LEXMARK Vs STATIC CONTROL CORP

[Anonymous]

Lexmark v. Static Control: An Update on Copyrights and Competition
Can
a market incumbent use copyrighted expression such as embedded software
in a manufactured product to block development of interoperable
competing products? In its widely reported decision in Lexmark Int’l,
Inc. v. Static Control Components, Inc., 387 F.3d 522 (6th Cir. 2004),
the Sixth Circuit seemed to strike a blow for third parties seeking to
enter a market. In that case, the Sixth Circuit vacated a preliminary
injunction preventing the distribution of a print toner cartridge
component that had to contain an exact copy of a small software program
copyrighted by the plaintiff in order for the cartridge to be able to
be used with the plaintiff’s printers. The Sixth Circuit, however, held
open the door that more evidence might show copyright infringement.
Recently, the district court shut that door. (Static Control
Components, Inc. v. Lexmark Int’l, Inc., 5:04-cv-00084-GGVT, Apr. 18,
2007) This ruling is worth studying for what it teaches about the
boundary between copyright enforcement and competition.

Background
Lexmark
manufactures printers and toner cartridges for the printers. Lexmark’s
cartridges contained a microchip with a short and simple software
program that allowed the printer both to determine how much toner was
in the cartridge and to identify the cartridge as one of Lexmark’s.
Static Control made a microchip with an exact copy of the Lexmark toner
program that it sold to other manufacturers so their cartridges would
work with Lexmark printers.Lexmark filed suit claiming infringement of
Lexmark’s copyright in its toner program and violation of the
anti-circumvention provisions of the 1998 Digital Millennium Copyright
Act (DMCA). The district court preliminarily enjoined Static Control
from distributing its microchip.On appeal, the Sixth Circuit dissolved
the injunction. The Sixth Circuit held that Lexmark had no DMCA claim
because the DMCA only protects technological access control measures,
and Static Control’s microchip did not provide access to Lexmark’s
toner program but replaced it outright. The Sixth Circuit also found
that Lexmark had not demonstrated that its toner program was
copyrightable for preliminary injunction purposes, but sent the case
back to the district court to decide that question as a final matter
based on more facts.

The Recent Ruling and What It Means
After
considering additional information about Lexmark’s toner program, the
district court found no infringement. First, the district court
determined that Lexmark’s short and simple program did not qualify as
an “original” work under the DMCA. Lexmark stressed the number of
different approaches that could have used in writing the toner program.
The district court was not impressed, finding that most of the
alternatives were different methods, which cannot be copyrighted, not
different expressions of the same method. The remaining alternatives
were impractical or inefficient. In short, the district court’s
decision drives home the important reminder that merely making choices
in creating a work will not guarantee copyright protection.

Second,
the district court held that Static Control’s copying of the toner
program was a permitted “fair use” under the DMCA needed to allow
interoperability. Initially, the district court focused on the Lexmark
toner program’s dual roles of measuring toner level and enabling
interoperability with Lexmark printers. Because Static Control’s
purpose in copying only impacted the latter role of permitting
interoperability, the district court found fair use, even though Static
Control’s microchip had a commercial purpose of creating competing
cartridges. The district court next examined whether the copying hurt
the market for the copyrighted work. Here, the interesting point is how
narrowly “market” was defined. The Sixth Circuit had held earlier that
the “market” could be for toner programs, not toner cartridges. The
district court found no evidence that an independent market for toner
programs existed, and thus found fair use. The lesson for copyright
holders is to proceed cautiously before attempting to enforce their
copyright beyond the copyrighted work itself to associated products or
services.

Finally, it is worth remembering that even if
copyright law would permit development of an interoperable product, a
contract might not. Although Static Control did not involve such a
contract, products involving software frequently are sold or licensed
subject to a contract barring all copying or use to develop a competing
product, including reverse engineering. Most courts now enforce these
provisions, which effectively waive defenses such as fair use to
copyright claims. 

[Author]

June 4, 2007 at 10:55 AM