HP:NOT SHY ABOUT SUING COMPETITION !
HP:NOT SHY ABOUT SUING COMPETITION !
2006-09-05 at 11:51:00 am #16385
ink technology rights black and white for H-P
With more than 4,000 patents for printing tools, company isn’t shy about suing competition for potential infringement
CORVALLIS, Ore. – A team of scientists and a phalanx of lawyers working on behalf of Hewlett-Packard Co. have one thing on their mind: ink — specifically, competitors’ ink.H-P’s ink-cartridge business acts as a powerful annuity for the company. The technology titan, which has a market share of 50 percent in the United States and more than 4,000 patents on its ink formulations and cartridge design, often sells its printers at a loss, then essentially locks customers in when they have to repeatedly come back to buy replacement ink cartridges. In fiscal 2005, H-P made more than 80 percent of its $5.6 billion in operating profit from ink and toner supplies, according to Sanford C. Bernstein & Co.To protect this franchise, increasingly under attack from rivals, H-P could sue any ink makers it suspects are infringing on its patents. This month, it sued China’s G&G Ninestar Image Co., a cartridge manufacturer, alleging G&G had violated seven H-P patents in cartridge design. The complaint also targets four online retailers. H-P also asked the International Trade Commission to open an investigation against Ninestar.
A Ninestar spokeswoman said the company had no comment.
This latest suit follows other actions in the past year. In June, H-P said retailers Walgreen Co. and OfficeMax Inc. had infringed on H-P ink patents with ink used at in-store ink-cartridge-refilling stations; Walgreens and OfficeMax both deny the claims. Last year, H-P similarly warned the U.S. arm of Cartridge World Inc., a domestic retail ink-cartridge refiller; Cartridge World says it is working to resolve the issue.New competitors such as Cartridge World, Caboodle Cartridge Inc. and Rapid Refill Ink International Corp. refill empty ink cartridges made by H-P and others and sell them at discounted prices of as much as 50 percent off a new cartridge in locations such as malls or urban stores.”A lot of people come into the ink marketplace with some assumptions that there really isn’t a lot of technology” in ink, says Tuan Tran, a vice president of marketing in H-P’s printing business. “We want to remind them that there is a lot of technology that goes into formulations.”Such a reminder often comes in court, where H-P is used to defending its patents on various products. In 2003, it launched a wide effort to protect its intellectual property and profit from its 33,000 patents through technology-licensing deals. Its litigation strategy has been on the increase under Mark Hurd, H-P’s chief executive since March 2005, who wants to improve the company’s profitability. In fiscal 2004, H-P’s patent efforts brought in around $200 million in cash and product discounts.H-P’s ink studies often start with teams of people in its worldwide printing group who routinely collect all the inks they can get on the open market and ship them to an H-P lab in Corvallis for testing by LeAnn Bell, H-P’s coordinator of competitive-ink testing, and her team of nine scientists.In 1998, Bell had just graduated from the University of Maryland, Baltimore County, with a doctorate in chemistry when she was recruited by H-P. Having studied mostly substances that cause cancer, she was surprised that the company wanted her to study something entirely different: ink.”I never thought about ink,” Bell says. But H-P had thought about it a lot — and was looking for someone with a background in chemistry to find a way to analyze inks from competitors to determine whether H-P patents were being violated.Taking on the assignment, Bell spent her first years at H-P learning the chemical components of ink and chemical-testing methods from other chemists. On average, she and her team test 50 inks in a two- to three-week period.More often than not, Bell says, she finds suspected infringements in the inks she tests. But she adds that she isn’t sure if that is indicative of the market or just of the samples she receives in the mail.”My job is enforcing our ink patents so that we are all playing fair,” she says. “It’s the corporate version of CSI.”