N.Y.:$5M LAWSUIT SAYS HP TRICKS CONSUMERS

[Anonymous]

LI man’s $5M lawsuit says HP tricks consumers
April ,
2005
A Valley Stream man has filed suit on behalf of New York consumers
against Hewlett-Packard Co., charging the printer giant’s “smart chip”
technology, which alerts users of an ink cartridge’s need to be replaced, sends
“premature” and “false” messages aimed at lining HP’s pockets.

The
class-action suit, filed Wednesday in U.S. District Court in Brooklyn by
consumer Dennis Just, alleges breach of good faith, unjust enrichment and
violation of New York business law, and seeks in excess of $5 million for the
class and attorneys’ fees.

The suit takes aim at a controversial
technology that HP’s Web site presents as a convenience. Critics of the
technology, however, say it’s primarily designed to stifle competition from
companies that recycle old HP cartridges with new ink. The cartridges “expire”
and can’t be used in printers between 2 1/2 and four years after
manufacture.

“The primary function of this impressive-sounding technology
is to make it difficult or impossible to refill that cartridge,” said a 2002
article in PC Buyer’s Guide.

But HP spokeswoman Jean Shimoguchi called
Just’s suit “without merit.” She noted smart-chip technology is used in 3
percent of HP’s ink-based printers, but wouldn’t say how many units that
represents. The suit contends all HP ink cartridges contain smart
chips.

Just wasn’t reachable and his lawyer, David Buchanan in Manhattan,
didn’t return calls.

The suit alleges HP, the world’s largest maker of
printers and accessories, “claimed to consumers that the smart chip would
improve printer performance.” Instead, it says, “the smart chip appears to be
designed to secretly and deceptively increase the sale of HP replacement ink
cartridges, whether or not ink remains in the cartridge and replacement is
necessary.”

Just’s suit alleges the smart chip technology warns that
replacements are needed when cartridges are “far from empty,” then “immediately”
steers them to an HP-sponsored Web site to buy replacements.

HP’s
Shimoguchi said cartridges on the shelf have a four-year expiration date, aimed
at preventing “degradation of print quality”; those in use in printers expire
after about 2 1/2 years, she said.

Gary Peterson, an analyst with
research firm GAP Intelligence in San Diego, said Just’s suit represents the
latest assault against what he called a cartel of printer-ink makers that
controls the high-profit market.

“A lot of people feel the ink industry
is very much like the oil cartels,” said Peterson. He called the HP cartridge
alert system “harmless,” but said the notion that cartridges can expire over
time, rendering them useless when they still contain ink, has been
controversial.

In March, HP sued two companies that sell recycled
cartridges refilled with non-HP ink, alleging the ink violates HP’s patents and
that they mislabel packaging.

Stephen Baker, a research director at NPD
Group, said consumer frustration about cartridge pricing often boils over
because “people feel cheated.”

[Author]

April 25, 2005 at 9:33 AM