Court Rules in Favor of Lexmark

A California federal judge has ruled against the Arizona Cartridge Remanufacturers Association, Inc. in its lawsuit challenging Lexmark International, Inc.'s Cartridge Return Program.

ACRA alleged in the lawsuit that the Lexmark Cartridge Return Program violated California Business and Professions Code sections 17200 and 17500, which prohibit unfair and deceptive business practices and deceptive advertising. The court confirmed that post-sale conditions on a patented article lie fully within the rights granted patent holders under federal patent law.

"In light of the Court's ruling that the Prebate condition falls squarely within Lexmark's patent right, Lexmark has adequately shown that there is little if any evidence to support ACRA's contention that the Prebate program is misleading, deceptive or unfair under Sections 17200 and 17500," wrote Judge Saundra Brown Armstrong of the United States District Court for the Northern District of California. The court concluded "that as a matter of law Lexmark's Prebate is not a deceptive practice." The court further stated: "Because of its patents, Lexmark has the right to impose conditions on the sale of its patented product."

Lexmark's Cartridge Return Program provides an up-front discount in exchange for their agreement to return the used cartridges only to Lexmark for remanufacturing or recycling.

In February, a federal court ordered Static Control to cease making, selling or otherwise trafficking in the Smartek microchip used in the remanufacturing of certain Lexmark laser toner cartridges. In issuing the preliminary injunction, the court ruled that Static Control engaged in a case of wholesale, identical copying of Lexmark's software for commercial exploitation and profit in violation of Lexmark's intellectual property rights under the Copyright Act. The court also ruled that Static Control's further act of circumventing a Lexmark technological measure violated the Digital Millennium Copyright Act.

The California ruling coincides with newly enacted legislation in North Carolina, which Static Control claims renders the Lexmark Cartridge Return Program unlawful in that state. "The North Carolina legislation, in my opinion, has no effect on the Lexmark Cartridge Return Program," said Vincent Cole, Lexmark's vice president, general counsel and secretary. "That legislation voids agreements that prohibit remanufacturing, whereas Lexmark's Cartridge Return Program agreements actually facilitate Lexmark's ability to remanufacture its used cartridges.