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 user 2009-08-11 at 12:49:58 pm Views: 47
  • #22817
    Accusations of Snooping in Ink-Cartridge Dispute
    Reseller Claims Seiko Epson Sent a Spy to Its Warehouse; Latest Dust-Up in Fight Over Printer Patents
    Printer cartridges have long been a subject of legal dispute, with printer makers suing smaller companies to clamp down on knock offs. But it is rare that such fights include allegations of corporate espionage.That’s the situation playing out now in an Oregon federal court, where Green Project Inc., a small ink-cartridge reseller, claims that Seiko Epson Corp., one of the world’s three biggest printer makers, sent an investigator disguised as a customer to snoop around the company.A Seiko Epson lawyer said the company sometimes uses investigators to enforce its patents. He declined to comment on the Green Project suit’s details, but said “we believe nothing was done wrong here.” Herbert Seitz, the man who Green Project says was an Epson investigator, said Monday he is unfamiliar with Green Project’s allegations. “I have nothing to say,” he said.

    The alleged incident began with a lawsuit that Seiko Epson filed in April against Green Project, which refills and resells old ink cartridges, and other cartridge resellers. But the suit has roots in a much broader battle.At issue is that big printer makers — including Seiko Epson, Hewlett-Packard Co., Lexmark International Inc. and Canon Inc. — rely heavily on ink and toner sales to generate profits. For years, the manufacturers have tried to stop smaller companies from cutting into their revenue by selling their own cartridges, arguing in lawsuits that some violate their patents.

    Green Project, which was founded last year, and other “remanufacturers” of printer cartridges accounted for more than $8 billion in global sales of inkjet and laser cartridges last year, according to Andy Lippman, an analyst at Lyra Research.In recent years, Seiko Epson has taken legal action against companies that import cartridges to sell in the U.S. In 2007, responding to a complaint by the Japanese company, the U.S. International Trade Commission ruled that certain imported cartridges violate Seiko Epson patents and ordered vendors to stop importing them. In a followup ruling last year, the ITC said that imports of certain “remanufactured” cartridges also violate Epson patents.

    In April, Seiko Epson sued a number of companies that it alleged were violating the import ruling. One was Green Project.Joseph Wu, Green Project’s founder and president, denied the company sells cartridges that were originally sold overseas. He said Green Project buys used printer cartridges that were sold in the U.S. from brokers that collect them; they are then shipped to China, where they are refilled and sent back to the U.S. for sale, he said. The brokers guarantee in writing that the cartridges are collected in the U.S., Mr. Wu said.

    In May, about a month after Seiko Epson filed its suit, Mr. Wu said a customer who identified himself as “K.C. Wells from K&R Supplies” came to Green Project’s offices. Mr. Wu said he was suspicious, since he had met the man at a trade show a few years earlier and heard him ask “detailed questions most customers don’t ask” about cartridge technology.Mr. Wu said he remained suspicious and days later did a Web search for “Seitz,” since he had heard there was a cartridge-fraud investigator that worked for Epson with that name. He said he found a photo that looked like his visitor.

    Last month, Mr. Wu’s company countersued Seiko Epson, claiming that Mr. Seitz’s actions constituted trespassing and theft of trade secrets. The suit seeks to prevent Seiko Epson from using the information collected, as well as restitution. It also seeks a declaration that certain Seiko Epson patents are invalid.Mr. Seitz’s “misrepresentation and subsequent entry into Green Project’s warehouse constitutes trespass,” the company’s lawyer wrote in a July 27 court filing. Green Project also alleges that Mr. Seitz improperly accessed company trade secrets when he requested a price list.

    Seiko Epson lawyer Harold Barza said that “in connection with the enforcement of intellectual property rights, we sometimes have to use investigators. It’s a perfectly normal practice.”Mr. Barza said that while Mr. Seitz has “done investigations before” for Epson,
    he is an independent contractor, not an Epson employee.Whether Green Project’s allegations would sway a court is unclear. “There’s a raging debate” in the legal community over ethical guidelines for information gathering, said Patrick Robbins, a defense lawyer at Shearman & Sterling LLP who sometimes uses private detectives.Mr. Robbins said courts have offered little clarity on whether it is acceptable to use deception to obtain information.