RICOH LOOSES I.T.C. RULLING AGAINST OKI-DATA

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RICOH LOOSES I.T.C. RULLING AGAINST OKI-DATA 
Ricoh’s ITC Complaint against Oki Data Resolved in Oki’s Favor
Much of the legal news of late has been dominated by printer original equipment manufacturers (OEMs) filing patent-infringement complaints against non-OEM supplies vendors in federal court and before the U.S. International Trade Commission (ITC). This week, however, there was big news in a case that pitted OEM against OEM. On January 25, the ITC issued its final determination in a 337 investigation that Ricoh brought against Oki Data. The Commission found that Oki did not infringe Ricoh’s intellectual property (IP) and terminated the investigation, determining there had been no violation of Section 337. So-called 337 investigations got their name from Section 337 of the Tariff Act of 1930, under which the ITC conducts investigations into allegations of certain unfair practices in import trade, such as infringement of IP rights.Although Oki is undoubtedly pleased with the ITC’s ruling, we are sure litigation has proved costly for the firm. Not only has Oki had some hefty legal fees, but we suspect that the Ricoh complaint was a factor in Oki’s redesign of its low-end color devices and their supplies. This summer, Oki rolled out a new low-end color LED engine design and new consumables in the single-function C330dn and C530dn and the multifunction MC361 and MC561. The firm significantly changed the consumables design with these machines. The previous products, the ones that Ricoh alleged infringed its IP, used four separate drums, but the new products use a one-piece drum as well as new cartridges. While Oki would not discuss the Ricoh complaints before the ITC and federal court at the time of the product rollout, it seems likely that the litigation was a factor in its decision to employ a different consumables design, although there were other reasons as well, such as fewer consumables to replace.

This is the second time this week that companies with large patent portfolios have been dealt a blow by the ITC. This week, Kodak, which has become dependant on IP licensing revenue to boost its results, received some bad news when the ITC issued an initial determination finding that Kodak’s patent claim is invalid and not infringed in a complaint that the firm brought against Apple and Research in Motion (RIM) over an image-preview feature used in phones (see News Briefing, “Kodak’s Fiscal 2010 Results Disappoint, but Consumer Inkjet Grows”).

Firms with large patent portfolios can realize a healthy revenue stream from licensing their technology to other vendors, but, as these recent cases show, such deals have perils for both licensor and licensee. With all the technology licensing deals in play between various printer and MFP companies, we suspect that it is only a matter of time before a disagreement inspires more IP holders to go running to the courts for relief.

Case History
Ricoh’s complaint against Oki Data was brought before the ITC in September 2009. Ricoh Company, Ricoh Americas Corporation, and Ricoh Electronics named Oki Data Corporation and Oki Data Americas as respondents, claiming that Oki had violated U.S. patent numbers 5,764,866 (the ‘866 patent), 6,388,771 (the ‘771 patent), 6,209,048 (the ‘048 patent), 6,212,343 (the ‘343 patent), and 5,863,690 (the ‘690 patent). The patents relate to scanning technology (the ‘866 patent and the ‘771 patent), controlling a printing or scanning device directly without relying on a host as an interface (the ‘048 patent), a printer cartridge containing internal components that prevent toner from leaking out of the cartridge or into unwanted regions of the cartridge (the ‘343 patent), and a method of affixing toner to a document using a fixing roller that has specific adhesion characteristics (the ‘690 patent).

Ricoh claimed that infringing products included the Oki C3530n and its drums and fuser units. Although not named in Ricoh’s complaint, the Oki C3400n and C3600n use the same supplies as the C3530n, and thus the case had the potential to affect the market for these machines’ drums and fusers as well. Not long after Ricoh’s complaint with the ITC was filed, Oki replaced the C3530n with the MC360, but the new machine was based on the same engine platform and supplies as the product alleged to infringe Ricoh’s patents.

Oki had apparently entered into a limited patent license agreement with Ricoh for these technologies back in 2001. The agreement expired in 2006, and the two firms were unable to reach an agreement in the renewal of the licensing agreement. It is unclear how or why the negotiations went sour, but discussion ceased in 2009, and Ricoh filed its complaint with the ITC, seeking an exclusion order and a cease-and-desist order barring importation and sale of infringing products.
Initial Determination Partly Upheld, Partly Reversed

In its final determination, the ITC upheld part of Judge Robert K. Rogers, Jr.’s initial determination and reversed other parts. In his September 23, 2010, initial determination, Judge Rogers had ruled that Oki had violated Section 337 for infringing several claims related to the ‘690 patent, although he found that Oki did not violate Section 337 with respect to the other patents named in the complaint.

On November 22, the ITC decided to review Judge Rogers’s determination regarding the ‘690 and ‘343 patents—the ones covering drum and fuser technology. In its final determination, the Commission upheld the judge’s determination that there was no infringement of the ‘343 patent, but reversed his finding regarding the ‘690 patent. The ITC also reversed Judge Rogers’ ruling that Ricoh had satisfied the so-called economic prong of the domestic injury requirement under Section 337. (In order to prove a violation of Section 337, complainants must prove the existence of a domestic industry relating to the product in question. The proof required to establish a domestic industry involves an “economic” prong and a “technical” prong.) The Commission has terminated the investigation against Oki Data.

Perils of Technology Licensing
The ITC’s final determination is excellent news for Oki, if not for Ricoh. The Commission’s finding that Oki did not infringe Ricoh’s IP does not bode well for Ricoh’s patent-infringement lawsuit against Oki in the United States District Court for the District of Delaware (State of Delaware). Typically, firms file patent-infringement complaints both before the ITC, which can issue exclusion orders, and in federal courts, which can award damages. The ITC determination in a 337 investigation can sway the verdict rendered by federal courts

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February 16, 2011 at 9:25 AM