printers – Techdirt (original) (raw)

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

Chip Shortage Forces Canon To Issue Workarounds For Its Own Obnoxious DRM

from the something-akin-to-justice dept

Tue, Jan 11th 2022 12:06pm - Karl Bode

For decades now, consumers have been lured into a sour deal: pay for a relatively inexpensive printer, then spend a lifetime paying an arm and a leg for viciously overpriced printer cartridges. As most have learned first-hand, any attempt to disrupt this obnoxious paradigm via third-party printer cartridges has been met with a swift DRM roundhouse kick to the solar plexus. In fact if there’s an area where the printer industry actually innovates, it’s most frequently in finding new, creative and obnoxious methods of preventing cartridge competition.

Unfortunately for Canon, the global chip shortage has temporarily put a kink in the company’s plan to annoy regular customers. The shortage means the company hasn’t been able to buy enough chips used to determine whether a printer cartridge is “genuine” or “authorized,” and therefore has had to start selling cartridges without DRM, and issue guidance helping users do an end around for the company’s own obnoxious DRM warnings:

? Semiconductor shortage leads to Canon selling toner cartridges without chips which usually identify them as genuine, so Canon now instructs customers on how to override the warnings for using "counterfeit" cartridges https://t.co/rqcmXckPFp

— Nils Adermann (@naderman) January 7, 2022

The company’s various international websites warn users that even “official” Canon ink cartridges could be seen as “counterfeit” across a range of printer products lines (19 devices in total) because they can no longer embed the chips needed for DRM:

“The role the chip plays in the toner cartridges is to communicate information, this includes toner level and to confirm that the toner is a genuine Canon product.”

Whoops.

Canon was just sued last October for disabling all the functions in their multifunction printers if the device’s cartridges ran out of ink (and failing to adequately disclose that to consumers). Basically, Canon did the math and realized that they’d boost their profit margins if they forced millions of customers to buy new printer cartridges — even if they were only using the device to scan. That this might annoy, inconvenience, or drive up costs for its customers, or sour the public on the brand apparently never entered into the company’s thinking.

Of course, none of this would be a problem if the company hadn’t embraced annoying, artificial limitations in a bid to hamper competition and drive up costs in the first place, but it’s obviously unlikely Canon will learn much of anything from the experience.

Filed Under: anti-circumvention, chip shortage, copyright, dmca 1201, drm, printers
Companies: canon

Happy Birthday, Statute of Anne

from the bitter-reminders dept

Early in my legal career I had the opportunity to attend a conference in London organized to celebrate the launch of the Copyright History project. The goal of this project was to translate, annotate, analyze, and even just simply make available the original primary source documents that underpin our modern notions of copyright. It is an important enterprise because all too often we forget just how these historical documents actually do underpin it. History is often like playing a giant game of “telephone,” where meaning changes over time, and in the case of many of these documents our understanding of what they were telling us has also changed over time — and often become distorted. Having access to these original primary source documents means that we can recalibrate our understanding of what these policies actually were intended to do in order to ensure that our modern notions of copyright echo them properly.

At its launch the project included primary source documents from five jurisdictions — Britain, Germany, France, Italy, and the US (with others added later) — and the collection now includes documents from 1450 through 1900. For the conference, some of those original documents were brought in by an archivist and displayed under glass for us to examine. One of them was the original parchment copy of Statute of Anne, which attendees of the conference — including me — had the privilege of getting to see up close with our own eyes.

The Statute of Anne, whose anniversary of coming into force on April 10, 1710 we celebrate today, is one of the founding pillars of modern US and UK copyright law. At the time of its passage it reflected an enormous change in attitude about how the copy right should be handled. Before it came along English law (which is not to be confused with Scottish law, whose own system already bore more features of what we would recognize as modern copyright law) granted a monopoly in the copy right to a handful of printers that had the king’s permission to publish. (It was fitting, in fact, that the Copyright History conference itself took place in a hall of the Stationers? Company, one of the most powerful companies of the 17th century that then had near-exclusive license to print.) This use of a royal printing license to create a monopoly in publishing limited to just these few printers gave the government the ability to also limit what ideas could be published, which necessarily limited discourse.

However, the political pressure for democratic reform eventually caught up with this system, and by 1695 it finally gave way for good. And that set the stage for the Statute of Anne to be enacted in 1710, which changed the approach to copyright entirely. While the Licensing Act of 1662 was ?[a]n act for preventing the frequent abuses in printing seditious treasonable and unlicensed books and pamphlets,? the Statute of Anne was purposefully ?[a]n act for the encouragement of learning.? Whereas the former was about government control over ideas, the latter was about spreading them. Instead of using royal printing licenses to administer the copy right as a means of controlling discourse, by its very design the Statute of Anne was meant to stimulate it.

And it did. Right away newspapers proliferated, public houses exploded with popularity (as they had during earlier periods when licensing statutes had lapsed), and democratic ideals flourished as tight government control over ideas yielded. But while the structure of modern copyright law today looks much as it did following the Statute of Anne, its limiting effects on discourse now seem more similar to the period that preceded it.

There were a few other key differences between the Statute of Anne and the licensing statutes before it, beyond just their stated policy goals, which bore on the former’s ability to stimulate discourse. For instance, the Statute of Anne fundamentally shifted the role of the author. Before the Statute, authors were largely relegated to subordinate figures, barely mentioned in association with the work. Instead full authority for the work was usurped by the printer, who, as an agent licensed to act on behalf of the government, had the sole discretion to deem it acceptable to be published. With the Statute of Anne, however, authors became central to the whole system. They retained full authority for the work and as such retained the rights to control its publication.

These rights were of limited duration, however, and the Statute of Anne further enhanced public discourse by creating a public domain. In fact, the only reason the Statute of Anne gave authors any limited rights was simply to address the problem of market failure. The fear was that no ideas would be contributed to public discourse at all if it were economically impossible for authors to contribute them. With the goal of the Statute being to get those ideas out there, these limited author monopolies were intended as a means for achieving that end.

Unfortunately, however, while in the early 18th century the focus on protecting and enhancing the rights of authors was intended to facilitate the growth of public discourse around those ideas, today that same focus on authors’ rights does the exact opposite. With so much emphasis now being put on the rights of the author as owner of the work to control it, at the expense of the public benefit the system is supposed to impart, it has had the effect of choking off what discourse these works might spawn. Through needlessly lengthy monopolies and overly-expansive interpretations of the reach of these rights, history seems to be repeating itself, returning us to the discourse-choking limitations of the licensing era and forsaking the promise of the Statute of Anne to promote its spread.

For, just like the 17th Century printers, these authors? copy rights get their teeth from government. They are government-granted monopolies with government-sanctioned reaches. With those rights, and with the government?s blessing, authors can limit ideas? consumption and dampen their reach and influence long after any economic necessity would justify — and just as the licensed printers once did. Back then the Stationers? Company had powers of search and seizure and could prosecute competing printers; today, particularly as copyrights are so often aggregated in the hands of a few large corporate gatekeepers, modern infringement lawsuits look much the same.

So we find ourselves at the turn of the 21st century at the same crossroads we were at 300 years earlier, faced with a choice in how we use government power. Do we use it to enable public discourse, or to stifle it? For although our modern copyright systems trace their lineage back to the author-focused structure of the Statute of Anne, that basic structure alone does not determine which value is fostered. It?s how we implement it that matters to which ultimately survives.

Yet unfortunately, today, while the original document articulating that policy value to promote the spread of ideas has been carefully preserved, thanks to how we’ve enshrined the notion of copyright in our modern law, the historic change it was to herald has not.

Filed Under: authors, copyright, printers, publishers, statute of anne

Researchers Reveal Details Of Printer Tracking Dots, Develop Free Software To Defeat It

from the whistleblowers-of-the-world,-rejoice,-but-still-be-careful dept

As Techdirt has reported previously in the case of Reality Leigh Winner, most modern color laser printers place tiny yellow tracking dots on every page printed — what Wikipedia calls “printer steganography“. The Electronic Frontier Foundation (EFF) first started warning about this sneaky form of surveillance back in 2005. It published a list of printers and whether it was known that they used tracking dots. In 2017, the EFF stopped updating the list, and wrote:

It appears likely that all recent commercial color laser printers print some kind of forensic tracking codes, not necessarily using yellow dots. This is true whether or not those codes are visible to the eye and whether or not the printer models are listed here. This also includes the printers that are listed here as not producing yellow dots.

Despite the EFF’s early work in exposing the practice, there has been limited information available about the various tracking systems. Two German researchers at the Technical University in Dresden, Timo Richter and Stephan Escher, have now greatly extended our knowledge about the yellow dot code (via Netzpolitik.org). As the published paper on the work explains, the researchers looked at 1286 printed pages from 141 printers, produced by 18 different manufacturers. They discovered four different encoding systems, including one that was hitherto unknown. The yellow dots formed grids with 48, 64, 69 or 98 points; using the grid to encode binary data, the hidden information was repeated multiple times across the printed page. In all cases the researchers were able to extract the manufacturer’s name, the model’s serial number, and for some printers the date and time of printing too.

It’s obviously good to have all this new information about tracking dots, but arguably even more important is a software tool that the researchers have written, and made freely available. It can be used to obfuscate tracking information that a printer places in one of the four grid patterns, thus ensuring that the hard copy documents cannot easily be used to trace who printed them. Printer manufacturers will doubtless come up with new ways of tracking documents, and may already be using some we don’t know about, but this latest work at least makes it harder with existing models.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: forensics, printer dots, printers, sources, tracking

HP Brings Back Obnoxious DRM That Cripples Competing Printer Cartridges

from the who-wanted-loyal-customers-anyway dept

Tue, Sep 19th 2017 03:35pm - Karl Bode

Around a year ago, HP was roundly and justly ridiculed for launching a DRM time bomb — or a software update designed specifically to disable competing printer cartridges starting on a set date. As a result, HP Printer owners using third-party cartridges woke up one day to warnings about a “cartridge problem,” or errors stating, “one or more cartridges are missing or damaged,” or that the user was using an “older generation cartridge.” The EFF was quick to lambast the practice in a letter to HP, noting that HP abused its security update mechanism to trick its customers and actively erode product functionality.

HP only made matters worse for itself by claiming at the time that it was only looking out for the safety and security of its customers, while patting itself on the back for being pro-active about addressing a problem it caused — only after a massive consumer backlash occurred.

Fast forward almost exactly one year, and it looks like HP hasn’t learned much from the Keurig-esque experience. The company this week released a new software update for the company’s OfficeJet 6800 series, OfficeJet Pro 6200 series, OfficeJet Pro X 450 series, and OfficeJet Pro 8600 series printers. One of the major “benefits” of the update? Printer cartridges from competing manufacturers no longer work. Again:

According to ghacks.net, a new firmware update for HP Officejet printers released yesterday appears to be identical to the reviled DRM update released exactly one year ago. When you try to use third-party ink after installing the new/old firmware, you apparently run into an error that says ?One or more cartridges appear to be damaged. Remove them and replace with new cartridges.? Depending on how many cartridges your specific printer uses, it may be possible to insert one or two without getting an error. But it seems when all of the ink cartridge slots are filled up, the warning message will be displayed again.

Just like a year ago, this restriction is being foisted upon consumers under the guise of a security update, powered by a service HP calls its “Dynamic Security” platform. Fortunately, consumers have several paths to avoid dealing with this nonsense. Customers can head to the HP support website and download an alternate firmware without the Dynamic Security platform embedded (something that HP knows most users won’t do, and which places the onus for remedying HP’s bad behavior on the end user). Users then have to block HP’s automatic update functionality to prevent this firmware from being installed automatically (at the cost of useful updates).

There’s probably an easier, more elegant solution: stop buying HP printers until the company realizes that eliminating device functionality under the pretense of security is obnoxious bullshit.

Filed Under: competition, drm, printers
Companies: hp

How Document-Tracking Dots Helped The FBI Track Down Russian Hacking Doc Leaker

from the just-metadata-things dept

The surprising story that quickly followed the somewhat-less-surprising Intercept leak was the arrest of Reality Leigh Winner for the leak of the document. It was an incredibly fast leak investigation that apparently began when The Intercept reached out for comment after obtaining the document on May 30th.

There’s been a lot of talk that The Intercept acted carelessly when speaking to government officials and burned its source. But the evidence trail laid down by the FBI’s affidavit suggests Winner did most of the burning herself. The document given to The Intercept was either an original printout or a scan of it. It showed telltale creases where it had been folded and placed into an envelope by the leaker.

More importantly, the document contained something else: data that indicated where and when the document had been printed. This made it much easier to link Winner to the posted document. Rob Graham of Errata Security walks through the steps he took to decipher the physical metadata created by the NSA printer used by Winner. Printers — and not just those owned by secretive government agencies — can help rat out leakers.

The problem is that most new printers print nearly invisibly yellow dots that track down exactly when and where documents, any document, is printed. Because the NSA logs all printing jobs on its printers, it can use this to match up precisely who printed the document.

Using a paint program to invert the document’s color scheme and the EFF’s handy spy-in-the-printer tool, Graham obtained the following information using only the auto-printed dots on the Intercept document:

The document leaked by the Intercept was from a printer with model number 54, serial number 29535218. The document was printed on May 9, 2017 at 6:20. The NSA almost certainly has a record of who used the printer at that time.

Very definitely it does have such records, as do a great many entities not heavily involved in national security. Many documents in many companies are considered “uncontrolled” if printed, and built-in document tracking allows them to track down employees who may have jeopardized nothing more than their own employment.

However, this does bring everything back around to the “just metadata” argument. The government has often claimed the wholesale collection of metadata is harmless, because it’s nothing more than transactional records. Obviously, metadata can be quite damaging. Winner’s decision to print the document ended her very short stint as a leaker.

Conversely, the government also claims — when raising the “going dark” specter — that metadata and other transactional records aren’t nearly as useful as intercepted communications and/or device contents. To some extent, that’s true. But it’s obvious that metadata/transactional records aren’t nearly as useless as they’re portrayed by law enforcement handwringers. Either way the government spins the metadata argument, it’s insulting the intelligence of Americans.

Filed Under: dots, fbi, leaks, metadata, nsa, printers, reality winner, tracking dots

HP Issues Flimsy Mea Culpa For Recent Printer Cartridge DRM Idiocy, But It's Not Enough

from the not-helping dept

Tue, Oct 4th 2016 10:43am - Karl Bode

A few weeks ago we noted how HP had effectively delivered a DRM time bomb in the form of a software update that, once detonated, crippled customers’ ability to use competing third-party print cartridges in HP printers. While such ham-fisted behavior certainly isn’t new, in this case HP had actually first deployed the “security update” to its printers back in March — but didn’t activate its stealthy payload until last month. Once activated, the software update prevented HP printers from even detecting alternative ink cartridges, resulting in owners getting a rotating crop of error messages about faulty cartridges.

HP customers were obviously annoyed, and the EFF was quick to pen an open letter to HP, quite correctly noting that HP abused its security update mechanism to trick its customers and actively erode product functionality. Ultimately HP was forced to respond via a blog post proclaiming the company was just “dedicated to the best printing experience” and wanted to correct some “confusion” about its DRM sneak attack. In short, HP strongly implied it was just trying to protect consumers from “potential security risks” (what sweethearts):

“HP printers and original HP ink products deliver the best quality, security and reliability. When ink cartridges are cloned or counterfeited, the customer is exposed to quality and potential security risks, compromising the printing experience. As is standard in the printing business, we have a process for authenticating supplies. The most recent firmware update included a dynamic security feature that prevented some untested third-party cartridges that use cloned security chips from working, even if they had previously functioned.”

And while HP ultimately said it would deploy an “optional firmware update” in a few weeks, the mea culpa is filled with the usual assortment of garbled half-truths — including HP patting itself on the back for being ultra-transparent and proactive after its customers began brandishing pitchforks. The EFF is fortunately attempting to hold HP’s feet to the fire, urging the company to more fully disclose just how many printers were impacted, detail how it intends to inform users about the update, and stop undermining their customers confidence in the security update process:

“HP needs to promise never to use a security update to take away features again. There’s hundreds of millions of inkjet printers out there, and they’re vulnerable to malicious software that can conscript them into jaw-dropping internet attacks. Whether or not you own an HP printer, you have a stake in HPs’ printers being swiftly updated when bugs are discovered in them. That means that HP must not give customers a reason to worry that the next “security update” is yet another self-destruct mechanism aimed at protecting the security of HP’s cartridge division, rather than the security of our printers, to which we supply our credit card details, Social Security Numbers and personal photos.”

The EFF is also urging annoyed customers to sign this petition, which currently has 12,400 signatures and counting.

Filed Under: cartridges, drm, ink, printers
Companies: hp

After Failing To Use Copyright & Trademark Law To Stop Printer Ink Resellers, Lexmark Finally Scores A Victory With Patent Law

from the all-about-the-control dept

Intellectual property: if you fail to block competition with one kind, apparently you can try, try again with another kind — and eventually you’ll end up in the Court of Appeals for the Federal Circuit, who will mess everything up and kill off the competition. Printer company Lexmark has been at war with alternative suppliers of ink for well over a decade. As you may be aware, printer ink is sold at a ridiculously high markup, such that one estimate (from over a decade ago) noted that in order to fill an Olympic-sized swimming pool with printer ink, it would cost you $5.9 billion (yes, with a “_b_“) at the checkout counter of your local office-supply retailer. The printer makers have notably taken a “give away cheap crappy printers at a low cost, and make it up in seriously overpricing the ink” strategy to their businesses. This kind of thing works great until someone tries to step in and sell competing ink.

The various printer companies have tried all sorts of tricks to fight back against this, with Lexmark being one of the most aggressive (though, others, including HP and Epson, have been fairly aggressive as well). Back in the early 2000s, Lexmark started out by arguing that replacement inkjet cartridges violated copyright law. Their claim rested on the idea that resellers were “circumventing” the technological protection measures that Lexmark placed on its ink cartridges, and thus were violating Section 1201 of the DMCA, which made it copyright infringement to “circumvent” technological protection measures. While a lower court agreed, the Sixth Circuit appeals court overturned the ruling, and smacked Lexamark around a bit for abusing the DMCA — properly noting the ridiculous end result that would occur if it bought Lexmark’s argument:

“If we were to adopt Lexmark’s reading of the statute, manufacturers could potentially create monopolies for replacement parts simply by using similar, but more creative, lock-out codes. Automobile manufacturers, for example, could control the entire market of replacement parts for their vehicles by including lock-out chips. Congress did not intend to allow the DMCA to be used offensively in this manner, but rather only sought to reach those who circumvented protective measures “for the purpose” of pirating works protected by the copyright statute.”

That case, somewhat surprisingly, did not end there. The reseller that it had sued originally, Static Control Components (SCC), then countersued Lexmark, arguing that Lexmark violated trademark law when it basically sent a letter to every SCC customer it could find, telling them that SCC had broken the law. That case then made its way through the courts, and just about two years ago, the Supreme Court ruled against Lexmark again, and basically rewrote the rules for who could sue over a “false advertising” trademark claim by effectively throwing out all previous tests.

In that case, Lexmark didn’t technically use trademark law to try to stop SCC, but very well may have abused trademark law to scare off SCC’s customers.

And, of course, there was still a third option. While Lexmark had also used patent claims against SCC, the jury in the case ruled against Lexmark as well, even saying that Lexmark had misused its patents. However, Lexmark was also suing other ink sellers for patent infringement as well, and suing in the courts and using the ITC loophole as well. Basically, Lexmark will use and abuse any and all tools at its disposal to stop competition in ink sellers.

And it finally won one. Last week, the Court of Appeals for the Federal Circuit (CAFC) — the court that is somewhat infamous for so frequently getting things wrong — finally gave Lexmark the victory it so desperately had sought for over a decade, saying that Impression Products violated Lexmark’s patents in selling its laser printer toner cartridges (which, yes, are slightly different than inkjet ink cartridges).

In this case, the key issue was basically over patent “exhaustion” and the question of if you first allowed for a sale overseas, could that product then be refurbished and resold back in the US. If this sounds familiar, you may remember that the Supreme Court ruled a few years ago in the Kirtsaeng case that you can resell goods you bought outside the US back in the US and it doesn’t violate copyright law. However, CAFC in this case basically says “Sure, but that’s not true with patents.”

Kirtsaeng is a copyright case holding that 17 U.S.C. § 109(a) entitles owners of copyrighted articles to take certain acts ?without the authority? of the copyright holder. There is no counterpart to that provision in the Patent Act, under which a foreign sale is properly treated as neither conclusively nor even presumptively exhausting the U.S. patentee?s rights in the United States.

Of course, there are other cases, mainly the well-known Quanta v. LG case that said that “exhaustion” applies to patents as well, and once you’ve sold a product, you can no longer use patent law to block future sales. But here, the court spends a lot of time trying to distinguish the differences between the Quanta case and this case — basically saying that there is no exhaustion when there’s a limited license, rather than a direct sale.

And the crux of its reasoning: “if we rule otherwise, that would really upset pharmaceutical companies who want to charge cheaper rates overseas and don’t want to see those cheap drugs resold back in the US.” Basically, there are neat business models that would be upset by geographical arbitrage:

At the same time, the conduct challenged here can have benefits. Lexmark?s Return Program provides customers an immediate up-front benefit: a choice between two options, one offering them a lower price in exchange for the single-use/no-resale limitation. And a company in Lexmark?s position could have a plausible legitimate interest in not having strangers modify its products and introduce them into the market with the quality of modifications (including ink refills) not subject to Lexmark?s control: lower quality of remanufactured cartridges could harm Lexmark?s reputation…. A medical supplier in Mallinckrodt?s position plausibly may have similar reason to believe that reuse, when not under its own control, carries a significant risk of poor or even medically harmful performance, to the detriment of its customers and its own reputation. Such interests are hardly unrelated to the interests protected by the patent law?the interests both of those who benefit from inventions and of those who make risky investments to arrive at and commercialize inventions.

Of course, that was the same argument that publishers made in the Kirtsaeng case, and the Supreme Court rejected it, so it seems like there’s at least a decent chance that should SCOTUS take this up on appeal, it may be yet another opportunity to smack CAFC around for getting things totally backwards (now becoming something of an annual tradition at SCOTUS).

There is a dissent from Judge Dyk (with Judge Hughes) that suggests that the majority’s decision here does not make sense in following Supreme Court precedent — and recognizing that the majority has just set up CAFC for yet another smackdown. The dissent notes a long line of cases saying that patent exhaustion is a thing and finds it troubling that the ruling ignores all that, and suggests SCOTUS won’t particularly like CAFC ignoring it all.

The majority?s justifications for refusing to follow Supreme Court authority establishing the exhaustion rule misconceive our role as a subordinate court.

First, the majority characterizes the statement of the exhaustion rule in the Supreme Court cases as mere dictum because in those cases there was either no restriction imposed or the restriction would otherwise violate the antitrust laws. But the cases impose no such qualification on the rule announced. The Supreme Court has repeatedly advised the courts of appeals that our task is to follow the rules proclaimed by the Court, and not to attempt to distinguish Supreme Court cases on their facts…

Not surprisingly, Impression Products has suggested it will appeal to the Supreme Court, so this case is far from over. However, once again, we see how companies will use intellectual property law however they can to try to block out competition.

Filed Under: cafc, copyright, copyright exhaustion, dmca, exhaustion, false advertising, ink, patent exhaustion, patents, printer ink, printers, supreme court, trademark
Companies: lexmark