Supreme Court rebuffs Lexmark in toner cartridge fight

Printer vendor Lexmark International has apparently failed in a carefully targeted legal battle to use the Digital Millennium Copyright Act (DMCA) to stop competitors from making cheaper, refurbished toner cartridges that can be used in its printers.

Lexmark had asked the U.S. Supreme Court to review its DMCA claim after being rebuffed by lower courts, but the high court rejected the claim without comment because it was filed late, according to Lexmark. The decision means the high court will now not hear the case anytime soon.

The legal fight began in December 2002, when Lexmark sued Static Control Components (SCC), which makes electronic chips used by refurbished toner cartridge makers to allow specific printers to recognize the replacement cartridges when they are installed. Lexmark alleged that Sanford, N.C.-based SCC violated U.S. copyright law by producing the chips, arguing that SCC's Smartek chips include Lexmark software that is protected by copyright.

The software handles communication between Lexmark printers and toner cartridges; without it, refurbished toner cartridges won't work with Lexmark's printers.

"I believe it is the end of the DMCA part of the case," said William London, general counsel at SCC. Essentially, the Supreme Court's refusal to review the case means that the DMCA issue ends with earlier court decisions. Lower course have already rejected Lexmark's claim that the DMCA should be invoked in the case, he said.

The case will continue in U.S. District Court as remaining issues are reviewed, London said. SCC is attempting to go to mediation with Lexmark in July, he said, but if that effort fails, the case would probably go to trial sometime next year.

"The whole dispute is a long way from being over," he said.

Julane Hamon, a spokeswoman for Lexmark, said in a statement that the Supreme Court's decision to reject the matter "deals only with the issue of an injunction. The case itself continues at the District Court level" where the main issues remain to be resolved. "This case is about improper methods used by competitors to interfere with Lexmark's customer agreements" for recycling and remanufacturing toner cartridges.

SCC's products violate Lexmark's intellectual property rights and allow unfair competitive advantages, she said. "We will continue to ask the courts to enforce existing laws governing contracts and intellectual property so that our laser cartridge customers can get the benefit of full and fair competition."

Ed Swartz, CEO of SCC, said the Supreme Court's decision to pass on hearing the DMCA issue has major implications.

If Lexmark had won its DMCA claim, he said, automobile owners across the country might have faced similar claims from car makers arguing that only their original equipment parts could be used to fix vehicles. "What Lexmark wanted to do was create a monopoly," Swartz said. "I don't know where Lexmark goes from here."

Also still before the courts is SCC's 2003 antitrust countersuit against Lexmark, which alleges that the printer company is trying to monopolize the cartridge market by blocking competition.

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