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 user 2009-12-01 at 11:43:33 am Views: 57
  • #23026
    Awareness of IPR rules keeps companies on their toes. Time to market is shortened to stay competitive.
    The effects of the patent infringement case filed by Epson two years ago are still reverberating in mainland China’s printer consumables industry. Suppliers continue to emphasize product development and IPR applications under efforts to remain competitive. The lawsuit, also known as the 337 investigation, was petitioned against 24 makers and resellers in the mainland, Germany, Hong Kong, South Korea and the US.The US International Trade Commission issued a final determination in 2007 that the defendants violated Epson’s patents. The ITC, therefore, released a general exclusion, limited exclusion, and cease and desist order. The first bans the import of the infringing products to the US, while the second prohibits unlicensed entry. The third forbids the 24 companies from selling and distributing the impinging cartridges in the country.

    Big manufacturers in the mainland were among those that hugely felt the impact of the case, being the major exporters to the US. Midsize and small suppliers observed mainly from the sidelines, having Europe, Asia, the Middle East and Africa as their core markets.One of the most affected makers, Zhuhai Ninestar Image Co. Ltd, appealed the ITC’s decision. In February 2009, it presented evidence that Epson also violated some of its patents. At the time of writing, the ITC has yet to issue a decision on the plea.

    With China producing an estimated 80 percent of the world’s compatible and remanufactured ink cartridges, the incident has posed a major setback to many companies. Suppliers and industry experts, however, believe that the case will pave the way for the sector’s further development as makers become more aware of industry regulations.The lawsuit compels them to heighten their knowledge of related directives and take measures such as setting up legal teams that handle IPR issues. These, in the long term, will strengthen competitiveness.

    Zhuhai Gree Magneto-Electric Co. Ltd, for instance, has since then applied for five patents. The supplier inspects and analyzes the intellectual properties that Epson’s ink cartridges cover to ensure it is not infringing on any product.Manufacturers are also beefing up R&D and hastening lead time for the immediate application of patents. This is because the earlier an IPR is obtained, the less likely that another maker will have already acquired the rights for the same design or technology.

    Since established printer brands such as Epson own the majority of patents for ink cartridges, suppliers also need to be innovative and not resort to mere copying.Zhuhai Ninestar, for example, has made advancements in its ink cartridge configuration and circuits. It collaborates with local universities in developing ICs. This enables the company to shortenproduct development cycle in time for the release of new printer models.Some suppliers, including Zhuhai Mingjia Electronics Co. Ltd, are releasing new versions of ink cartridge with chipsets that can be purchased separately. This gives buyers the option to source the component elsewhere.Further, the case has brought a shift to makers’ target markets. Companies are now widening their reach to alternative destinations such as Eastern Europe, Canada, South America and Southeast Asia where IP rules are less stringent.

    Government help
    The China government played a major role in assisting suppliers when the 337 investigation erupted. The Ministry of Commerce, in particular, facilitated communication with related US departments and encouraged local industry associations and makers to cooperate actively with the legal proceedings.The State Intellectual Property Office and the China Computer Industry Association have also expressed their support to companies within the country and have been following the case closely.

    In Guangdong province, the General Chamber of Commerce established a law assistance office that offers free consultation on the anti-dumping and tariff act. It invites lawyers in China to offer their service to suppliers. It was this center that advised Zhuhai Ninestar to apply for selective exclusion if it is proven that Epson infringed on some of its patents.

    In April 2009, a regulation for the manufacture of recycled printer consumables was also introduced in Guangdong. This new standard covers the production process and environmental control requirements of ink and toner cartridges.The directive is yet to be released nationwide. Even so, it is a first step in determining the guidelines to be followed and tackling related issues in the remanufacture of printer consumables. It adheres closely to the general policies in energy saving, emission reduction, recycling and sustainable development.The regulation is supported by several local and national supervision centers in Zhuhai and other cities in Guangdong.In addition, local governments have taken the initiative to patronize compatible and remanufactured products to help boost sales and awareness of domestic brands.

    Industry overview
    Overall demand for printer consumables has been increasing, according to the Zhuhai Printer Consumables Industry Association. This is partly because the financial crunch has urged buyers to turn to low-cost models, which abound in China.

    Makers of ink cartridges, however, are struggling with weakening business, a result of the rising popularity of supplierslaser printers that use toner cartridges, even without the legal dispute.Color ink cartridges account for 80 percent of total output, while b/w versions represent the rest. Large makers have a capacity of 3 million units per month. The majority of production is under OBM.

    Midsize operations can turn out 200,000 cartridges monthly. The capacity of small companies is naturally lower. Both types of manufacturers focus on OEM.Key processes such as plastic injection, ink refilling and testing are done in-house. Some have the capability to produce their own ink as well. Suppliers used to source the component overseas but are now obtaining their requirement locally to reduce overhead and subsequently decrease unit prices.