Supplies Under Scrutiny in Europe and Russia

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Supplies Under Scrutiny in Europe and Russia Legal Disclaimer Solore quibus coreperatiis am rem vent utem ut fugitiisqui dolor ad quo molupta ectibusam, inverov itatist aut acepediam ipsusanda voluptinis ipsae sunt. Arci nonseror rehenienes erentia vento beature doluptat. Acimendae volorum ate et la sum lit alique excearu mquasit quibus nis dolupta tibereictet harchil lautemquam ventia volupta temquiam fugia aut ero quati imintest rehentur? Xerem ut optibea quam re sincimincto consequi abore natus eum aut laut event utaerovit illorio. Nam eturem ad quatem. Nam, simil enimaxi moluptatur, quatqui omnistrum simusandae pro imi, ut eatem ent faceped moluptate nulpa. Id quiaes entotasim volut facesto custia ditae nulliquam, es re ne consequi blabori onsequam volenis sitatet underov iducius aeratis evel eum aut magnis dolut laborrum a cus et, culla pos moluptas aut officiduci ipsaerio explis que nihitam ventis maxim estio eos molupta cullis eos et etur? Qui tota por maio ilignis tiatur mo qui ut doloriae nis nobis iur a verunt mos alit por molore antiam sum rest pos ese rest, cus doluptaque peruptu

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Table of Contents Introduction ...... 3 OEMs Fight Back ...... 5 The Pelikan Briefs ...... 6 Epson: Euro Clone Warrior ...... 8 Epson v. Medea … and Ninestar ...... 9 Toner Troubles ...... 10 Samsung Goes to Court ...... 11 Canon Takes Aim at Infringers ...... 12 It’s Not Just about Toner ...... 14 Epson Battles in the UK, Again ...... 15 More to Come—Much More ...... 16

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Introduction Although lawsuits in the United States involving digital imaging consumables get all the attention, Europe has had its share, too. The availability of patent-infringing ink and toner cartridges is on the rise in the region, and these products are disrupting the market in Europe for digital supplies. While European cases may get short shrift in the industry press, don’t be fooled. Hardware manufacturers have settled numerous lawsuits with European firms stopping them from marketing products that violated OEM intellectual property (IP). Often these settlements require violators to pay the OEM an undisclosed amount, and we estimate millions of euros have been exchanged as a result. While the list of offenders is now long, it is still growing as even more OEM lawsuits are filed in European courts.

There are essentially five categories of ink and toner cartridges (see table on the following page). From a legal perspective, OEM cartridges are, of course, the safest for the channels to market. Generally remanufacturing is permitted under patent law, so companies can safely sell remanufactured cartridges as long as all the materials used during the refurbishing process do not violate any OEM IP. Likewise, newly constructed compatible cartridges can be free of any legal snares if the manufacturer diligently reviews all of the IP represented in the design of the original OEM product and painstakingly works around each patented technology.

The other two categories in the grid are manufactured without regard for IP, and marketing products in either category can land a vendor in legal hot water—very hot water. Counterfeits are sold to unwitting customers who believe they are purchasing genuine OEM cartridges while infringing compatible cartridges are copied directly from the original OEM cartridge and manufactured with no consideration of the patented technologies. These infringing compatibles, also known as “clones,” are often marketed either as non- infringing compatibles or increasingly as remanufactured cartridges. While OEM, remanufactured, and non-infringing compatible cartridges are legitimate, counterfeits and clones are illegal, and they are at the center of the growing number of OEM lawsuits.

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Hapless firms ignorant of the fact that the products they sell are infringing are liable for damages nonetheless.

Ink and toner cartridges contain essential cartridges are simply copied. They printing technologies, and OEMs invest require no empties so the fixed costs of heavily in the research and development acquiring and inventorying cores are of consumables. Because cartridges non-existent. Because the costs are often contain a wealth of IP, those in the artificially cheap, clone manufacturers channels that sell third-party are able to bring products to market at a consumables must be certain the fraction of the cost of legitimate third- sources for the products they market party supplies. Clones are often priced are legitimate. Increasingly, the well below the price of remanufactured channels are at risk of selling cartridges and non-infringing newly built that infringe OEM patents. Europe has a compatibles, and legitimate third-party well-established and legitimate third- supplies vendors find clones impossible party supplies industry that is supported to compete with because they are so by diverse channels including inexpensive. In order to preserve their distributors and wholesalers, retailers sales, a growing number of legitimate and resellers, various equipment European firms find that they must sell dealers, and many others. Without clones or exit the market. Clones have constant vigilance, however, even long- gained market share at the expense of time vendors marketing third-party OEMs and remanufacturers alike. supplies can be unaware that they are Manufactured mainly in Asia, clones selling infringing products, which places have had little trouble slipping through them in jeopardy of lawsuits. Hapless Europe’s many entry points. Because of firms ignorant of the fact that the its long and porous border with Africa products they sell are infringing are and certain Eastern European countries liable for damages nonetheless. where patent-holder rights and other IP There are few R&D costs associated with protections are largely ignored, the counterfeits and clones because the European Union’s markets are highly

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susceptible to clones. Estimates business as infringing products continue German Customs published by IDC in 2013 indicate that as to flood the market and print volumes many as one in five toner cartridges have tumbled along with the rate of authorities, currently sold in Western Europe are consumption of toner and ink cartridges. flanked by infringing new-builds. This year, IDC Since 2013, OEMs have been active in representatives released more narrowly focused the courts in Germany, the Netherlands, from HP, Konica research finding that one-third of the Poland, Spain, the United Kingdom, and, consumables (ink and toner) shipped in most recently, France and Russia. Minolta, and Russia, Poland, Hungary, and the Czech This year started with a dramatic Lexmark, Republic are now new-build compatibles. demonstration of just how serious OEMs searched for European vendors say that clones have are about protecting their IP in Europe. penetrated many of the region’s larger infringing Raids were conducted at the 2014 retailers, and as in the U.S., clones are Paperworld event in Frankfurt, Germany, consumables also widely available on the Internet. as German Customs authorities, flanked among the OEMs Fight Back by representatives from HP, Konica exhibits on the Minolta, and Lexmark, searched for The OEMs’ war on clones is not new, but trade-show floor. infringing consumables among the it is intensifying. Before the recession, exhibits on the trade-show floor. several hardware manufacturers Paperworld hosts one of the European including Canon, Epson, and HP filed third-party supplies industry’s most suits in Europe. Over the past couple of important annual events, years, OEMs have felt an even greater Remanexpo@Paperworld, which attracts need to protect their consumables remanufacturers from across Europe as

German customs agents inspect products in Chinamate booth at Remanexpo@Paperworld 2014

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well as from around the world, along with party supplies vendors have suffered as their suppliers and other stakeholders in much as—if not more than—OEMs as the third-party supplies industry. While clones have flooded into Europe and The Remanexpo Paperworld had experienced searches grabbed more and more market share. 2014 raids were and product seizures in the past, the Paperworld is no stranger to raids. raids at Remanexpo certainly received a escalated According to a post on the Office lot of attention. compared to what Products International (OPI) website, in we had We noted that the stands hosted by 2013, the German authorities raided 31 Ninestar, a third-party supplies vendor Paperworld booths and collected nearly experienced in the based in Zhuhai, China, and UniPlus $50,000 in fines, which had to be paid past, which offers Technology, a Taiwanese firm, were both “on the spot” by the firms displaying yet another raided. We also saw the authorities in infringing products. Included in the 2013 booths hosted by Chinamate Technology raids were two booths in the indication that a Company, Doliami (China) Limited, and Remanexo@Paperworld hall: one hosted growing number HK HaoYinBao Group, which is an by Ninestar and the other by UniPlus of OEMs are affiliate of Zhuhai Dior International Technology. Ninestar was accused of serious about Trading. Reports from various websites displaying toner cartridges that were indicate that the Maetone Image alleged to infringe Lexmark patents, and protecting their Company stand was among those raided it was alleged that UniPlus was exhibiting supplies by German customs. The firms were infringing inkjet print-head cartridges for businesses. alleged to be demonstrating infringing ink HP machines. Although the German and toner cartridges for HP, Konica authorities did not release the actual Minolta, Lexmark, and Samsung number of booths that were inspected at machines. Though no official statement Remanexpo in 2014, it was clear that was issued by either the German Federal significantly more booths were visited by Customs Administration or Messe the authorities than had been in 2013, Frankfurt regarding the raids, eyewitness and more product was seized in 2014. reports along with posts at various The Remanexpo 2014 raids were websites indicate that all of the escalated compared to what we had companies involved were from Asia. experienced in the past, which offers yet another indication that a growing number The European remanufacturing industry of OEMs are serious about protecting applauded the efforts of the German their supplies businesses. authorities and the OEMs at Remanexpo@Paperworld. In a prepared The Pelikan Briefs statement on its website just after the The raids at Paperworld may have been raids, the European Toner and Inkjet dramatic, but in reality they are just one Remanufacturing Association (ETIRA) example of OEM IP protection activity in said it fully endorsed the action. “Selling Europe, activity that has been ongoing patent-infringing new-built cartridges is a for over a decade. One of the first high- criminal offense,” ETIRA warned, “and visibility cases in the region started in resellers and distributors should not buy Germany in 2002. With twists and turns, these products if they want to stay out of challenges and appeals, the case ran for court and avoid bankruptcy.” While some five years. third-party vendors claim the OEMs’ legal actions are anti-competitive, most Canon filed a patent-infringement suit in aftermarket companies in Europe the German District Court of Düsseldorf welcome the assistance. Legitimate third- against Pelikan Hardcopy Deutschland

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GmbH and Pelikan Hardcopy European Logistics and Services GmbH in April 2002. Canon alleged that the Pelikan companies had violated European patent 0 879 703, which was issued for technology that would ultimately be used in more than a dozen replacement Canon ink tanks. Pelikan challenged the 0 879 703 patent in the European Patent Office (EPO) in June 2003, but in July 2005 the EPO declared it valid. Pelikan then appealed the patent office’s validation and challenged another related European patent held by Canon (06 353 HP filed litigations against Pelikan 73). The patents in question were upheld related to Pelikan’s H06 cartridge, equivalent to the HP 57 on appeal and confirmed by the German Federal Court of Justice in October 2007. infringing cartridges from multiple While they challenged the patents, the locations in Germany. Pelikan defendants also appealed rulings The OEM followed its patent- from the German court hearing the case. infringement suit with another complaint On November 20, 2003, the district court accusing Pelikan of misleading issued a first-instance ruling in favor of advertising and unfair competitive Canon, which the Pelikan Hardcopy practices. This second suit was filed in companies appealed to the Higher June 2007 in the Cologne District Court District Court of Düsseldorf. The court and involved the same SKUs, the Pelikan dismissed the appeal in November 2005. H06 and H08. HP alleged that the When the higher court later upheld the offending Pelikan products were sold in Canon patents, it effectively ended packaging indicating that the cartridges Pelikan’s lawsuit defense. It appears the were remanufactured when in fact they firm may have anticipated the outcome. were clones. In a press release, HP Pelikan had actually pulled all its claimed its internal testing determined infringing cartridges from the European that “certain of the products sold in this market in 2003. packaging are apparently new, as In April 2007, Pelikan Hardcopy opposed to remanufactured, products.” Deutschland was back in the Düsseldorf Unlike what happened in the Canon district court, this time named as a case, Pelikan settled quickly with HP. On defendant in a suit brought by HP. The August 2, 2007, the OEM announced OEM alleged that Pelikan’s H06 and H08 that Pelikan had admitted its products tricolor cartridges, which are equivalent infringed the patents in question and it to the HP 57 and 28 cartridges, settled the lawsuit pending in the respectively, encroached on HP’s IP. Düsseldorf court. A report on the Specifically, the suit claimed that Pelikan German-language website www.heise.de had violated three of HP’s patents on the (Heise Online) confirmed that the patents cartridge and three of its ink-formulation involved were related to technology patents. At the time the case was filed, found in the cartridge print heads as well an HP representative said that the as to the ink formulations. It also company had purchased multiple suggested that Pelikan may not have

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Epson launched a been aware that the cartridges were Korea, and Taiwan. In Russia, Epson global campaign new-build—the article claimed (in began working with the authorities to translation) that Pelikan might “have crack down on counterfeit supplies, against clones been victims of irregularities in foreign which resulted in an increase in sales of and counterfeits, suppliers.” As noted earlier, companies its legitimate toner and ink cartridges in which quickly are at risk of being held liable for selling Moscow. In the United States, the firm bore fruit. infringing products, even if vendors do settled a long-running suit over infringing not know that the products they are ink tanks with Print-Rite and its selling are infringing. subsidiary, Multi Union Trading HP’s second case was also settled in the Company, which exited the U.S. market OEM’s favor. The Recycler Magazine ran in 2005. Epson then filed suit in the United States in 2006 against some 24 an article in September 2008 reporting firms including one of Europe’s leading that HP said Pelikan Hardcopy third-party supplies vendors, Armor Deutschland GmbH was found to have Group of France and its German violated German laws governing unfair competition. The Cologne Regional Court remanufacturing subsidiary Artech. ordered Pelikan to cease labeling certain Ultimately, most of the companies settled with Epson. The OEM then enlarged the newly manufactured ink cartridges as geographical scope of its efforts to “remanufactured.” Further details include certain distributors in Mexico regarding the Cologne matter were not selling infringing cartridges. given. In Europe, Epson focused on ridding Epson: Euro Clone Warrior larger markets of clones including those Featuring permanent print heads based in Germany and the United Kingdom. In on piezoelectric technology, Epson’s April 2006, the firm announced that it had devices have historically employed reached out-of-court settlements with replacement ink tanks with relatively four online retailers in Germany. simple designs that made them easy to According to the OEM, BWD Computer, clone. At the turn of the century, the Gesellschaftfür Polymerchemie, which is availability of cloned tanks for Epson commonly referred to as GEPOC, machines was growing and Epson’s Tintenshop, and Tinten-Toner all agreed tanks were losing significant market to “cease trading in compatible printer share to such products. By 2005, Epson cartridges that were infringing a number held less than 50 percent of the supplies of intellectual-property rights belonging market in many emerging economies, exclusively to Epson.” and its share in Western markets Epson was also successful in ridding including the U.S. and Europe was certain markets in the UK of inkjet slipping. clones. In 2005, the firm reached In response, Epson launched a global settlements with various UK distributors campaign against clones and including CybaHouse and its sister counterfeits, which quickly bore fruit. The company Nutronic Limited as well as parent company, Seiko Epson, formed Environmental Business Products Ltd. an internal division specifically to (EBPL). The firm’s victories continued in coordinate global legal activities. 2006 when it settled with the online Between 2005 and 2008, the firm filed reseller Bentham Limited, which did suits related to IP violations in various business as IJT. Bentham agreed to Asian countries including China, Japan, stop importing and marketing infringing

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products and to pay the OEM an Ninestar had undisclosed amount in compensatory supplied Medea damages. In August 2006, Epson with the announced that it had reached a deal with Recharge Inkjet Technologies compatibles at the Limited, which ran the online retail site center of the CartridgeMonkey.com. Epson said, “The Epson suit. settlement terms include[d] Recharge undertaking not to infringe Epson’s patents and registered designs, and making substantial settlement payment to Epson.” Epson v. Medea … and Ninestar

While Epson had enjoyed a string of An Inkrite NG cartridge for Epson legal victories against various European inkjet printers distributors, the issues in the Medea International lawsuit would not be Ninestar was interesting because at the resolved as easily. In March 2006, the time Epson was also fighting a pitched Japanese OEM announced it had legal battle with the Chinese firm in the “started patent-infringement proceedings United States—a battle that the OEM in the English High Court” against would ultimately win. We suspect that the Medea, an importer based in Dundee, evidence that Epson gathered separately Scotland, that distributed ink cartridges for the U.S. and European cases was throughout the UK under brands such as combined to support both lawsuits. Inkrite, JR Inkjet, InkyJet, and others. At Epson’s case against Medea in the UK issue was a “spongeless valve design” lasted for several years and was used in certain ink tanks marketed by enlarged to include other defendants Medea. Epson asserted that Medea’s including Choice Stationery Supplies spongeless valve encroached on the Limited and Ebuyer Limited. At first, it OEM’s patented "Epson Smart Valve appeared that Medea was looking to Technology.” As details emerged, The resolve the matter quickly after the Register reported on its website importer agreed to settle the initial Epson (http://www.theregister.co.uk) that in fact complaint. In October 2007, however, six patents were involved in the case. Epson filed a second suit against all three companies. An online report After Epson filed suit, we learned of the published on the website of the West strong relationship that existed between Somerset Post, a local newspaper based Medea and the third-party supplies near the offices of Choice Stationery vendor Ninestar. Reports eventually Supplies, said the OEM was seeking revealed that Ninestar had supplied amounts in excess of £1 million in Medea with the compatibles at the center damages and costs. The report said that of the Epson suit, and in November Epson’s suit involved a total of 10 2007, the Scottish firm announced it patents, including patented ink would sell the Inkrite NG (Next formulations and IP related to the design Generation) line of new tanks for Canon of the cartridge. and Epson machines sourced from Ninestar and featuring its pigmented In the end, Medea settled its case with EverBrite ink. The connection with Epson three years after the OEM filed

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suit. A report on the CRN website marketing ink cartridge clones were channelweb.co.uk quoted a statement developing the capability to bring cloned Many of the firms from Epson saying Medea “agreed to toner cartridges to market. marketing ink withdraw the products from sale and pay As the installed base of inexpensive cartridge clones an undisclosed sum towards Epson’s monochrome EP printers and MFPs grew claim for substantial damages and legal were developing in Europe between 2004 and 2010, so costs.” Ebuyer had previously agreed to did demand for cheap infringing toner the capability to a similar deal with Epson in August 2010. clones. Companies marketing infringing bring cloned toner The Yorkshire-based reseller ink cartridges had the channel cartridges to discontinued marketing Inkrite-branded relationships in place in Europe to quickly cartridges and paid Epson an unspecified grow their nascent toner businesses. market. amount to settle the matter. Moreover, new low-cost, web-based sales engines like Amazon were Toner Troubles becoming available along with large While Canon, Epson, and HP focused on ecommerce sites devoted exclusively to infringing ink cartridges, little was being ink and toner cartridges. With the done about the growing number of installed base and channels in place, infringing toner cartridges entering the toner clones soon were flooding many European market. OEMs selling European markets. As noted earlier, electrophotographic (EP) devices may estimates indicate that today as many as have believed that EP technology was one in five cartridges sold in Europe are beyond the capabilities of those firms clones, and that ratio is even higher in that reverse-engineered simple ink tanks. certain countries including those in A rather significant capital investment is Eastern Europe. also required to produce new toner Although it would be a while before firms cartridges in volume so OEMs may have selling toner clones in Europe were thought that such funding was beyond named in lawsuits, rumors began the reach of a small third-party supplies circulating that some OEMs were taking firms. Unfortunately, such perceptions steps to protect Europe from the growing proved wrong, and many of the firms clone problem. In 2010, for example, we

Toner for Samsung’s CLP-300 series proved easy to clone and is a popular SKU among clone manufacturers

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heard rumors that Samsung had sent Samsung then filed patent-infringement cease-and-desist letters to various suits, and it appears the injunctions will distributors and dealers across the EU, remain in place until the outcome of It appears that warning them to stop selling cloned toner those suits is resolved. Samsung has cartridges or face legal action. For BusinessPartner PBS reported that the several years prior, Samsung had now had its fill injunctions issued in Germany are against successfully grown its market share and of infringing products that infringe Samsung’s European printer installed base in Europe. As a patents 1 975 744 and 2 357 537, which toner cartridges. result, clone makers saw growing cover cartridges used in the color Samsung demand in the region for various CLP-610/620 series and monochrome ML- Samsung toner cartridges especially 1660 series, respectively. European SKUs for popular low-end lasers, which patents 2 325 701 and EP 2 256 559, used toner containers that were relatively which cover the designs for cartridges used easy to copy. Many vendors saw in color laser printers such as the CLP-310, Samsung’s letters as a prologue to future CLP-320, and CLP-360, are also alleged to legal actions and heeded the warning. be violated. Those that didn’t would regret it. At the time that the Munich court issued In March 2012, The Recycler confirmed injunction orders, the names of the that Samsung had contacted European seven distributors were not known. resellers warning them that they might be However, several names have come to distributing toner cartridges that infringe light since the orders were issued. the OEM’s patents. The post quoted an According to Digital Imaging, four of announcement released by the South these seven resellers went to trial in Korean firm saying, “after conducting early April. The defendants included extensive internal investigation and Seevetal-based HQ Cartridges, one of evaluation, Samsung has reached the Germany’s largest online resellers; conclusion that the patent technique is CMN PrintPool of Hamburg; North- applied in specific toner products of Toner of Oststeinbek; and Kolor Office several branded newly produced Supplies, based in the Grossneuhausen cartridges…carrying the distinctive region. The Munich district court is numbers CLP-310, CLP-315, CLP-320, expected to render a verdict shortly CLP-325, CLX-3170, CLX-3175 and against the four named firms. The CLX-3185 printers.” identities of the other three firms Samsung Goes to Court enjoined from selling alleged Samsung clones have not been revealed yet. It appears that Samsung has now had its fill of infringing toner cartridges. In 2013, Several weeks after the news broke that attorneys for the firm filed the first Samsung had filed complaints in the lawsuits from the Korean OEM that we Munich court, we learned that the firm are aware of in Europe against initiated similar legal action in Holland. distributors selling clones. According to On December 17, the Netherlands-based reports on various German-language business website Computable reported websites including BusinessPartner PBS, the OEM was suing four resellers a Munich court awarded Samsung a accused of selling patent-infringing toner preliminary injunction against seven cartridges. The firms include Digital unnamed distributors in late November Revolution, which operates the website prohibiting them from selling infringing www.123inkt.nl; Maxperian, which new-build compatible toner cartridges. according to its LinkedIn profile sells

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cartridges on various websites including identity of the supplier of the products.” www.sneltoner.nl, www.mediamarkt.nl, but because the OEM has been “unable www.kruidvat.nl, www.treklpleister.nl, to trace the manufacturer or supplier … www.cartridge.co.uk, and [Samsung] has no other option than to www.cartridges.com; Print About, which address the issue with your company.” operates the www.printabout.nl site; and It appears that Samsung is claiming a Yorcom Computers, which runs the total of a dozen cartridges from Uprint www.yorcom.nl website. Samsung filed a infringe European patents 2 325 701 B1 motion for a preliminary injunction and 2 037 327 B1, which relate to ink- against the defendants, and a hearing and/or toner-supplying apparatus and took place in late December in the methods for the ink and/or toner supply. District Court of The Hague. Although Samsung demanded an A post at the ETIRA website reports that “adequate reply” by April 14, as of this the court in the Hague ruled on January writing the deadline has come and gone 9 that Digital Revolution and Maxperian and we have not heard any reports of had infringed Samsung IP. The firms further actions on Samsung’s part related were ordered to immediately stop selling to Uprint. The Korean firm did expand its the clones in question and were actions in Germany, however. On August compelled to name the suppliers that had 20, the German website Digital Imaging provided the infringing products. reported that Samsung requested that the District Court of Munich issue the Canon is growing According to ETIRA, the judge also ordered PrintAbout “that it too should injunctions against six unnamed more aggressive provide a list of its suppliers of such resellers. The case involves the sale and and has had some products to Samsung.” The court, distribution of illegal replica toner cartridges—newly manufactured, success protecting its however, did not enjoin the firm from unlicensed, non-original toner cartridges. toner IP in Europe. selling the products that Samsung claims infringe. PrintAbout can continue to The cartridges in question are those market the accused cartridges pending used in the CLP-310/CLX-3170, CLP- the outcome of Samsung’s ongoing case 320/CLX-3180, CLP-365/CLX-3305, before The Hague. No details were Xpress M2825/M4025 2875 and available regarding the fate of Yorcom ProXpress/4075 series devices, and the Computers, suggesting that the firm has patent in question is European patent not received any court orders yet. 2397914 B1, “developing device and image forming apparatus.” The cartridges Samsung seems to be widening its are the same as those included in pursuit of clones into other European Samsung’s earlier filings and the patent countries. On April 15, The Recycler is related to the EP 2325701 and EP reported that lawyers for Samsung 2256559 patents that the OEM claims in dispatched letters to European resellers its earlier suits were violated. of Uprint cartridges warning them of Canon Takes Aim at Infringers potential IP violations. Uprint is a French company with some 250 resale partners, Canon is growing more aggressive and has most of which are located in France. We had some success protecting its toner IP assume that Uprint sourced the in Europe. It has announced a number of cartridges from a third-party outside of out-of-court settlements resolving patent, Europe. According to The Recycler, trademark, and copyright infringement Samsung told the resellers that it “has claims with several UK-based distributors used its best endeavors to discover the accused of selling infringing toner bottles

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for imageRUNNER machines. In late selling toner cartridges that infringe September 2013, Canon announced it European patent number 2 087 407. Canon is stepping had reached a settlement with Allcopy up its patent Ninestar seems intent on defending itself Products U.K. Limited, which markets in Canon’s latest litigation as it has protection and compatible toner containers and other against so many other OEMs including copier parts. In late 2013 and early 2014, enforcement on Brother, Canon, Epson, HP, and Canon reached similar settlements with Lexmark. In a prepared statement, the desktop consumables. Parsia International Limited, a UK copier company said it will “protect its parts and consumables distributor, and customers and partners with all strength.” PPC Solutions, another UK-based When questioned, a Ninestar marketing distributor of consumables and hardware manager we spoke to refused to confirm parts. According to Canon, the firms whether or not the company will provide agreed to cease importing and marketing its customers with legal representation. the infringing toner bottles in the UK. The company is also staying tight-lipped In addition to protecting supplies for its about whether it will indemnify its imageRUNNER devices, Canon is customers. stepping up its patent protection and After its filings at The Hague, Canon enforcement on desktop consumables, initiated suits in other courthouses across which are used in HP- as well as Canon- Europe. On May 23, the company filed branded printers. (Canon owns much of separate patent-infringement actions with the IP found in both the print engine and the District Court of Düsseldorf in the cartridges used in HP LaserJet Germany against two German devices.) In April, the OEM announced remanufacturers: wta Carsten Weser that it had filed suit against Aster GmbH and KMP PrintTechnik AG. On Technology Holland B.V. in the District May 29, Canon announced it was suing Court of The Hague. Aster Technology Zephyr SAS, whose trade name is Green Holland is the European distribution, Eco, along with the Hong Kong and marketing, and sales arm of the Chinese Chinese companies that share the name manufacturer Aster Graphics, and Canon Aster Graphics Company Limited. The alleges the Venlo-based firm is infringing suits were filed in France before the European patent number 2 087 407, Paris First Instance Court. which covers technology in “process Canon continued to file cases in Europe cartridge, electrophotographic image throughout the summer of 2014. In mid- forming apparatus, and July, the OEM filed patent-infringement electrophotographic photosensitive drum suits in the High Court of Justice of unit.” The accused Aster products are England and Wales against European replacement toner cartridges employed Cartridge Warehouse Limited and Printer in various LaserJet printers. Supplies Technology Limited. In late After naming Aster in its case before The July, Canon was back at the district court Hague, Canon amended its complaint in in Düsseldorf to name Thomas Zenkel, the Netherlands to include Seine (Holland) owner of the domain tintenalarm.de, in a B.V. Formerly known as Ninestar Image patent infringement suit. Mr. Zenkel’s site (Holland) B.V., Seine Holland is the appears to be a reseller of aftermarket overseas sales company for the ink and toner, as well as a number of Seine/Ninestar group of companies in the other office-supply products, and Netherlands. Canon accuses Seine presumably sold what Canon claims are Holland, like Aster, of importing and infringing cartridges. In August, Canon

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initiated a second round of complaints in lawsuits in Germany against the ink and the UK against three firms: Badger toner cartridge vendor BestUse, which Office Supplies Limited, Inkjet Direct operates the www.bestuse.de website. Limited, and Greentrees International Similar to its 2007 Pelikan case, HP filed Limited. The firm also filed a complaint a patent-infringement complaint and a in Russia with the Moscow City second complaint alleging that BestUse Economic Court claiming that X-Com falsely marketed newly- manufactured Shop Ltd. sold infringing toner ink cartridges as remanufactured. A cartridges on its Russian-language representative for the OEM indicated the website www.xcom-shop.ru. German online retailer was accused of As in the case in the Netherlands, Canon violating both structural and chip patents is alleging in the various suits filed in on certain HP ink tanks as well as France, Germany, and the United infringing patents on the HP 344, a Kingdom that the defendants have tricolor (CMY) integrated cartridge. The infringed European patent number 2 087 OEM said in a prepared statement that, 407. Canon says the defendants “BestUse GmbH refused to defend itself.” imported and sold “certain toner A Düsseldorf court thus issued two cartridges for use in various models of verdicts confirming HP’s claims. BestUse Hewlett-Packard laser beam printers.” was ordered to pay HP’s legal costs and In the actions, Canon is seeking various provide information about its suppliers. remedies including an injunction and HP also announced that it had reached damages. In Russia, Canon is seeking settlements with some of the largest enforcement of Russian Federation third-party supplies vendors in Poland. patent 2467370, which relates to toner We have noted that HP has been cartridges. particularly active in Poland, presumably As active as Canon has been in the because it is an entry point to various European courts, we would not be Western European markets. surprised to see more lawsuits filed by Last year, the OEM settled its litigation the OEM in the region. The discovery against Action S.A., which distributes efforts of Canon’s lawyers working on the products under the ActiveJet brand, and various cases are bound to yield the AB S.A., the distributor of the TB Print names of other companies that are line. Both Polish resellers agreed to stop marketing products Canon claims are selling certain HP-compatible ink infringing. The OEM also has suits filed cartridges. At the time, HP also announced in the United States against some of the that it had filed a patent-infringement third-party supplies industry’s largest complaint against Black Point S.A. players including Aster, Ninestar, and In January 2014, HP said it had reached Print-Rite. It seems likely that those settlement agreements with six additional cases will reveal information that Canon companies in Poland accused of violating will use in its pursuit of infringing patents on some 20 different HP ink products worldwide. SKUs. The firms include: It’s Not Just about Toner • ABC Data S.A. , a Warsaw- While we are seeing more litigation based reseller of Modecom- involving toner cartridges, inkjet brand inkjet cartridges; hardware manufacturers have also • Komputronik S.A., the Poznan- remained busy in the European courts. based owner of the Accura On January 24, HP filed two separate inkjet cartridge brand;

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costs. An HP representative indicated that the six firms resold infringing cartridges from the Taiwanese firm, Microjet, which markets various new- build integrated ink cartridges worldwide.

Epson Battles in the UK, Again

As noted previously, Epson has successfully stopped a number of firms from peddling cloned ink tanks for its hardware in the UK over the years. Its most recent victory over DCI, however, may be Epson’s biggest UK win to date. Founded in 1983, DCI has been one of the most prominent manufacturers of compatibles in the United Kingdom and is well known for its Jet Tec brand of compatible and remanufactured inkjet and toner cartridges.

HP has been focused on cleaning up inkjet DCI was one of the first vendors to offer clones from the market in Poland, which compatibles for Epson cartridges using the provides an entry point for clones into other European countries Intellidge microchip. At one point, the Boston, UK-based firm said it was making • Modecom S.A. of Ołtarzew, as many as 2 million compatible cartridges which owns the Modecom inkjet a month. While we were unable to verify cartridge brand; the figure, some have reckoned that as many as 1 million of those ink SKUs were • Praxis S.A., the Warsaw-based Epson compatibles. Epson filed suit against owner of ePrimo-brand inkjet DCI in April 2011, and it appeared that the cartridges; third-party supplies vendor would fight • Scot Sp.z o.o., a Modlniczka- the OEM’s allegations. DCI filed a based distributor of Printe-brand counterclaim and issued a press release inkjet cartridges; and in December 2011, announcing that • Kris Krzysztof Muszalski of some of the initial hearings went in its Czestochowa, which owns the favor. In the end, however, DCI decided it Expression brand of inkjet was in its best interests to agree to the cartridges. OEM’s settlement terms. Epson’s recent According to HP, each of the Polish Epson did not reveal any financial terms victory over DCI, companies admits that HP’s patents are of the settlement, but the OEM did however, may be valid and enforceable and has agreed to announce one condition: DCI has ceased its biggest UK win cease selling the cartridges in question in to manufacture compatible cartridges for to date. Poland and other regions where HP’s Epson printers. DCI will not abandon the patents are registered. With the market for non-OEM Epson cartridges, exception of ABC Data, the Polish firms but going forward, it will focus on agreed to withdraw and destroy their marketing remanufactured Epson remaining inventory of the infringing cartridges rather than producing new cartridges and reimburse HP for its legal compatibles. Neither Epson nor DCI

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offered any further comment on the reap benefits across Europe. Likewise, resolution of the lawsuit. Poland is a key entry point for the growing Eastern European markets, More to Come—Much More which explains in part why HP has In addition to the pending Canon and become so active there. Samsung trials, there are unmistakable It has also become clear that companies signs that more European courts will see trading in infringing products will continue additional lawsuits related to clones. In to receive scrutiny long after they have fact, there may be cases winding their settled a patent-infringement lawsuit. HP way through courts in Europe today that revealed recently, for example, that it have yet to be disclosed to the public. became involved in a dispute with the As noted, Samsung is preparing to file Polish vendor Action S.A. over the terms complaints in France. With the German of the agreement reached at the end of court ordering BestUse to turn over 2012. HP says Action S.A. had agreed to information about its suppliers to HP, we stop selling certain compatible inkjet expect to see related suits in the future. cartridges with print heads, but the OEM The list of OEMs filing lawsuits also looks later found that Action S.A. was not living like it will grow. Konica Minolta’s up to its end of the agreement. Further appearance at Paperworld indicates the action was required by the OEM to firm is aware of the growing number of enforce the terms of the settlement. HP clones for its machines. Lexmark, which now says that Action S.A. “has agreed to has been very active in enforcing its U.S. abide by its commitments to not import or patents, may also get active in the EU. sell infringing inkjet print cartridges, has The firm said in 2012, “[An] important agreed to an extended recall of infringing issue facing the market today is the Actis and ActiveJet print cartridges, and increase of clone toner cartridges that has compensated HP for its legal costs.” have been found to violate Lexmark Going forward, we would not be patents in a number of countries.” surprised to see other OEMs involved in While the largest consumables markets similar enforcement activities. in Europe—Germany and the UK—have It is clear that we will hear more about seen their share of lawsuits, we expect lawsuits in the EU in the near future. cases to spread to courts in other Europe will continue to be an important countries as well. This is especially true market for OEMs and remanufacturers of countries of strategic importance in alike, and regional markets must be terms of import/export activities. We protected. The economy in the region is speculate, for example, that Canon and expected to improve in the near term, and Samsung filed suits in the Netherlands a better economy means more jobs and not because the firms are losing a large more printing. Moreover, the Eastern amount of revenue in the Dutch market, European market is also expected to grow but rather because Holland is home to in the near term. While all the forecasted two of Europe’s largest ports, Rotterdam growth is a good thing, it is also bound to and Amsterdam. The Netherlands also attract more infringing products. There is has dedicated IP courts in the Hague as no doubt that OEMs will do all they can to well as an efficient customs rid the markets of clones and other infrastructure. Getting the Dutch courts products that violate their IP. So, we feel and customs officials to pay more that it is not a matter of “if” but rather attention to infringing products would “when” the next inevitable suit is filed.

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