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 user 2010-05-10 at 9:50:32 am Views: 59
  • #23793
    Recent legal activity by HP finds the firm winding down one case against a group of aftermarketers while filing a new complaint with the International Trade Commission (ITC) against yet another list of third-party supplies companiesWhen HP filed its complaint in September, Lyra Research predicted that: “If HP was a bit lackadaisical in getting the current lawsuit out the door, the production of future cartridge lawsuits will be greatly accelerated.”With its most recent lawsuit, HP is taking action on ink jet technology that the firm has leveraged across multiple cartridges, leaving no doubt that the OEM is ratcheting up its efforts to stem the flow of revenue being diverted by unlawful means to aftermarket coffers.

    On 23 September, 2009, HP filed complaints with the ITC and the US District Court for the Central District of California against 11 manufacturers and sellers of HP-compatible aftermarket cartridges. This case involved compatible ink cartridges that, according to HP, violated multiple claims within four US patents used in the firm’s HP 02 ink cartridges.

    During the ensuing months, a number of these firms defaulted – Mextec Groupd/b/a Mipo America of Miami Beach, Florida; Shanghai Angel Printer Supplies of Shanghai, China; Shenzhen Print Media of Shenzhen, China; Zhuhai National Resources & Jingjie Imaging Products of Guangdong, China; Mipo International of Kowloon, Hong Kong; Tatrix International of Guangdong, China; and Ourway Image of Guangdong, China – leaving four aftermarketers involved in ongoing litigation with HP.

    On 1 February, the ITC released its response to respondent Zhuhai Gree’s motion for termination of investigation based on an entry of consent order. Under the terms of the consent order, Zhuhai Gree stipulates that “it will not directly or indirectly import into the United States, sell for importation into the United States, or sell within the United States after importation of any ink jet ink supplies or components thereof that infringe any of the asserted claims,” while the company further states that the signing of the consent order does not constitute an admission by Zhuhai Gree that an unfair act has been committed.

    In addition, HP also indicated that it has “settled or is close to reaching a settlement agreement with” the other three respondents. In fact, Lyra Research has learned that HP has now settled patent infringement claims brought against ink cartridge reseller Comptree Inc, putting an end to disputes between the companies in Federal court and the US ITC.

    New aftermarket Lawsuit
    On 5 March, HP took action again, simultaneously filing a complaint with the ITC and the US District Court for the Northern District of California, alleging six of its product patents were infringed: US patent numbers 6,234,598; 6,309,053; 6,398,347; 6,412,917; 6,481,817; and 6,402,279.

    The claim stated: “The infringing ink cartridges at issue in this action include cartridges that are marketed as compatible with at least the HP 27/28 and HP 56/57 ink cartridges. In addition to those products, HP manufactures and sells additional models that share the same or similar structure but differ in other attributes, such as ink volume, ink colour, and compatibility with certain printing platforms. These models include the HP 21/22, HP 54, and HP 58/59 cartridges.”

    In the complaint, HP alleges that MicroJet Technology of Taiwan; Mipo Technology Limited of Hong Kong; Mipo Science & Technology of China; Mextec d/b/a Mipo America of Miami, Florida; SinoTime Technologies; All Colors of Miami, Florida; and PTC Holdings Limited of Hong Kong unlawfully import into the United States, sell for importation, and/or sell within the United States after importation certain ink jet ink cartridges with infringing print heads and components.

    The OEM claims that MicroJet manufactured and sold the allegedly infringing ink cartridges under its own brand name and as generic and/or made-to-order products and print heads to other companies, including Mipo and PTC. Mipo and PTC then resold the accused products in markets, including the US. Sinotime is accused of selling the allegedly infringing products under the name ‘All Colors’ on Amazon and advertising the products as “remanufactured” cartridges.”Defendants and/or other unidentified parties were either directly or indirectly involved in the events surrounding the converted print heads based on, inter alia, the manufacturing, packaging, distribution, marketing, and sale of the products containing HP converted print heads,” states HP in its filing.

    After describing the process by which it purchased the infringing products for testing. HP subsequently claims: “Results from internal analysis of ‘Mipo’ products indicated they were composed of a genuine HP print head and a non-HP cartridge body that was made to resemble [or in some cases, closely resemble] a genuine HP cartridge body.”

    According to HP’s internal tracking system, the HP print heads are from truck shipments that were hijacked in March and September 2007, after the firm implemented increased security measures to stop the unlawful removal of print heads from a contract manufacturer assembly plant located in Malaysia.

    HP decries the defendants’ patent infringement from a technical and marketing perspective.
    According to the OEM: “Defendants acted with an unlawful purpose and deliberate intent as demonstrated, for example, by the fact that the cloned ink cartridge body was designed to look exactly like a genuine HP ink cartridge body in order to pass off the ‘Mipo’ labelled product as a genuine, remanufactured HP ink cartridge.”

    Moreover, “As a result of Defendants behaviour, Defendants have reverse passed off (or reverse palmed off) HP’s print heads as its own, thereby misleading the public and deceiving the public as to the true source of their products.”

    The result of this behaviour, “entitles HP to an award of its damages, Defendants ill-gotten profits, treble damages, costs, and reasonable attorneys’ fees,” claims HP. “In addition, HP seeks a return of genuine HP print heads that were unlawfully taken by Defendants.”

    While this lawsuit is still in its infancy, the defendants have already come out in defence of their business practices. In prepared remarks, MicroJet maintained: “All products manufactured by us are created with our own research and development efforts,” while Mipo claimed, “HP’s accusation is groundless. Mipo is a professional remanufacturer of printer cartridges. We never converted any cartridges.”

    Predicting the outcome
    While Lyra is loath to predict how the courts will rule in any lawsuit, given the swift and favourable outcome of HP’s previous complaints filed with the ITC and US District Court, we would be surprised if this lawsuit did not follow a similar course.

    According to Lyra’s Cartridge Demand Advisory Service, the HP 21, 22, 56, 57, and 02 are among the top 20 ink cartridge products in the world, and the HP 56 holds the all-time record for number of units sold among printer cartridges of any make or technology.”At its height in 2005, I’d estimate that about 120 million original HP 56 cartridges were sold around the world,” asserts Andy Lippman, Senior Analyst with Lyra’s Hard Copy Supplies Advisory Service.

    HP’s lawsuits also have broader implications, as Lippman explains that the firm is attacking a widespread problem in the aftermarket – the tendency of some Chinese companies to reverse engineer and clone integrated ink cartridges without regard for patents.

    The problem, he says, is that these infringing cartridges cause extreme pricing pressure because the new Chinese compatibles can be produced and sold for less than it costs to source an original cartridge core.

    Lippman tells Lyra Research that the new compatibles are often shown at aftermarket trade shows, particularly those in China, and that he spotted a few in Shanghai at ReChina Asia Expo 2009. Moreover, the presence of these illegal cartridges pollute the empties supply stream, as they are mixed in with valuable OEM empties, and it is difficult and expensive for remanufacturers to avoid them.As a result, maintains Lippman: “The remanufacturing industry often speaks out against this practice and is likely on the side of HP.”He notes that the HP-Pelikan lawsuit from 2007 involved new integrated cartridges that Pelikan was advertising as remanufactured, and says, “It’s plausible that Pelikan had no knowledge that they were selling new integrated cartridges.”At the time of the HP lawsuit, Lyra Research speculated that Pelikan may have unknowingly obtained illegitimate HP empties and cautioned that aftermarket companies should be “carefully scrutinising all empties” as the risk was high that the current supply of empties had already been tainted by infringing products.

    Lyra know nothing about empties , they are kissing the oem’s asses ,because the oem’s are the only ones that buy there overpriced expensive reports .(the asian remanufactures don’t waste there money on such useless reports ).