, Ky.-based company offers an upfront discount to consumers who agree to return used cartridges only to Lexmark for refilling or recycling." What's wrong with that? The court is just upholding the company's right to offer an incentive to customers. No DMCA challenge implied, gang. Read the ruling before you post, huh?

Re:oh, this is BS

[fermion]

Of course it is legal. And the customer might even have an informed choice on whether to take the rebate of not. It is just another thing that confuses consumers and is marginally deceitful.

The problem is the printer will be advertised at it's price after rebate. At the retail outlet the full terms may not be disclosed until after the sale is completed. It is possible the consumer may not understand the full terms until after he or she has used the printer.

Yes, it is the consumer's responsibility to ask questions and make an informed decision. OTOH, how complex do we want to make act of purchasing good and services. I mean in the US this is an activity we want people to engage in hundreds of times a day, if possible. By making it complex and deceitful we are increasing the opportunity costs of consuming product. I mean I already have grocery stores I don't shop at because they require you to carry a card to get the price other grocery stores will give you just for walking in.

Canon printers are extremely good

[DrXym]

I have an S750 with 4 seperate ink cartridges. Getting replacements is easy and cheap, there are drivers for Windows, Mac & and Linux and the thing has decent performance & quality. Replacements are $4 for a cartridge and I can even use a refill kit if I choose.

Why the hell anyone would lock themselves into a proprietary solution where the cartridges / printer heads are small or half filled, chipped and cost $60 a pop is beyond me.

All I can say is Canon kicks ass and Lexmark and the others suck! I would be extremely wary of buying anything from HP, Lexmark or Epson given their track record. Let's hope the EU puts an end to it.

Stop this nonsense.

[Anonymous Coward]

Coffee this hot is routinely served in the world; The fact that some fat slob with a good lawyer can extort money from corporations just because *shit happens* should make you mad.

I routinely drink coffee at the temperature you claim produces 3rd degree burns. Big friggin' deal. The world isn't fair, nature isn't fair, and that's why its called *an accident*.

People like you are what's wrong with the world. Stop defending nonsense like this, because it marks you as someone who is either an ambulance chaser or an idiot; neither of which is very flattering.

Re:You can say that again

[lythotype]

I don't know what model Canon you're talking about but I have just purchased the i850. There is more than 200 pages in the black tank. If fact it is (looking at the printer next to my desk right now) a bit larger than the color tanks to accommodate more printing in black. The tanks are transparent so I can see the ink levels, which makes purchasing a tank ahead of time easy. The color tanks are separate tanks (as opposed to HP all-in-one color tank), so when one color runs out I only have to change that one empty tank, which means that I'm not throwing away good ink. They only cost about $9 (regionally).

I used to be a die hard HP printer fan until I purchased, for my work, an HP1200 and HP960CXi. What pieces of junk! Gone is the renowned HP laserjet reliability in this new laserjet 1200. Its ugly shape adds to its unreliability (just pulling the side off to plug in the printer cable and putting it back in is a nasty chore). The 960 is also ugly (compared to older HP deskjets). The fit of the logo/model panel on the left and the buttons panel on the right are nasty and you can tell that the printer uses a generic body frame with ill fitting parts to make it a specific model.

I remember when Canon was way behind in terms of quality and usability but now they have caught up and are way beyond what HP is today. With there new tank system, elegant sleek look, speed and quality of both color and print (think text, clip art and photos!), Canon's printers are much better than HP's.

Moot Point Anyway

[nurb432]

If you haven't noticed, the complexity and integrated-ness of modern equipment makes its pretty hard for one to do repairs without OEM parts.. In most *any* industry.

When was the last time you *repaired* a formatter board, or a rear axle, or an electric motor... Bet most of you haven't ever done it.. few even know how.

Sure you can often replace the part, but its most likely either a new OEM part, or a 3rd party refurb of an original part..

This legal wrangling only helps solidifies things, but its heading that way regardless..

Yes its sad you aren't allowed to do what you want with YOUR stuff, but soon there wont be much you can do.. except watch it slowly die due to planned obsolescence..