EU recycles Lexmark ink cartridge probe

Unfair rebates, rival claims

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A new complaint against Lexmark could re-ignite the European Union's investigation into the company's policy regarding sale of replacement printer cartridges.

According to a report in the Wall Street Journal, third party cartridge supplier Static Control Components (SCC) has complained that Lexmark's policy of offering rebates to customers who return used cartridges inhibits its ability to compete with the company. It is believed that the European Commission is currently examining the complaint.

This is not the first time that Lexmark has faced an EU probe over its cartridges. Competition Commissioner Mario Monti launched an investigation into the cartridge business in mid-2002, citing concerns about the high prices charged for replacement cartridges. The inquiry was to cover all industry players, however it is believed to have stalled due to lack of information.

The new complaint against Lexmark stems from the recent EU ruling on recycling. The European Parliament voted in December to introduce a new law that includes a ruling directing manufacturers of printers to no longer incorporate chips into their own-brand ink refill cartridges. While third party suppliers claimed that these chips made it difficult to supply replacement cartridges, the EU ruling was designed to make cartridges easier to recycle.

Meanwhile, SCC and Lexmark are engaged in a protracted legal battle on the other side of the Atlantic. The case has been ongoing since 2002, with Lexmark alleging that microchips incorporated in SCC cartridges infringe copies of Lexmark's copyrighted software and were being sold by SCC to defeat Lexmark's technological controls, thereby allowing unauthorised access to Lexmark's protected software programs and the unauthorised remanufacturing of certain Lexmark toner cartridges. In February 2003 a US court issued a preliminary injunction against SCC, finding that Lexmark is likely to prevail at trial on the merits of its copyright infringement and Digital Millennium Copyright Act (DMCA) claims.

Lexmark has already won one legal battle in the US surrounding the issue. In October 2003, a federal judge in California has ruled against the Arizona Cartridge Remanufacturers Association in its lawsuit challenging Lexmark's cartridge return programme. ACRA alleged in the lawsuit that the Lexmark cartridge return program violated California Business and Professions Code sections 17200 and 17500, which prohibit unfair and deceptive business practices and deceptive advertising. The court confirmed that post-sale conditions on a patented article lie fully within the rights granted patent holders under US federal patent law.



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