PROOF THAT EPSON IS SPYING ON THE INK-CARTRIDGE INDUSTRY

[Anonymous]

http://online.wsj.com/article/SB124995836273921661.html
Accusations of Snooping in Ink-Cartridge Dispute
Reseller Claims Seiko Epson Sent a Spy to Its Warehouse; Latest Dust-Up in Fight Over Printer Patents
Printer
cartridges have long been a subject of legal dispute, with printer
makers suing smaller companies to clamp down on knock offs. But it is
rare that such fights include allegations of corporate espionage.That’s
the situation playing out now in an Oregon federal court, where Green
Project Inc., a small ink-cartridge reseller, claims that Seiko Epson
Corp., one of the world’s three biggest printer makers, sent an
investigator disguised as a customer to snoop around the company.A
Seiko Epson lawyer said the company sometimes uses investigators to
enforce its patents. He declined to comment on the Green Project suit’s
details, but said “we believe nothing was done wrong here.” Herbert
Seitz, the man who Green Project says was an Epson investigator, said
Monday he is unfamiliar with Green Project’s allegations. “I have
nothing to say,” he said.

The alleged incident began with a
lawsuit that Seiko Epson filed in April against Green Project, which
refills and resells old ink cartridges, and other cartridge resellers.
But the suit has roots in a much broader battle.At issue is that big
printer makers — including Seiko Epson, Hewlett-Packard Co., Lexmark
International Inc. and Canon Inc. — rely heavily on ink and toner
sales to generate profits. For years, the manufacturers have tried to
stop smaller companies from cutting into their revenue by selling their
own cartridges, arguing in lawsuits that some violate their patents.

Green
Project, which was founded last year, and other “remanufacturers” of
printer cartridges accounted for more than $8 billion in global sales
of inkjet and laser cartridges last year, according to Andy Lippman, an
analyst at Lyra Research.In recent years, Seiko Epson has taken legal
action against companies that import cartridges to sell in the U.S. In
2007, responding to a complaint by the Japanese company, the U.S.
International Trade Commission ruled that certain imported cartridges
violate Seiko Epson patents and ordered vendors to stop importing them.
In a followup ruling last year, the ITC said that imports of certain
“remanufactured” cartridges also violate Epson patents.

In
April, Seiko Epson sued a number of companies that it alleged were
violating the import ruling. One was Green Project.Joseph Wu, Green
Project’s founder and president, denied the company sells cartridges
that were originally sold overseas. He said Green Project buys used
printer cartridges that were sold in the U.S. from brokers that collect
them; they are then shipped to China, where they are refilled and sent
back to the U.S. for sale, he said. The brokers guarantee in writing
that the cartridges are collected in the U.S., Mr. Wu said.

In
May, about a month after Seiko Epson filed its suit, Mr. Wu said a
customer who identified himself as “K.C. Wells from K&R Supplies”
came to Green Project’s offices. Mr. Wu said he was suspicious, since
he had met the man at a trade show a few years earlier and heard him
ask “detailed questions most customers don’t ask” about cartridge
technology.Mr. Wu said he remained suspicious and days later did a Web
search for “Seitz,” since he had heard there was a cartridge-fraud
investigator that worked for Epson with that name. He said he found a
photo that looked like his visitor.

Last month, Mr. Wu’s company
countersued Seiko Epson, claiming that Mr. Seitz’s actions constituted
trespassing and theft of trade secrets. The suit seeks to prevent Seiko
Epson from using the information collected, as well as restitution. It
also seeks a declaration that certain Seiko Epson patents are
invalid.Mr. Seitz’s “misrepresentation and subsequent entry into Green
Project’s warehouse constitutes trespass,” the company’s lawyer wrote
in a July 27 court filing. Green Project also alleges that Mr. Seitz
improperly accessed company trade secrets when he requested a price
list.

Seiko Epson lawyer Harold Barza said that “in connection
with the enforcement of intellectual property rights, we sometimes have
to use investigators. It’s a perfectly normal practice.”Mr. Barza said
that while Mr. Seitz has “done investigations before” for Epson, he is
an independent contractor, not an Epson employee.Whether Green
Project’s allegations would sway a court is unclear. “There’s a raging
debate” in the legal community over ethical guidelines for information
gathering, said Patrick Robbins, a defense lawyer at Shearman &
Sterling LLP who sometimes uses private detectives.Mr. Robbins said
courts have offered little clarity on whether it is acceptable to use
deception to obtain information.

[Author]

August 11, 2009 at 12:51 PM