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

Posted by timothy on from the how-conveeeenient dept.

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?"

26 of 365 comments (clear)

  1. Woo! by Locky · · Score: 3, Funny

    Another victory for the DMCA, Gimme a hell yeah!

  2. So, America... by nordicfrost · · Score: 5, Insightful
    Has your patent legislation done any good for you lately?


    (Not that ours has)

    1. Re:So, America... by danila · · Score: 3, Interesting

      There is no net positive impact for the economy from licensing fees. What one company gets, another pays. More earnings for workers in one firm means pink slips for another firm.

      The only possible positive impact from patents is when more inventions are created because of the additional incentives. This is true to some extent in many industries. But it should be patently obvious that it's not the case for Lexmark. While you might be mislead by extremely low prices of new printers, benefits to consumers are not very clear, because of just as extremely high prices for cartriges. The price of one colour print is simply too great. This is an indicator that certain printer manufacturers do not turn the limited monopoly granted to them into public good. That can only mean one thing - the monopoly should be revoked, not strengthened by rulings such as this one.

      --
      Future Wiki -- If you don't think about the future, you cannot have one.
    2. Re:So, America... by macdaddy357 · · Score: 3, Insightful

      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.

      --
      How ya like dat?
    3. Re:So, America... by Artifex · · Score: 3, Interesting
      May I suggest Brother, Canon, HP, Xerox, the list goes on and on.


      Cheap inkjet printers that are nice do exist, just make sure you keep a few things in mind:

      - If you can hold out until mid to late November, you'll see all kinds of holiday and discontinued model sales, through the end of the year.
      - Assuming you get a color inkjet, you probably will want to look for a model with multiple ink cartridges, so you don't have to waste other colors when one color goes.
      - Also, when you get it, make sure that in whatever operating system you use (be very careful you're not buying a "winprinter" if you need it for *NIX, unless you can get an emulation package) you set the driver to print in greyscale by default - most drivers set to color by default, and "black" is not black, but is a blend of the other inks...

      When I bought my HP, it was for $50 from CompUSA, down from $99 - and that was in 1999. Later, I bought a Canon at a lesser discount from Fry's, in 2001, because it uses cartidges that are more expensive to replace all at once, but less expensive overall because I only refill the empty colors. I gave my sister the HP, which is still very nice (and in fact I miss the dedicated envelope slot). HP is so popular that the third party manufacturer prices are probably half the HP price. Canon alternatives, on the other hand, are around two thirds. I have to say, at $10 or $12 total per cartridge, the premium for Canon's name and warranty seems worth it.

      And don't forget, no matter what brand of printer you eventually get, some office supply stores will give you free reams of paper or a small store credit for each empty cartridge you return, because most of these cartridges are specifically designed to be recycled and reused, to the point where the stores bank on making a profit returning these. PLEASE do this, not just for the free paper, but because of the environmental impact... which is another reason not to use Lexmark!
      --
      Get off my launchpad!
  3. Market can solve this, buy Canon by astrashe · · Score: 5, Insightful

    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.

    1. Re:Market can solve this, buy Canon by ponxx · · Score: 4, Insightful

      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.

    2. Re:Market can solve this, buy Canon by Cpt_Kirks · · Score: 3, Funny

      at Wal-Mart

      Dammit, I forget, is Wal-Mart E-VILLE or not?

      It seems /. should publish a spread sheet so we can keep up.

    3. Re:Market can solve this, buy Canon by ScrewMaster · · Score: 3, Insightful

      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.

      --
      The higher the technology, the sharper that two-edged sword.
    4. Re:Market can solve this, buy Canon by JayBlalock · · Score: 3, Insightful
      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.

      --
      Bush: He's Liberal in all the wrong ways.
  4. Yea but. by Pharmboy · · Score: 5, Insightful

    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).

    --
    Tequila: It's not just for breakfast anymore!
  5. BMW does it by TekkaDon · · Score: 3, Informative

    At least for BMW's Mini car here in Spain. If you buy a Mini and try to repair it outside an official BMW/Mini repair shop or install anything that is not officially sanctioned by BMW, your guarantee will be void.

    So with that information, either you buy the car or you don't, but you can't hardly complain if they explain this to you when you buy the car. It's their way or the highway, with another car.

    So, like with the Lexmark (if they also warn the potential buyer), the choice is in the consumer hands.

    j.

    1. Re:BMW does it by kfg · · Score: 3, Informative

      Oddly enough this tactic was tried many, many years ago here in America and declared illegal.

      You can have your car serviced anywhere you like, or do it yourself, and it doesn't void your guaruntee.

      This is not to say it won't effect your guaruntee. If you put full race cams and a cheap turbo on your car and blow the engine up that isn't due to faulty design or manufacturing. Buy a new engine.

      But if you have your oil changed at Jiffy-Lube and a con rod fractures that's a defect and they can't get out of it by saying they didn't service the car.

      This doesn't mean that there aren't unscrupulous dealers who will claim otherwise, but that's why they're unscrupulous.

      That's what makes this particular rule somewhat puzzling. It flies in the face of decades of case law and centuries of American legal and cultural tradition.

      Most puzzling about it is the way it overreaches the actual issue at law.

      Ah well. That's why God invented Appellate Courts I suppose.

      KFG

    2. Re:BMW does it by barzok · · Score: 4, Informative

      It's called the Magnusson-Moss Warranty Act of 1974. Anyone who's into repairing or modifying their own car should be be aware of it. Also see SEMA's page on the issue.

    3. Re:BMW does it by kfg · · Score: 3, Informative

      And that act, like many consumer protection laws, is merely the legislative codification of case law that predates it by decades.

      KFG

  6. A Decent Printer by Kevitt · · Score: 5, Interesting

    I'd be more than willing to spend slightly more money for a printer that is actually built to be used more than 6 months before either falling apart (cannon,lexmark), or being superceded by the same printer under a different model number that uses totally different replacement cartridges (HP).

    Look at the crap that printer manufacturers are pawning off on people nowdays. You got your printer selling at like $70US, and refills selling at $50US. It just makes no sense. If you're like me and only print when absolutely necessary, then by the time your ink runs out you might just as well buy a whole new printer and forget about the new cartridges altogether.

  7. oh, this is BS by erc · · Score: 4, Insightful

    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?

    --
    -- Ed Carp, N7EKG erc@pobox.com PGP KeyID: 0x0BD32C9B What I'm up to: http://intuitives.mine.nu
  8. You can say that again by Kaiwen · · Score: 5, Interesting
    Buy Canon printers instead of Lexmarks.

    I just replaced my old Canon with a new i550 two weeks ago. The deciding factor was ink cost. Despite good reviews on both HPs and Lexmarks (along with the Canons), throwing in the cost of refills priced everything else out of the market. And not only is Canon ink cheap, the printers make very economical use of it. HPs and Lexmarks are real guzzlers by comparison.

    Until their inks become affordable, I won't even consider other brands.

    Lee Kaiwen, Taiwan

  9. Boycott Lexmark by gvc · · Score: 4, Informative

    I have boycotted Lexmark for some time due to their gouging on refills. I am also proud author of an expose on how to use Samsung cartridges in a Lexmark E210 printer, at 2/3 the cost.

    I wonder if use of a Philips screwdriver violates the DMCA? The modification involves removing a tab in the printer that matches a slot in the cartridge casting. I suppose this could be considered a digital rights management device.

  10. It's even worse than you describe! by mariox19 · · Score: 5, Interesting

    Speaking with my brother, a mechanic, on this subject just recently, I learned the following. It is getting close to impossible to work on cars these days without first using computer diagnostics. Each of these systems is specific to the automobile's make. Moreover, diagnostic systems are proprietary.

    Gone are the days when you could work on your own car. A friend of my brother -- who my brother says is an excellent amateur mechanic -- tried to fix his own car and ended up making it worse. The reason? He lacked the diagnostic equipment, and there is just no way to begin without first using it.

    Even independent shops are being hurt by this, since they must purchase the equipment for each manufacturer whose cars they wish to service, and the manufacturers change their systems every few years. Obviously, the "authorized" repair shops at the individual dealers have an advantage.

    It's well known that the profit margin on automobiles is growing more narrow. Companies are looking to make money by offering financing and through parts and repairs. They have an incentive to get you to deal with them exclusively.

    They haven't gotten to prohibiting "unauthorized" repairs directly; but they are getting more and more successful at a de facto prohibition.

    If only Linus would go into car manufacturing!

    --

    quiquid id est, timeo puellas et oscula dantes.

    1. Re:It's even worse than you describe! by Anonymous Coward · · Score: 5, Informative

      I call bullshit.

      I have a little OBD-II code reader / clear unit in my glove compartment. Plug it in to an OBD-II vehicle (into the government-mandated owner-accessible standard connector), turn on ignition, watch scanner display any codes. Clear codes.

      There are proprietary extensions, but the availability of cheap computer diagnostics makes it easier to repair cars than it was 10-15 years ago. You can identify failing components more easily, or determine if the "Check Engine" light was just set by a fluke condition. Yes, the dealers have sophisticated tools; in many cases, a cheap tool has 90% of the functionality.

      Back in the '70s-'80s, a home mechanic needed a good timing light, tach/dwell meter, and a circuit-tester or that exotic device, a multimeter. If you want to work on your own vehicle, you're going to need some tools. Your brother has probably only been trained on dealer-level equipment & procedures. A competent home mechanic can do most of the work on their car. I know, because I do. I've troubleshooted overheating transmissions, ignition problems, failing oxygen sensors. You do have to make an effort to understand what you're changing; just as tuning a '60s 4-barrel carb was very different than tuning a 1-barrel.

  11. Hot coffee by Safety+Cap · · Score: 4, Interesting
    Check out the facts of the case rather than regurgitating the company-issued spin.

    McDonald's knew their coffee was hot enough to cause third-degree burns within a few seconds' contact, but said they did not intend on lowering the temperature, because as one juror put it "[McDonald's has a] callous disregard for the safety of the people."

    Oh, and by the way, the lady initially asked for compensation for her medical bills but was offered a minuscule amount that wouldn't cover the bills. The jury awarded $2.7 punitive and $160,000 in compensatory damages (the latter reduced from $200,000 because she was partially responsible), but the judge reduced the punitive to $480,000. McDonald's then settled for something much less (sealed to prevent curious eyes from seeing).

    --
    Yeah, right.
  12. Canon printers are extremely good by DrXym · · Score: 3, Insightful
    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.

  13. It's a consumer-driven problem by heironymouscoward · · Score: 3, Interesting

    Consumers have been focussed on low up-front costs for years, the high cost of ink and paper are well-known but rarely figure in buying decisions.

    It's not even as if people are kept in the dark, this has been common knowledge for as long as ink jet printers have been around.

    And yet people choose cheap printers from HP and Lexmark ignoring the long term ink and paper costs... when companies like Xerox and Canon offer much cheaper ink, but slightly more expensive printers.

    It's a classic choice facing consumers: low-upfront plus high maintenance, or high upfront and low maintenance. There are many examples:

    - low-energy light bulbs (do you buy these?)
    - better insulation in your home
    - fuel-efficient cars
    - season tickets for transport
    - freezing food in the summer when it's cheap
    - etc.

    The fact is that people value choice, very highly. And when it comes to printers, many people prefer to pay more for ink if they can get away with lower upfront costs.

    The manufacturers have generally responded by subsiding printers with ink, and their cartridges are designed to support this business model. You don't have to like it, and we apparently still have choices, but it's a valid business model and people who complain are just being fanciful. Ink is cheap, yes, but printer technology is not: someone has to pay, and it's either in the form of $199 printers and $5 ink, or $45 printers and $25 ink.

    If my car only cost $995 new, I'd be very happy to accept restrictions on the spare parts I can use. Fact is, cars and printers are not sold on the same basis.

    --
    Ceci n'est pas une signature
  14. A little government regulation would help. by fmaxwell · · Score: 5, Interesting

    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.

    You're probably familiar with the yellow EnergyGuide stickers that appear on all major appliances. You've doubtless seen the EPA mileage estimates on new car window stickers. Those are both examples of useful government regulations that require informational stickers to assist consumers in making informed purchases.

    We need similar requirements levied on printer manufacturers. The manufacturers should have to include a prominent sticker which states the life expectancy of the toner/ink cartridges in pages and the estimated cost per page based on the MSRP of the manufacturer's cartridge. If the manufacturer does not publish an MSRP, then the sticker should be based on the dealer cost plus some fixed markup (representative of typical markup within the industry). The test would be equivalent to an EPA mileage test. It would use standard pages (e.g. X% coverage) and there might be a number for "B&W Text" and another for "Color Graphics" on each printer (with B&W printers having an "N/A" for the "Color Graphics").

    Armed with that information, a consumer could make an intelligent, informed decision. It would do a lot to discourage deceptive pricing ($40 printers with -- surprise! -- $50 ink refills).

  15. what's wrong with that? by twitter · · Score: 3, Interesting
    "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."

    Oh, that's easy. Doctrine of first sale. If you really sold it to me, I can do what I want. If you are leasing it to me, that's another story because you and I agreed that you own the thing. If you don't care that I throw the thing in the trash all your other conditions are bogus.

    Your "prebate", which is essentialy fair market value for your outrageously patented printer cartrige is a farce as well. The root problem here is that Lexmark can get patents on their toner cartridges that effectively keeps anyone else in the world from making them. The most "innovative" thing the company has done is add a lock out chip. By charging an outrageous amount for normal new cartidges that no one else may make and convincing purchasers that they don't really own the cartidge, Lexmark seeks to suck as much money from their users as possible by keeping them from doing what most normal people would do: put tonner into a perfectly usable part.

    I will never buy or recomend a Lexmark printer. They have always been the worst on the market. I suspect it's because the company has such poor morals. The whole thing is dishonest and no on should do business with dishonest people.

    --

    Friends don't help friends install M$ junk.