*NEWS*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. 

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June 4, 2007 at 10:53 AM