Copyright Office Rules Against Lexmark

SparkyTWP writes "'The United States Copyright Office has ruled in favour of Static Control Components, of Sanford, N.C., saying that its microchips do not contravene the Digital Millennium Copyright Act.' This was in regard to SCC making microchips that imitated Lexmark's in remanufactured printer cartridges. It appears Lexmark won't be able to do anything about third-party cartridges."

Comments

Doh!

[eln]

Well, this is going to do some serious damage to the business models of virtually every printer company out there.

Re:Doh!

[nizo]

Exactly, most printer companies, especially in the low end area, depend on making $$$ off of people when they buy their uber-expensive cartridges. Personally I would like to see a company make an easy-to-refill inkjet cartridge and sell me the ink at a reasonable rate, and would be willing to spend more on the printer (though again, they make less in the long run).

Re:Doh!

[cpt kangarooski]

Well, there's nothing wrong with them _trying_.

The problem is that copyright -- which is what Lexmark was trying to use, and is a monopoly -- is not intended to protect them from this sort of competition.

It is after all entirely possible that the razor/razor blade approach is not feasible with regards to printers. Lexmark should not be protected from fucking up; if they made a mistake with their pricing, it's their own damn problem.

Re:Doh!

[Balorn]

Furthermore, with a lot of our copiers, we have to go through the name-brand dealers or it voids the warranties and service contracts on our machines

IANAL but isn't that illegal?

Doing a quick search: Magnuson-Moss Warranty Improvement Act - United States Code Annotated - Title 15 Commerce And Trade - Chapter 50 - 2302

No more expensive cartridges

[drpentode]

I guess HP won't be raping me for cartridges anymore. But I think this will raise the price of printers.

Telling quote

[wrinkledshirt]

"Lexmark filed its suit against SCC in December, 2002, saying the DMCA shields itself from competition from the remanufacturing industry."

Could there be a more appropriate quote that shows how the DMCA is ultimately an anti-competition and anti-capitalist tool?

I have a Lexmark printer ...

[GFW]

and I just needed a new cartridge (black). This was my first replacement, and what I discovered was that in ordinary retail channels, you can't buy third party. You have to go to the web for that (which means you have to plan ahead). I hope this ruling makes third party cartidges more available, but I suspect that Lexmark has leverage over typical places like Office Max (Don't sell third party ink, or you can't sell our printers).

Re:I have a Lexmark printer ...

[swordboy]

Actually, it is the other way around. Places like Best Buy and OfficeMax enjoy the healthier margins on the brand-name ink. Heck - they even get the printer makers to omit the USB cable so that they can charge $20 for a part.

A while ago (when USB printers first became the dominant style), I had some real fun. I loaded up a cart with thousands of dollars worth of computer stuff (that I was legitimately going to purchase) and a printer was part of it. When I found out that the *cheapest* USB cable in the store would cost me $20, I just left the salesmen standing there with their thumbs in their asses.

I ordered a *hundred* USB cables for a dollar and I keep them in my trunk. Now, Best Buy is a necessity for me at times because it is convenient. Whenever I go, I stop by the printer aisle and give a cable or two away to anyone who mich need one. It saves them $20 and makes me feel a little better about actually spending my money at such a crooked store.

The interesting thing is that Lexmarks are sold *with* a USB cable at places like RiteAid and other convenience stores.

YAAAY!

[idontgno]

Now printer companies will be honest in their product pricing models. No more low-ball piece-of-crap printers and highway-robbery refills cartridges. A little competition in the expendables market will be awesome. Let quality and price drive the market, not consumer lock-in.

Does anyone know if Lexmark has any legal recourse beyond this ruling? Can they appeal somewhere? Or is this the done deal?

Justice...

[Ibix]

Nice. It's been said before here - the courts usually do the right thing, you just need the staying power (read: money) to get there.

I liked the quote at the end:

"We are examining the documents and devoting a large amount of time with our economists and attorneys to calculate the damages that we feel we are entitled to from Lexmark because of their serious misdeeds," SCC CEO Ed Swartz said about the ruling.

I read that as "My turn now..."

I

Which printer to buy?

[Realistic_Dragon]

Linuxprinting.org has a vendor score card to show you which vendors deserve yor support.

Their recommendation (and HP's work writing opensource drivers that support all the features of their printers) was the reason that I purchased a PhotoSmart 7260 from HP and I haven't regretted it - even the integrated card reader works.

Not surprisingly they rate Lexmark inkjet printers as useless.

No they can't - Magnuson-Moss act

[yerricde]

No they can't. With the DMCA out of the way for now, and disregarding patents, the Magnuson-Moss Warranty Improvement Act prohibits a manufacturer from conditioning a product's warranty on use of other products identified by trademark unless the manufacturer can prove that the off-brand product damaged the product under warranty.

Re:No they can't - Magnuson-Moss act

[Anonymous Coward]

I guess I won't k-whore, so I'll post anon, but here is a pretty good discussion about Magnuson-Moss. The part that prohibits tying a warranty to follow-on sales of supplies is nicely explained in the section titled "Tie-in Sales" Provisions.

Now, that being said, there's nothing to keep the companies from trying to tie warranty to their own supplies. Most consumers are sheep and will believe the "customer service" droid at the end of the 1-800 line when the droid says "your warranty is void because you didn't buy Barfco toner carts."

So the tie-in might work by default. The company will just get its pee-pee slapped by the FTC or a state attorney general if they get called out. But that may take years, and we all know that business milestones are measured in weeks. That's plenty of time for the marketing VP to gather his bonus and promotion and leave the aftermath of anti-competitive and illegal warranty policies to the customer-service VP that he personally doesn't like, anyways.

(It's not everyday that a bright executive gets to garner laurels and financial rewards for a bright idea that simultaneously torpedoes a competing executive in a different department of the same company. Gotta push down to rise up, right?)

Re:No they can't - Magnuson-Moss act

[EinarH]

I think you are wrong.

From FTC.gov ; Understanding the Magnuson-Moss Warranty Act

The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties. Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.

Nothing about cars as far as I can see..
However as a IANAL, I can see that there is a lot of leagal speak about "limited warranty" and "requirements" for the law to apply so comments from law gurus are appreciated.

A major hit for "Intellectual Property"

[ivan256]

This issue had no business involving copyright law. This should have been settled with patents (i.e. If Lexmark doesn't have any covering it's cartridge design, it's SOL). This was a perfect example of the concept of "Intellectual Property" clouding the distinction between copyrights, patents and trademarks. The fact of the matter is that Lexmark's business model is perfectly valid, and well documented, but they didn't want the time limitations imposed by patent law and they thought they could get around it. They should fire the legal team that gave them the advice that led them down this path, and wise investors should have left long ago after seeing all this money wasted on developing "protection" technology that depended on an untested legal concept to work.

more info @ scc's website

[morcheeba]

Here's SCC's webpage on the case. They have a Press Release (pdf) and a link to the official ruling site (but I don't see the ruling there yet).

I've been watching this case closely, and I'm glad it's been thrown out like the Garage door opener case!

"Consumer products" not "motor vehicles"

[yerricde]

Relevant text of the statute from an off-brand inkjet ink manufacturer, quoting 15 USC 2302:

(c) No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer's using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade or corporate name; except that the prohibition of this subsection may be waived by the commission if:

1. The warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and
2. The Commission finds that such a waiver is in the public interest.

Where again is it limited to motor vehicles?

Great!

[retro128]

This can only be a good thing. Not only does it put Lexmark in their place, but it also tells other companies that they can't cloak their anticompetitive practices behind the DMCA.

There was a similar case where the Chamberlain Group, a garage door opener manufacturer, sued Skylink Technologies over a universal garage door opener using the DMCA by saying that the program that interpreted the signals from the garage door remote was being exploited by Skylink, and thus fell under the circumvention article in the DMCA. Skylink has won this case. The judgement is here.

not just lawyer bills

[morcheeba]

It's not just lawyer bills... The injunction has halted the sale of SCC's smartek chips since feb 8... Nine months of lost sales for SCC and the cartridge remanufacturers who buy SCC's chips.

What kills me is that, in granting the preliminary injunction the judge had to consider the potential for damages (page 48)... he found that Lexmark would suffer "irreparable harm" in terms of lost sales and money. Excuse me, but I think those can be repaired with money. On the other hand, if SCC had been put out of business under a load of bogus legal bills it couldn't survive, I think it would have suffered irreparable harm.

Similar case

[Sowbug]

The facts sound roughly similar to Sega v. Accolade, a 1992 9th Circuit Court of Appeals case in which Sega (whom you all know) sued Accolade, who made Sega Genesis-compatible games without obtaining a license to do from from Sega.

Sega sued the crap out of them, alleging among other things trademark infringement. Basically, the Genesis console has a bit of code in the bootloader that checks that the game cartridge has the word "SEGA" in a particular location. That triggers a display that says "PRODUCED BY OR UNDER LICENSE FROM SEGA ENTERPRISES LTD" for a few seconds on the screen.

Sega was trying to be clever. If you manufactured a game cartridge without the "SEGA" code, it wouldn't run. And if you manufactured one with it, then you caused the display to appear. And if that statement was false (because you hadn't actually obtained a license), Sega could sue you for trademark infringement! Hehehehe.

The court told Sega to get a life. Trademarks are a limited monopoly allowing the holder exclusive use of certain aspects of words, pictures, or phrases. They certainly can't be used to tie monopoly purchases to nonprotected things, thereby extending the limited monopoly to them. If you could, then every manufacturer would have monopolies on everything they manufactured, as well as every replacement part, or compatible product, etc. etc. etc. They'd simply manufacture a patented, copyrighted, or trademarked doodad and then make sure that their entire product depended on that item to operate.

This sounds like what Lexmark was trying to do -- they had some sort of computer chip that verified that things were legit, and then they sued anyone who needed to copy that chip in order to make replacement parts. The lesson from Sega v. Accolade is: don't do this.