CHIP MANUFACTURE SUES 27 WHOLESALERS / REMANUFACTURES
CHIP MANUFACTURE SUES 27 WHOLESALERS / REMANUFACTURES
2011-01-10 at 8:37:36 am #24258
CHIP MANUFACTURE SUES 27 WHOLESALERS/REMANUFACTURES
In Addition to OEM Suits, Remans Now Face Supplier Lawsuits
On December 14, American Imaging Cartridge, LLC; Innovative Cartridge Technologies, Inc.; and Platinum Manufacturing International, Inc. filed a patent-infringement lawsuit (case 8:2010cv02789) in Florida Middle District Court in Tampa against dozens of big and small players in the third-party supplies industry. It is the latest in a string of suits alleging that a growing number of firms are using or marketing so-called universal chipsets that violate various patents.
The electronic chipsets on most OEM cartridges can be a huge stumbling block for firms attempting to market fully functional non-OEM cartridges. OEM chips are challenging for non-OEM companies to emulate without violating the original patents, and successfully reverse-engineering the technology requires large investments of time and money. Those that can bring to market non-infringing, compatible chips stand to win big, however. Chips are essential parts for third-party supplies vendors and are often far more lucrative to market than other cartridge parts such as OPC drums and toner.
To ensure their profitability, companies with intellectual property (IP) rights to third-party chipsets have become increasingly litigious in protecting their IP. Currently, the three largest suppliers to the U.S. remanufacturing industry—Future Graphics, Static Control Components, and UniNet Imaging—are involved in lawsuits related to chip technology. The three firms compete fiercely to supply remanufacturers with tools and components such as chips, drums, toners, and more. Over the past few months, the list of firms named in complaints has widened to include third-party consumables vendors—much to the remanufacturing industry’s chagrin, no doubt.
The December Complaint
The defendants in the suit filed in December include domestic remanufacturers and distribution organizations along with the U.S.-based subsidiaries of certain foreign firms. The companies named in the complaint included:
* ACM Technologies, Inc.;
* Alpha Image Tech;
* Arlington Industries, Inc.;
* Cardinal Cartridge, Inc.;
* Copy Technologies, Inc.;
* Densigraphix, Inc.;
* Diamond Digital Group, Inc.;
* E-Toner Mart, Inc.;
* Imageworks, Inc.;
* Ink Technologies Printer Supplies, LLC;
* K & W International Development, Inc.;
* Kalon Corp;
* Kalon International;
* Kiwi Group Corp.;
* Laser Toner Technology, Inc.;
* LD Products, Inc.;
* LTS Technology, Inc.;
* Matric Kolor, Inc.;
* Mextec Group, Inc., also doing business as Mipo America, Ltd.;
* Monoprice, Inc.;
* Sinotime Technologies, Inc.;
* Nano Pacific Corp.;
* Power Imaging Supply, Inc.;
* Printer Essentials.Com, Inc.;
* R & L Imaging Group, Inc.;
* Target Imaging LTD; and
* TTI Imaging, Inc.
Also named in the suit were some individuals: Ronald Roman, who does business as RTR Enterprises; John Doe 1, doing business as BB Office Supply; and John Does 2 through 10, who are described as “seller(s), manufacturer(s), importer(s) and/or distributor(s) of ink cartridges for imaging devices and/or chips for same that infringe the Patents-in-Suit.” The plaintiffs are seeking damages, attorneys’ fees, and injunctions prohibiting further infringement.
The defendants are alleged to have infringed patents related to universal monochrome toner cartridges and their components. The technologies are designed to allow toner cartridges to be used in more than one device or to enhance a cartridge’s performance. The U.S. patents involved include 7,136,608, 7,286,774, 7,187,874, 7,512,360, 7,551,859, 7,068,954, 7,106,993, 7,136,607, 7,362,988, 7,447,464, and 7,174,123. The patents were issued to inventor Steven Miller, who, as we will discuss below, is an officer in various firms marketing the technologies. The patents are mainly related to technologies found in cartridges for use in Lexmark monochrome laser printers as well as certain devices from other vendors such as IBM. The defendants are accused of employing the infringing technologies in monochrome cartridges for use in Lexmark T420, T630, and T640 units.
Prior to the December compliant, we were unaware of Tampa, FL-based American Imaging Cartridge, LLC. We were, however, familiar with the other two plaintiffs, Innovative Cartridge Technologies (ICT) and Platinum Manufacturing International. According to the Florida Department of State, Division of Corporations, Mr. Miller is an officer of both firms, which are each based in Pinnellas Park, FL. Both companies cross-license technology, including technology for universal chipsets, with Static Control Components. We became aware of ICT and Platinum Manufacturing International because of their involvement with Static Control in earlier patent-infringement lawsuits, including Static Control’s ongoing legal disputes with its biggest rival Future Graphics.
Escalating Chip Wars
The 2008 Static Control Components v. Future Graphics lawsuit (case 1:2008cv00109), which is still wending its way through the courts, centers on chipsets and shares some key elements of the American Imaging Cartridge et al. v. Ronald Roman et al. case. For example, the ICT-owned intellectual property in the Future Graphics case involves some of the same patents as the American Imaging Cartridge et al. v. Ronald Roman et al. lawsuit including U.S. patents 7,187,874 and 7,286,774. Both patents relate to universal printer chips for monochrome cartridges. One major difference, of course, between the Future Graphics case and American Imaging Cartridge’s most recent complaint is that the older case focuses on the supplier of the chips, not on the users.
ICT and Static Control along with Industrial Engineering and Development, Inc., another firm Mr. Miller officiates, were also named as co-defendants in a suit brought by Powervip, Inc. and Powervip SA (case 1:2008cv00382). Powervip SA is a chip manufacturer based in Montevideo, Uruguay, and its U.S. distributor, Powervip, Inc., sold Future Graphics its universal chips. After ICT and Static Control filed suit against Future Graphics, Powervip sued for a declaratory judgment indicating that certain products it manufactured and sold do not infringe the defendants’ patents and that those patents are invalid. The defendants’ were unsuccessful in their motion to dismiss the case or transfer it to a different jurisdiction (read here). The matter is moving forward in the U.S. District Court for the Western District of Michigan.
To add to the tangled web of lawsuits we are weaving, ICT is also a co-plaintiff in Static Control’s lawsuit (case 1:2008cv00601) against UniNet Imaging, Inc.; UI Supplies, Inc.; and Summit Technologies, LLC. UniNet acquired Summit in 2007 to expand its chipmaking capabilities. Platinum Manufacturing International filed suit (case 8:2008cv00310) against UniNet Imaging, Inc., and Summit Technologies in 2008, and ICT and Platinum Manufacturing International themselves were named as defendants in a patent-infringement lawsuit (case 2:10-cv-01938-ODW-RZ) filed by UniNet Imaging this spring.
More Trouble for U.S. Remans
The December complaint will no doubt worry third-party cartridge vendors in the United States. It suggests that in addition to the ever-present threat of OEM lawsuits, firms that market non-OEM consumables now face legal action if they side with the wrong supplier. The plaintiffs appear to be very serious in pursuing legal remedies against U.S. remanufacturers. The December action follows a similar move in November against Schoon Manufacturing Corporation by American Imaging Cartridge and Platinum Manufacturing International. In that suit (case 8:2010cv02654), Schoon Manufacturing was accused of violating seven of the eleven patents included in the December complaint.
Suppliers to remanufacturers are increasingly challenged to make money. Many cartridge components including toner and drums are commoditized, especially those used in monochrome cartridges. Suppliers are reliant on the sale of value-added products like chips to make up for lost margins. Obviously, from the cases detailed above, suppliers have been willing to beat each other with legal cudgels in order to protect their businesses. At present, all the cases noted above remain in play.
We found it interesting that Static Control did not join its cross-licensing partner in the lawsuits filed in November and December. Static Control is a formidable legal warrior—just ask Lexmark—and the company does not back down from a fight. With that said, presumably, the firm did not feel it was wise to sue many of its U.S. customers whether or not they use infringing chips. It appears, however, that its various partners did not find much merit in Static Control’s wisdom.
What makes the American Imaging Cartridge et al. v. Ronald Roman et al. lawsuit so troubling is the sheer number of defendants. American Imaging Cartridge, LLC; Innovative Cartridge Technologies, Inc.; and Platinum Manufacturing International apparently have rounded up all the third-party vendors they could find that are not using ICT (or presumably Static Control) chip technology in their Lexmark cartridges and named them in the lawsuit. This litigious group of patent holders is sending a very clear message to the industry—buy your chips from us or else.