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 user 2003-12-04 at 9:45:00 am Views: 68
  • #8086
    Headline: Chip battle rumbles on

    Lexmark and Static Control Components (SCC) have both claimed victory in the latest battle in the war over SCC’s right to sell computer chips that enable firms to remanufacture toner cartridges for Lexmark printers.

    SCC said it had claimed a crucial victory after the US Copyright Office ruled that SCC’s selling of the chips is not in breach of the Digital Millennium Copyright Act (DMCA).

    However, Lexmark was immediately keen to point out that the US Copyright Office ruled that the pre-existing section of the DMCA code in question only allowed aftermarket companies to develop software that enables the operation of remanufactured cartridges if the company reverse-engineers the software and does not copy it.

    It has yet to be firmly established in court if SCC legally reverse-engineered its SMARTEK chip or if it infringed upon Lexmark’s intellectual property by directly copying the printer/cartridge communication and authentication software.

    Lexmark is adamant that SCC was not victorious as the Librarian of Congress denied SCC’s request for an exemption to the DMCA to permit circumvention of access controls on software in printers and toner cartridges.

    Lexmark general counsel Vincent Cole said: “It is inconceivable to us how anyone could consider this ruling a victory for Static Control.”

    Nevertheless, SCC CEO Ed Swartz said: “We feel that we have not only won another victory for Static Control but also for the consuming public.”

    Despite the ruling, SCC is still bound by a preliminary injunction, issued by a federal judge in March, that bars it from making or selling the chips.

    Lexmark filed its suit against SCC at the end of 2002, using the DMCA as its defence against remanufacturers.

    Almost a year on and there still seems to be no immediate end to the legal battle between Static Control Components (SCC) and Lexmark. It’s an epic tale that has taken on Gone with the Wind proportions, although these two companies certainly give a damn about the outcome.

    It was way back in January that Lexmark filed the initial lawsuit, saying that SCC’s Smartek chip infringed its copyright for software that controls the ‘handshake’ link between printer and cartridge.

    Lexmark sought an immediate injunction, which it received, while SCC imaging supplies division president Bill Swartz cried foul. “This is not just an attack on the aftermarket, but also an attack on consumer choice,” he said. Lexmark said it was just ensuring that the consumers were being protected by using genuine Lexmark toner cartridges. Not to mention protecting all that Lexmark revenue.

    The injunction on SCC was granted as the ruling US District Court decided that Lexmark would be likely to win when the case came to trial, due to copyright infringement. It is here that the Digital Millennium Copyright Act (DMCA) was used by Lexmark in its defence.

    The presiding judge accepted that public policy generally favours competition providing it is legitimate competition and does not support “copyright infringement and violations of the DMCA in the name of competition”. Just a few days later SCC filed an anti-trust lawsuit against the printer firm, alleging restriction of commerce and unfair trade practices and seeking $100 million in damages connected to the Sherman Anti-Trust and Lanham Acts.

    The latest round in this battle has seen both companies claiming victory in true politicians’ style.

    SCC says the US Copyright Office has ruled that it is not in breach of the DMCA while Lexmark points out that the matter is still dependent on whether SCC is shown to have reverse engineered the Smartek chip or directly copied it, a matter that is yet to be firmly resolved. The printer maker was also delighted to see the Librarian of Congress deny SCC’s request for an exemption to the DMCA to allow circumvention of software access controls in printers and toner cartridges.

    Despite this, SCC claimed another victory for itself and the consumer while Lexmark described talk of an SCC victory as “inconceivable”. Lexmark has worked hard and spent a lot of money to make its toner cartridges difficult to remanufacture and will clearly see this one through to the bitter end.

    Predictably, SCC has backed up its own personal interest in battling Lexmark with its view on the overall effect that a definitive decision in Lexmark’s favour would have across manufacturing.

    Swartz believes that if printer makers use their chips to dictate the type of cartridge we use, car manufacturers will be able to dictate the brand of tyres, parts and petrol that can be used.

    Certainly the DMCA has taken on huge relevance and the question is whether the law can stand up to the battering it is getting not just from the SCC/Lexmark tussle but also from other cases such as the one that involved Chamberlain Group and Skylink Technologies. Skylink makes garage door openers that work with Chamberlain’s digital security technology.

    As with Lexmark, Chamberlain claimed copyright infringement and a violation of the DMCA. However, Skylink has just won the case in a decision that must give SCC some hope. With Skylink’s victory, all eyes will now be on SCC/Lexmark and the sturdiness of the DMCA.