Date: Wednesday March 30, 2011 08:34:39 am
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    ITC Finds Jahwa Respondents in Default in Lexmark Toner Cartridge Complaint
    In a move that should come as no surprise to observers of the toner cartridge patent-infringement suit that Lexmark initiated last summer, the U.S. International Trade Commission (ITC) has issued initial determinations in investigation 337-TA-740, finding the so-called Jahwa group of companies in default. As we have followed the complaint wending its way before the ITC and the U.S. District Court for the Southern District of Ohio, it has become clear that this group of respondents has consistently failed to respond to the complaint and court orders, making a default judgment all but a foregone conclusion.

    It appears that now Lexmark has settlement agreements with or default judgments against all 24 of the respondents named in the lawsuit, at least for the ITC complaint. The district court recently issued permanent injunctions against some of the companies that the ITC issued default judgments against in February, so it may take some time before we see the district court’s rulings on the Jahwa respondents. Still, it is probably safe to assume that this part of the case too will go in Lexmark’s favor.

    The original list of firms named in the complaint is shown below. Although some of the settlement agreements were not new, Lexmark officially announced that it had settled with the first 10 respondents in the list below in early February (see News Briefing, “Lexmark Announces Settlement Agreements in Toner Cartridge Lawsuits”). Nectron, respondent number 11, defaulted in February (see News Briefing, “More Respondents Default in Lexmark’s Toner Cartridge Complaint before the ITC”). ITC Judge Carl C. Charneski issued default judgments against respondents 12 to 18 on the list at the end of February (see News Briefing, “More Third-Party Supplies Firms Default in Lexmark Toner Cartridge Complaint before the ITC”). This left just the Jahwa respondents and Virtual Imaging Products, which imported cartridges from an unknown source, with their status in the case yet to be determined.

        Alpha Image Tech;
        E-Toner Mart, Inc.;
        Nano Pacific Corporation;
        Ninestar Image Co. Ltd.;
        Ninestar Image International, Ltd.;
        Ninestar Technology Company, Ltd.;
        Print-Rite Holdings Ltd.;
        Seine Image International Co. Ltd.;
        Union Technology International (M.C.O.) Co. Ltd.;
        Ziprint Image Corporation;
        Nectron International, Inc.;
        Acecom, which does business as Inksell.com;
        ACM Technologies, Inc.;
        Chung Pal Shin (doing business as Ink Master);
        Direct Billing International, Inc. (doing business as Office Supply Outfitter);
        IJSS Inc. (doing business as TonerZone.com Inc. and Inkjet Superstore);
        Ink Technologies Printer Supplies, LLC (doing business as Ink Technologies LLC);
        Quality Cartridges, Inc.;
        Virtual Imaging Products;
        Jahwa Electronics Co., Ltd.;
        Copy Technologies, Inc.;
        Laser Toner Technology, Inc.;
        C & R Services, Inc.; and
        Huizhou Jahwa Electronics Co., Ltd.

    On March 8, Judge Charneski has issued an initial determination finding Virtual Imaging Products, Jahwa Electronics, Copy Technologies, Laser Toner Technology, and C & R Services in default. This order also finds some of the firms Lexmark already announced settlement agreements with in default, including Alpha Image Tech, E-Toner Mart, and Union Technology International.

    A March 22 order from Judge Charneski finds the last firm on the above list, Huizhou Jahwa Electronics, in default.

    According to the judge’s orders, “A party shall be found in default if it fails to respond to a complaint and notice of investigation, and fails to show cause why it should not be found in default.” Once a party has been determined to be in default, the party waives rights to appear, be served with further documents, or to contest allegations, and “t]he facts alleged in the complaint will be presumed to be true.”

    As noted above, the U.S. District Court for the Southern District of Ohio has also issued some injunction orders related to this case. On March 18, Judge Michael R. Barrett signed a permanent injunction, consent judgment, and dismissal with prejudice for Acecom, a Ninestar distributor. Acecom has six months to sell its inventory of allegedly infringing products and after that must not make, use, sell, offer for sale, or import any of the compatible of remanufactured toner cartridges for the various E-series printers named in the order. The same day, Judge Barrett signed a similar permanent injunction, consent judgment, and dismissal with prejudice for Chung Pal Shin (doing business as Ink Master).

    When the Lexmark toner cartridge patent-infringement lawsuit first came to light this summer, many speculated that third-party firms, Ninestar in particular, which has litigated strongly in its defense in Epson’s inkjet patent lawsuits, might put up a fight. That has not happened, and instead of a legal showdown, we have instead seen a series of settlement agreements and default judgments in Lexmark’s favor. When this case is completely resolved, the end will seem anticlimactic, but it will still be counted as a crucial win for Lexmark, which will have prevented the aftermarket firms named in the suit from gaining share in its monochrome toner cartridges business.

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