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 user 2009-12-01 at 11:44:46 am Views: 76
  • #23027

    Awareness of IPR rules keeps
    companies on their toes. Time to market is shortened to stay

    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.

    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

    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
    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.

    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

    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

    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

    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.

    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.