Box-Wrap Rap: Lexmark And Patent Infringement

    September 6, 2005

Lexington, KY – Lexington, KY based Lexmark International finally won a major ruling in their never ending war to protect their printer cartridge business. The decision came down from the 9th Circuit Court of Appeals saying that when consumers open the packaging for printer cartridges, they agree to the terms and conditions of Lexmark, namely, not to refill them.

Lexmark has been fighting this battle in form or another now for years. This particular case against the Arizona Cartridge Remanufacturers Association (AFRA) said that when people open the packaging on a Lexmark ink cartridges that say “single use only” based on their Prebate program.

The Prebate program is a cartridge recycling program devised by Lexmark in order add that aspect of the business. The way it works is that users get special pricing when they agree to send the cartridge back to Lexmark directly. The new ruling solidifies that contract. Any user who purchases this Prebate priced cartridge is obligate not send it any place else other than Lexmark. The court ruled that anyone not following the policy is in violation of patent law and could face legal ramifications.

Many of the bloggers and other critics attack Lexmark for their protection of their cartridge but one must recognize this is the very heart of Lexmark’s business model, which is based on the old Gillette strategy. Lexmark sells the basic printer for a fairly inexpensive price and then makes their profit on the ink cartridge sales, which are priced in some cases, at about the same prices as the printers themselves.

The heart of this case comes from the little words on the packaging saying, “single use only.” ACRA said “Lexmark lacks a valid contract with consumers to limit post-sale use of the cartridge.” The court quoted California law saying, “a contract for sale of good may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.”

The court pretty much shot down all of ACRA’s arguments including the Prebate program being somewhat deceptive. The finished saying “ACRA has failed to raise a triable issue of fact” and that they couldn’t show anything that really proved their case.

John Stith is a staff writer for WebProNews covering technology and business.