OEMs have long been active at protecting the intellectual property of their laser cartridges, but the one that we’ve been hearing the most from recently is Canon. Just in the past two years, the vendor has initiated two cartridge-related lawsuits in both the U.S. ITC and U.S District Court for the Southern District of New York against more than 60 aftermarket cartridge supplies vendors and manufacturers. Last year, Canon came out of the lawsuit victorious, having successfully acquired a GEO, thus barring these companies from making, importing into, and selling the involved cartridges in the U.S. So far this year, less than half of the over 30 defendants involved in this year’s case have settled in either the ITC or district court case (or some in both), meaning that the conclusion of this year’s litigation will likely not be seen until 2015. It is believed that the result may be another GEO, as was indicated by the ITC earlier this year.
This year however, the ongoing litigation against third party cartridge vendors has resulted in a very notable reaction from the aftermarket. Several months ago, Canon announced that 9 defendants had defaulted in the 2014 U.S. ITC case, meaning they failed to respond to Canon’s initial complaints in the allotted amount of time. However, many of these defendants had already settled in the U.S. District Court case. Interestingly, a group of the remaining defendants (that have not yet settled and were not named as defaulting) banded together and responded to Canon’s allegations, asking the vendor to issue a statement explaining why the defendants that had already settled at the district court should not be found in default the U.S. ITC case. The group is reasoning that because of the vendor’s action, these companies are being presented as unresponsive and/or uncooperative, even though they have already reached settlements on one side of the case. This action is at least notable in that a group of companies that are direct competitors came together for a common cause in an effort to protect their reputations and industry.
Printer makers spend millions of dollars developing their technology and securing their patents and will put forth the resources to protect them. Supplies are a crucial part, and the most profitable part, of OEM revenues and when other companies start infringing their patents or introducing low quality clones for a fraction of the price of a legitimate cartridge, it can have negative implications. OEMs will, and should, protect themselves. Notably, Canon is on the lowest end of the spectrum with regard to the volume of third party cartridges available in the IT channel as tracked by gap intelligence. It is expected that this has a lot to do with the fact that Canon is one of the top patent holders, but also because the company very actively protects what is covered by those patents.
While settlements are good for both parties, it should be noted that when the defendants take this action, it’s difficult to know whether or not they had been infringing on patent rights, as they are essentially just agreeing that won’t do it moving forward. To make a case for any that haven’t infringed, these lawsuits are damaging to their reputations, because whether or not the infringement claims are true, they will be associated with the negative side of a patent infringement lawsuit. This in particular is causing a lot of concern among third party manufacturers because it can give a negative connotation to their industry as a whole. And although many of the companies named in these lawsuits are by no means small companies, they also don’t have the same amount of capital or legal resources that large OEMs have to endure a multi- year fight to clear their names.
To my knowledge, this is one of the first times that third party competitors have banded together to fight for the reputations of other competitors involved in the same case. Over the past year or so, there has been an increasing level of talk and response from the aftermarket, especially since the influx of non-infringing alternatives that hit the market shortly after Canon’s GEO was awarded last summer. The more companies that are engaged in patent infringement lawsuits, the more damaging effect it can have on their industry as a whole, so like the OEMs protecting their technology, the legitimate aftermarket is protecting its right to compete.
Recycling Times Media was set to launch its PatentSmart website this week, providing remanufacturers with a centralized collection of OEM cartridge patents that they can use to stay on top of what is patented by the OEMs. With this, it seems that remanufacturers will have a much better and faster way to ensure that they won’t be infringing. Details about the site remain limited, but it could have the potential to change the way third party companies approach the development of new components and technologies, even if the effects aren’t immediate. At the very least, the recent actions from the aftermarket have demonstrated a shift in attitude from reactive to proactive, and I don’t think this is the last we’ve heard from this side of the industry.