LEXMARK's 7 YEAR TONER-BATTLE WITH STATIC-CONTROL-CORP

[Anonymous]

http://www.kentucky.com/news/local/story/1031191.html
LEXMARK’s 7 YEAR TONER-BATTLE WITH
STATIC-CONTROL-CORP
Lexmark toner-cartridge program at center of
ongoing litigation
A seven-year court
battle between Lexmark International and a North Carolina company that
provides supplies to companies that remanufacture printer cartridges has
reached a final ruling in U.S. District Court.

Last month, Judge
Gregory Van Tatenhove dismissed a number of claims by Lexmark and
Static Control Components and said they “shall recover nothing.” The
ruling ended with a note saying the companies could present arguments
that the other should pay for costs and attorneys’ fees but cautioned
that in “close and difficult” cases, costs are sometimes denied as “a
proper exercise of discretion.”

The case may be far from over,
though.
In an Oct. 26 motion, Lexmark asked for a new trial, citing
several arguments including that the jury’s verdict in part of the case
“was against the weight of the evidence at trial.” The company also
argued that pre-trial rulings “set the stage for irrelevant,
inadmissible and highly prejudicial evidence to be presented to the
jury.”Static Control Components has already filed notice of appeal with
the U.S. Court of Appeals for the Sixth Circuit in Cincinnati.

The
case between the Lexington-based printer maker and Static Control
Components began in 2002. It centers on a program eventually called the
Lexmark Return Program, which offers Lexmark customers up-front
discounts on toner cartridges if they agree to return the cartridge
after a single use to Lexmark and not other remanufacturers. Lexmark
then remanufactures the cartridges and resells them.The program keeps
some cartridges out of the hands of remanufacturers and refillers, who
over the past decade have siphoned the profits from printer companies.
The printer companies rely on profit-rich ink and toner, because
printers are often sold for little or no profit.

The case grew
out of a past decision by Lexmark to include a chip on its Lexmark
Return Program toner cartridges that determined whether they had been
remanufactured. If they had, the cartridge turned itself off and would
not print.The legal battle began when Static Control Components
developed a chip that turned off Lexmark’s, allowing remanufacturers to
buy up empty Return Program toner cartridges, install Static Control’s
chip and then resell them.

Van Tatenhove ruled in favor of Static
Control on two counts, saying “this court declares that the computer
software code on Static Control’s reengineered replacement microchips
for use with (various Lexmark printers) sold after February 24, 2004,
does not infringe any Lexmark copyright.”He also ruled that the
manufacture, distribution and sale of microchips for use with the same
printers do not violate a certain section of the federal Digital
Millennium Copyright Act.He ruled in favor of Lexmark, though, on a
specific patent infringement claim “but with no remedy being entered on
said claim.”Lexmark spokesman Jerry Grasso said the company would not
comment on ongoing litigation but noted that “it is likely we will
appeal.”An attorney for Static Control Components did not return
messages.

The court battles have gone both ways over the years.
“Unfortunately
this is how the legal system has evolved, especially with patent law,”
said Tom Carpenter, vice president and senior equity analyst at Hilliard
Lyons in Louisville, in describing the length of time it has taken for
the case to be considered.”Laser cartridges are a large profit pool and
that’s important for Lexmark to protect,” he said.

Asked whether
Lexmark should be spending the court costs elsewhere in its business,
Carpenter called it “a delicate balance.””The company’s justified in
defending its patents, technology and profit pools, but as an investor,
you’d prefer not to see perpetual litigation,” he said. “However, in
this case, it may be the nature of the beast with Lexmark and the
remanufacturing industry.”

[Author]

November 24, 2009 at 10:33 AM