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HP Tries Desperately To Make ‘Printer As A Subscription’ A Thing

from the behold-our-self-immolation dept

When last we checked in with Hewlett Packard (HP), the company had just been sued (for the second time) for crippling customer printers if owners attempt to use cheaper, third-party printer cartridges. It was just the latest in a long saga where printer manufacturers use DRM or dodgy software updates to wage all out war on consumer choice.

There hasn’t been a whole lot of introspection going on at the company since. Shortly after the lawsuit HP CEO Enrique Lores went on CNBC to double down on the company’s position. First by making up claims that HP has to be obnoxious about cartridges to protect consumer security (false), then by basically stating that any consumer who intelligently shops for cartridges is a “bad investment.”

This week HP unveiled its latest plan on this track: printing as a service. The company’s new “All-In Plan” requires that you pay anywhere from 7amonthto7 a month to 7amonthto36 a month to rent a printer with a set printable page limit. During your rental, HP sends you, of course, their ink cartridges.

As Ars Technica notes, the printer must remain connected to the internet for monitoring. And the company’s privacy policy effectively gives HP full control over, well, everything:

“Subject to the terms of this Agreement, You hereby grant to HP a non-exclusive, worldwide, royalty-free right to use, copy, store, transmit, modify, create derivative works of and display Your non-personal data for its business purposes..”

And of course the subscription comes with long term contracts and early termination fees should you not subscribe for the full two-year term. All told, the tone-deafness is fairly stunning.

Paying for the same several-hundred dollar printer for all eternity is precisely the sort of concept Lores has been pushing for a while. The problem is it’s not clear that anybody actually wants this. It’s also not really clear that paying up to $36 for a printer you never really own makes much value sense. Printers inherently aren’t that expensive. And ink isn’t either, if companies aren’t being restrictive tyrants.

For HP, none of that matters. Lores isn’t thinking about building quality products or building solid relationships. He’s thinking exclusively of finding creative ways to goose profits and deliver Wall Street improved quarterly returns at any cost. You can’t do that by simply providing users a quality, affordable product people like; you inevitably have to start cutting corners and nickel-and-diming users.

Once they’ve established renting a printer as a norm, they’ll just steadily jack the rental price skyward as they make the underlying value proposition steadily worse. Ultimately the business becomes less and less about making popular quality products, and more and more about making unnecessarily convoluted subscriptions with creative restrictions and ever-skyrocketing monthly prices.

Filed Under: consumers, drm, Enrique Lores, ink cartridges, printers, rentals, subscription, tone-deaf
Companies: hp

HP CEO Makes Up A Whole Lot Of Bullshit To Defend Crippling Printers That Use Cheaper Ink

from the smart-consumers-are-bad-for-us dept

Mon, Jan 29th 2024 05:34am - Karl Bode

The company could have taken the opportunity for self reflection, acknowledge their error, and attempt to shore up a fraying relationship with customers. Instead, HP CEO Enrique Lores went on CNBC to not only double down, but to make up a whole bunch of new nonsense to justify their unpopular actions.

On the segment, Lores claims that HP is crippling the use of cheaper ink and toner cartridges because they’re simply worried they will infect consumers with viruses:

“Last Thursday, HP CEO Enrique Lores addressed the company’s controversial practice of bricking printers when users load them with third-party ink. Speaking to CNBC Television, he said, “We have seen that you can embed viruses in the cartridges. Through the cartridge, [the virus can] go to the printer, [and then] from the printer, go to the network.”

Ars Technica talked to numerous security researchers who laughed at the claim, noting that it’s never been meaningfully documented in the wild, and isn’t something consumers should be worried about.

Printer manufacturers have a long and proud history of hiding their anti-competitive price gouging under the pretense of user safety and security. In this case, HP cripples printer functionality using its “Dynamic Security System,” which stops HP printers from functioning if an ink cartridge without an HP chip or HP electronic circuitry is installed.

It’s clear to everybody that HP is simply being obnoxious and anti-competitive to goose quarterly revenues. But you really get a good sense of Lores’ distorted thinking later on in the CNBC article, where he calls savvy, cost-conscious consumers a “bad investment”:

“This is something we announced a few years ago that our goal was to reduce the number of what we call unprofitable customers. Because every time a customer buys a printer, it’s an investment for us. We’re investing [in] that customer, and if this customer doesn’t print enough or doesn’t use our supplies, it’s a bad investment.”

That kind of thinking teeters toward the psychotic. HP is being obnoxiously anti-competitive, hiding it behind claims of user security, then declaring consumers the enemy if they’re smart enough to see through the company’s bullshit and shop for cartridges intelligently.

Of course for publicly traded companies, it’s simply not enough to sell a quality product that people like. Wall Street’s unrelenting need for improved quarterly returns at any cost routinely turns big companies and their execs into self-sabotaging, anti-competitive jackasses sooner or later. Companies start to nickel-and-dime users, skimp on customer service, or cannibalize product quality to hit quarterly revenue goals.

It’s not clear if a handful of class action lawsuits will be enough to shift the company’s thinking back to reality, but being so obnoxious that you permanently pollute the HP brand reputation in the mind of an entire generation of future shoppers might just do the trick.

Filed Under: drm, Enrique Lores, ink cartridges, printers, security, third party, virus
Companies: hp

HP Hit With Yet Another Lawsuit Over Bricking Printers That Use Third-Party Ink Cartridges

from the this-is-for-your-own-good dept

Thu, Jan 11th 2024 05:23am - Karl Bode

Hewlett Packard (HP) has been socked with yet another lawsuit for crippling the printers of consumers who use cheaper third-party ink cartridges. The lawsuit, filed by eleven plaintiffs in US District Court in the Northern District of Illinois, states that HP misleadingly used its “Dynamic Security” firmware updates to “create a monopoly” over replacement printer ink cartridges.

The lawsuit seeks monetary damages of $5 million, demands that HP immediately cease crippling its printers in such a fashion, and is seeking a trial by jury. From the lawsuit:

“In 2022 and 2023, HP distributed updates to many of its registered customers that featured the functionality of “Dynamic Security” previously discontinued: it disabled the printer if the customer replaced the existing cartridge with a non-HP cartridge. There was no notification of any kind at the time of this firmware update that might inform customers that the update would reduce the printer’s functionality. Even if a customer were able to discern that the update would impede the printer’s functionality with other cartridges, there was no means of opting out of the update.”

Despite years of criticism, HP has only doubled down. As Ars Technica notes, CFO Marie Myers has even lauded the obnoxious, predatory behavior as “relationship building”:

“We absolutely see when you move a customer from that pure transactional model … whether it’s [to] Instant Ink, plus adding on that paper, we sort of see a 20 percent uplift on the value of that customer because you’re locking that person, committing to a longer-term relationship.”

When it comes to obnoxious DRM and bizarre, greedy restrictions, nobody does it better than printer manufacturers. The industry has long waged a not-so-subtle war on its own customers, routinely rolling out firmware updates or DRM preventing them from using more affordable, competitor printer cartridges. Usually under the flimsy pretense of consumer safety and security.

A few years ago, printer manufacturers took this tactic one step further, and began preventing users from being able to use a multifunction printer’s scanner if they didn’t have company sanctioned ink installed. Canon was hit with a $5 million lawsuit in 2021 for the practice, but was able to quietly settle it privately without facing much accountability, or having to change much of its behavior.

In 2022 HP was also hit with a lawsuit (pdf) for preventing scanners from working without sanctioned ink cartridges installed, and not being transparent about this with customers. HP has spent a few years trying to wiggle out of the suit, but hasn’t had much luck. Last August, U.S. District Judge Beth Labson Freeman ruled that that case could also proceed.

It’s not clear how many lawsuits and regulatory actions are required before HP gets the message that this kind of behavior is violently unpopular bullshit that harms the company’s overall brand at the cost of a slight goose in quarterly earnings.

Filed Under: consumer rights, drm, hardware, ink cartridges, ink jet, laserjet, printers, right to repair
Companies: hp

Strike Three: Lexmark Can't Use Patents, Trademarks Or Copyright To Block Third Party Ink Cartridges

from the good-to-see dept

Printer companies have long used the fairly straightforward business model of “sell cheap printers, and make all the money by price gouging the ink.” As we’ve noted, one study found that a swimming pool filled with printer ink would cost you almost $6 billion at retail (and that was almost 15 years ago, so the number is likely much higher today). For this business model to function at truly monopolistic pricing levels, it requires that the printer manufacturers figure out ways to block third parties from selling cheaper ink for their printers. Lexmark has been among the most aggressive in doing so, and has gone for the intellectual property trifecta: abusing copyright, trademark, and patent laws to try to block third party ink sales. Back in 2004, it lost its attempt to abuse copyright law to block sales. In 2014, the Supreme Court told Lexmark to stop abusing trademark law to scare off customers of third party ink sellers. And, today, the Supreme Court has completed the triad and told Lexmark that it cannot abuse patent law to stop third party ink cartridges as well. In the process, the Supreme Court, once again, smacked down the Court of Appeals for the Federal Circuit (CAFC), the appeals court that is supposed to be the “experts” in patent law, but keep getting the basics wrong.

The specific issue here was one of patent “exhaustion.” That is, when a manufacturer (legally) sells a patent product, has it “exhausted” its rights to its patents regarding that particular product, or can it continue to hang onto those rights and block legal purchasers from doing things with it. This is important, if you believe in the right to actually own what you buy. Lexmark tried to argue that even after it sold its printers, it could block third party ink (or, in this specific case, laser toner) cartridges, by claiming that using such cartridges violated its patents. If you follow this stuff, you may remember two previous big Supreme Court cases, dealing with the concept of “exhaustion.” There was the Kirtsaeng case regarding copyright exhaustion (once you’ve sold a copyrighted work, you can’t stop the buyer from reselling it) and Quanta v. LG that said the same basic thing for patents.

But CAFC twisted itself in knots to argue that this case was different, saying that Quanta was only about blocking sales, and this case — titled Lexmark v. Impression Products at CAFC and now Impression Products v. Lexmark at SCOTUS — was different because it involved a “limited license” rather than a direct sale. That is, Lexmark basically sold its products with a license agreement, saying “hey, don’t use third party cartridges, and if you do, we effectively are pulling our patent license and will sue you for infringement.”

The Supreme Court is not impressed with the CAFC’s pretzel logic and notes that it’s pretty damn obvious that once you’ve sold a patented product, you’ve exhausted the right to pull back the license on that product and claim infringement:

We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them. The single-use/no-resale restrictions in Lexmark?s contracts with customers may have been clear and enforceable under contract law, but they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.

The Patent Act grants patentees the ?right to exclude others from making, using, offering for sale, or selling [their] invention[s].? … For over 160 years, the doctrine of patent exhaustion has imposed a limit on that right to exclude…. The limit functions automatically: When a patentee chooses to sell an item, that product ?is no longer within the limits of the monopoly? and instead becomes the ?private, individual property? of the purchaser, with the rights and benefits that come along with ownership…. A patentee is free to set the price and negotiate contracts with purchasers, but may not, ?by virtue of his patent, control the use or disposition? of the product after ownership passes to the purchaser…. The sale ?terminates all patent rights to that item.? …

This well-established exhaustion rule marks the point where patent rights yield to the common law principle against restraints on alienation. The Patent Act ?promote[s] the progress of science and the useful arts by granting to [inventors] a limited monopoly? that allows them to ?secure the financial rewards? for their inventions…. But once a patentee sells an item, it has ?enjoyed all the rights secured? by that limited monopoly…. Because ?the purpose of the patent law is fulfilled . . . when the patentee has received his reward for the use of his invention,? that law furnishes ?no basis for restraining the use and enjoyment of the thing sold.?

Simple, right? And, once again, the (unanimous) SCOTUS ruling is not kind to the lower judges at CAFC:

This venerable principle is not, as the Federal Circuit dismissively viewed it, merely ?one common-law jurisdiction?s general judicial policy at one time toward anti-alienation restrictions.? … Congress enacted and has repeatedly revised the Patent Act against the backdrop of the hostility toward restraints on alienation. That enmity is reflected in the exhaustion doctrine.The patent laws do not include the right to ?restrain[ ] . . .further alienation? after an initial sale; such conditions have been ?hateful to the law from Lord Coke?s day to ours? and are ?obnoxious to the public interest.?… ?The inconvenience and annoyance to the public that an opposite conclusion would occasion are too obvious to require illustration.?

And then, to help the CAFC out, after quoting another case saying that this result is “too obvious to require illustration”… immediately provides an illustration. In other words, “hey CAFC, how can you be this stupid? You even need us to draw you a picture.”

But an illustration never hurts. Take a shop that restores and sells used cars. The business works because the shop can rest assured that, so long as those bringing in the cars own them, the shop is free to repair and resell those vehicles. That smooth flow of commerce would sputter if companies that make the thousands of parts that go into a vehicle could keep their patent rights after the first sale. Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement. And even if they refrained from imposing such restrictions, the very threat of patent liability would force the shop to invest in efforts to protect itself from hidden lawsuits. Either way, extending the patent rights beyond the first sale would clog the channels of commerce, with little benefit from the extra control that the patentees retain. And advances in technology, along with increasingly complex supply chains, magnify the problem.

As an aside, this “illustration” being used to mock CAFC is likely to come in handy elsewhere. We’ve been writing a bunch lately about companies trying to kill off “right to repair” laws, and here’s the Supreme Court, in a unanimous decision written by the Chief Justice, using the right to repair as a fundamental and obvious point. “That smooth flow of commerce would sputter…” Indeed.

The opinion continues to smack down CAFC later, noting that it “got off on the wrong foot.”

The Federal Circuit reached a different result largely because it got off on the wrong foot. The ?exhaustion doctrine,? the court believed, ?must be understood as an interpretation of ? the infringement statute, which prohibits anyone from using or selling a patented article ?without authority? from the patentee…. Exhaustion reflects a default rule that a patentee?s decision to sell an item ?presumptively grant[s] ?authority? to the purchaser to use it and resell it.? … But, the Federal Circuit explained, the patentee does not have to hand over the full ?bundle of rights? every time…. If the patentee expressly withholds a stick from the bundle?perhaps by restricting the purchaser?s resale rights?the buyer never acquires that withheld authority, and the patentee may continue to enforce its right to exclude that practice under the patent laws.

The misstep in this logic is that the exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is instead a limit on ?the scope of the patentee?s rights.?… The right to use, sell, or import an item exists independently of the Patent Act. What a patent adds?and grants exclusively to the patentee?is a limited right to prevent others from engaging in those practices…. Exhaustion extinguishes that exclusionary power…. As a result, the sale transfers the right to use, sell, or import because those are the rights that come along with ownership, and the buyer is free and clear of an infringement lawsuit because there is no exclusionary right left to enforce.

There was a separate, but related question in the case as well, concerning “international” exhaustion. The above parts were about what happened to cartridges Lexmark sold within the US. But Lexmark had argued separately that products sold outside the US shouldn’t be subject to patent exhaustion, so if those cartridges were then sold back into the US, they should be subject to infringement cases, since the exhaustion had not occurred under US patent law (the same issue that came up under copyright in the Kirtsaeng case). And, here, SCOTUS (at 7 to 1, with Justice Ginsburg dissenting) found that the same applies to patent law, pointing to the ruling in Kirtsaeng, ans saying that the analysis is effectively the same here:

Applying patent exhaustion to foreign sales is just as straightforward. Patent exhaustion, too, has its roots in the antipathy toward restraints on alienation… and nothing in the text or history of the Patent Act shows that Congress intended to confine that borderless common law principle to domestic sales. In fact, Congress has not altered patent exhaustion at all; it remains an unwritten limit on the scope of the patentee?s monopoly…. And differentiating the patent exhaustion and copyright first sale doctrines would make little theoretical or practical sense: The two share a ?strong similarity . . . and identity of purpose,? … and many everyday products??automobiles, microwaves, calculators, mobile phones, tablets, and personal computers??are subject to both patent and copyright protections…. There is a ?historic kinship between patent law and copyright law,? … and the bond between the two leaves no room for a rift on the question of international exhaustion.

The opinion also makes fun of the White House for weighing in on this case with little relevant to add, and with a confusion about the fact that patent law is based on the public interest, rather than as what’s in the best interest for the two parties in the transaction:

The Government has little more than ?long ago? on its side. In the 1890s, two circuit courts?in cases involving the same company?did hold that patentees may use express restrictions to reserve their patent rights in connection with foreign sales…. But no ?coalesc[ing]? ever took place: Over the following hundred-plus years, only a smattering of lower court decisions mentioned this express-reservation rule for foreign sales…. And in 2001, the Federal Circuit adopted its blanket rule that foreign sales do not trigger exhaustion, even if the patentee fails to expressly reserve its rights…. These sparse and inconsistent decisions provide no basis for any expectation, let alone a settled one, that patentees can reserve patent rights when they sell abroad.

The theory behind the Government?s express-reservation rule also wrongly focuses on the likely expectations of the patentee and purchaser during a sale. Exhaustion does not arise because of the parties? expectations about how sales transfer patent rights. More is at stake when it comes to patents than simply the dealings between the parties, which can be addressed through contract law. Instead, exhaustion occurs because, in a sale, the patentee elects to give up title to an item in exchange for payment. Allowing patent rights to stick remora-like to that item as it flows through the market would violate the principle against restraints on alienation. Exhaustion does not depend on whether the patentee receives a premium for selling in the United States, or the type of rights that buyers expect to receive. As a result, restrictions and location are irrelevant; what matters is the patentee?s decision to make a sale.

As for Ginsburg’s dissent over international exhaustion, she also dissented from Kirtsaeng, and more or less repeats that argument here.

In the end, this is a big win for consumer rights, and blocks companies from trying to abuse patent law from restricting how people can actually use products they bought.

Filed Under: cafc, ink cartridges, patent exhaustion, patents, scotus, supreme court
Companies: impression products, lexmark

Your Toner Is No Good Here: Region-Coding Ink Cartridges… For The Customers

from the all-ink-must-provide-proof-of-citizenship.-that-is-all. dept

Everyone likes buying stuff with a bunch of built-in restrictions, right? The things we “own” often remain the property of the manufacturers, at least in part. That’s the trade-off we never asked for — one pushed on us by everyone from movie studios to makers of high-end cat litter boxes and coffee brewers. DRM prevents backup copies. Proprietary packets brick functions until manufacturer-approved refills are in place.

Here’s another bit of ridiculousness, via Techdirt reader techflaws. German news outlet c’t Magazin is reporting that Xerox printers are going further than the normal restrictions we’ve become accustomed to. For years, printer companies have made sure users’ printers won’t run without every single slot being filled with approved cartridges. This includes such stupidity as disabling every function (including non-ink-related functions like scanning) in all-in-one printers until the printer is fed.

Xerox is going further. Not only do you need to refill the ink, but you have to fill it with local ink. techflaws paraphrases the paywalled, German-language article.

Xerox uses region coding on their toner catridges AND locks the printer to the first type used. So if you use an NA (North America) catridge you can’t use the cheaper DMO (Eastern Europe) anymore. The printer’s display does NOT show this, nor does the hotline know about it. When c’t reached out to Xerox, the marketing drone claimed, this was done to serve the customer better, I kid you not.

Ah, the old “serve the customer better by limiting his/her options,” as seen everywhere DRM/DRM-esque restrictions are applied.

But while c’t Magazin has only recently stumbled across this issue of region-locked ink cartridges, it’s by no means a new issue. Techflaws also points to a 2011 forum post by a user who ran into this problem with his Xerox printer.

I have seen hundreds of posts regarding the rejection of ink based on the location of purchase. I asume that Xerox does this to prevent the purchase of ink not manufactured by them. However – forcing a client to pay for a service for a snippet that needs to be installed in order to use the printer is ABSURD.

I changed from HP to Xerox because I thought it was a trusted name. I have instead learned that in the process of trying to protect against counterfeit – it is the paying customer that will get a non-functioning printer – with no help unless you are willing to pay for the printer to work as it should have to begin with.

So, it appears that if you attempt to forcefeed a Xerox printer not-from-around-here ink, it will potentially brick the device. At that point, you’re forced to ask for a Xerox rep to drop by and unlock your purchased printer for you. Here’s another confirmation of Xerox’s “locals only” ink limitations.

As I live in the UK my ink blocks are for the European market. If I purchase from ebay, ink blocks for the USA or Asian market and insert them into my printer, the printer will stop with a contact your engineer code on the LCD. The printer is now unusable.

The rate charged to the person in the forum post quoted above was 596/hour.There’snomissingdecimalpointthere.Sure,it’sonly10minutesofwork,butit’s596/hour. There’s no missing decimal point there. Sure, it’s only 10 minutes of work, but it’s 596/hour.There’snomissingdecimalpointthere.Sure,it’sonly10minutesofwork,butit’s60 being shelled out by a paying customer just so his printer will go back to printing. The only thing actually “broken” is Xerox’s business model.

This person notes they switched from HP to Xerox because the latter was supposedly more trustworthy. Apparently not. Printers aren’t a business. They’re a racket. HP is no better than Xerox. It too will lock your printer to a certain region to ensure you ~~receive only the best customer service~~ purchase only most profitable ink cartridges.

If dates are anything to go by, HP likely pioneered the bullshit that is region-locked ink. This is from a 2005 Slashdot post. (The internal link to the Wall Street Journal is dead, so it has been omitted.)

Looks like the printer cartridge manufacturers will be borrowing techniques from Hollywood. HP introduced region coding for some of the newest printers sold in Europe. HP’s US location and US dollar sliding lead to the situation, where cartridge prices in Europe are significantly higher than those in the States. In the Wall Street Journal article HP representative in Europe claims the company doesn’t make any money off regional coding for cartridges, and that consumers will win once the US dollar rises over Euro.

Unbelievably, the rep says customers will “win” if an aspect HP can’t control (currency exchange rates) happens to shift in the customers’ favor. Why not just say consumers will be better off if those scratch tickets are winners? Or if the housing market rebounds and brings the residence housing the HP printer back into the black?

How much have consumers “won” since 2005?

In January of 2005 (when the post appeared at Slashdot), the exchange rate was 1.312 ($$ to Euros). A decade later, the exchange rate is 1.162. The dollar has gotten stronger, but this change is unlikely to have any appreciable effect on the price of “European” ink (wtf even is that, HP, Xerox, et al — ink is ink). Thanks for the investment tip, HP PR.

Nearly every major printer manufacturer is in on the scam. HP saw an opportunity to increase incremental sales and staked out this territory in 2004. This brave new world of customer-screwing was followed by Lexmark, Canon, Epson and Xerox — none of which saw anything wrong with illogically restricting ink cartridges to certain regions.

Region coding for DVDs and videogames makes a certain amount of sense, provided you’re willing to make a small logic buy-in on windowed releases. But ink? It’s not like Australians need to wait six weeks for HP to cut loose ink cartridges so as not to sabotage the US release. The only reason to do this is to tie paying customers into the most expensive ink and toner. This lock-in is cemented by many printers’ refusal to recognize third-party replacement cartridges and/or allow refills of existing manufacturer cartridges.

The excuses made for this mercenary behavior would be hilarious if they weren’t so transparently dismissive of customers. Every flowery ode to customers’ best interests by PR flacks boils down to nothing more than, “Fuck ’em. It’s not like they have a choice.”

Filed Under: drm, ink cartridges, region coding, toner
Companies: canon, epson, hp, lexmark, xerox