Copyright Office Rules For Toner Remanufacturer

In a stunning end to a case that threatened the very foundation of the Digital Millennium Copyright Act, the U.S. Copyright Office ruled late Tuesday in favor of Static Control Components (SCC) in the company’s fight against rival Lexmark International
. The decision allows Sanford, N.C.-based SCC to sell microchips to be used in old Lexmark toner cartridges, and establishes precedent that indicates that the DMCA allows aftermarket companies to develop software for the purpose of remanufacturing toner cartridges and printers.

“We feel we have not only won a victory for Static Control but also for the consuming public,” said Ed Swartz, SCC’s CEO. “We are pleased that the United States Copyright Office agreed with our position that the Lexmark contentions on the DMCA were without merit.”

The ruling actually marks the second consecutive victory for SCC in its battle with Lexington, Ky.-based Lexmark. Earlier this year, following a preliminary U.S. District Court injunction on behalf of Lexmark, the North Carolina State Legislature approved a measure that made the Lexmark Return Program, formerly the Prebate program, void and unenforceable in the Mid-Atlantic state.

The case began when Lexmark filed suit in December 2002, after SCC unveiled a product used in the remanufacturing of laser toner cartridges for the Lexmark T520/522 and T620/622 laser printers. Lexmark, the world’s second-largest printer manufacturer, charged that SCC’s new product release blatantly violated the DMCA because the chip mirrored the behavior of one made by Lexmark, and the DMCA shielded itself from competition from the remanufacturing industry.

“We invest hundreds of millions of dollars annually in research and development to help ensure that we are providing the very best technologies and the finest services and support to our valued customers,” Lexmark general counsel Vincent Cole said back in February. “We believe that our printing solutions and services make us unique, and we intend to vigorously protect the intellectual property that helps to set us apart from our competition.”

Still, Swartz and other officials at SCC were undeterred. These officials insisted that the microchip was perfectly legal under section 1201 of the DMCA, which allows aftermarket companies to develop software for the purpose of remanufacturing toner cartridges and printers. The company also argued that Lexmark was trying to squash competition by installing a microchip on its toner cartridges to make it difficult for third-party manufacturers to make generic cartridges.

The DMCA, passed in 1998 by Congress, allows for review of new products that require an exemption for being able to circumvent a technology measure that would control access to a copyrighted work.

As of Wednesday afternoon, there was no indication whether Lexmark would appeal the ruling, and Lexmark officials were not immediately available for comment.

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