The North Carolina company that says it’s fighting for the survival of low-cost, remanufactured printer cartridges, filed an antitrust lawsuit Monday against Lexmark International Inc., charging it with attempting to monopolize the printer market.
The new lawsuit, filed by Static Control Components Inc. (SCC) in Sanford, N.C., comes after Lexmark filed a lawsuit against Static last December for illegally copying its printer computer technology — the computer chips that have become an integral part of toner cartridges.
On Friday, the U.S. District Court for the Eastern District of Kentucky issued a preliminary injunction favoring Lexington, Ky.-based Lexmark that bars SCC from making chips used in replacement cartridges for two of its laser printers.
“Naturally, we’re disappointed in that order,” said William “Skip” London, general counsel for SCC. But London said Judge Karl Forester’s ruling also provided guidance on what it could and couldn’t do in producing compatible cartridges. “We anticipate that we will be able to come up with a chip in a very short period of time that doesn’t go against the judge’s ruling,” he said.
In its antitrust case filed today in federal court in North Carolina, SCC alleges that Lexmark’s anticompetitive practices are squeezing out companies that remanufacture toner cartridges. In its lawsuit, it argues that approximately 35 percent of Hewlett-Packard Co. toner cartridges are remanufactured, compared with about 14 percent for Lexmark. Static blames that disparity on Lexmark’s anticompetitive practices.
Lexmark officials said they hadn’t received the lawsuit and wouldn’t comment until they had a chance to look it over.
The cartridges in dispute are sold by Lexmark with an upfront discount that gives the user a discount if the buyer agrees not to turn the cartridge over to a remanufacturer. Lexmark said the company offers users the option of buying without an upfront discount if they choose not to return the cartridges to Lexmark. Those cartridges can be remanufactured.
But SCC officials have called the “prebate” program a “sham” and said end users will always buy the lower-priced discounted cartridge that can’t be remanufactured.
The case has potentially broad implications. Lexmark’s Dec. 30 lawsuit against SCC charges the company with violating the Digital Millennium Copyright Act (DMCA), the controversial 1998 law established to prevent piracy. The law was aimed at music and motion pictures, but critics have said Lexmark’s use of it illustrates a broader problem.
Under the DMCA, it’s conceivable, for instance, that a hardware maker could prevent interoperability with other systems by citing the law’s anticircumvention provisions. By putting software controls on, for instance, auto parts, OEMs can use the law to stop remanufacturing of parts in that industry.
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