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AnchorDesk

David Coursey
Red alert! It's the great printer refill rip-off

David Coursey
Executive Editor, AnchorDesk
Monday, February 3, 2003
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Consumers and digital-rights advocates have a lot at stake in a lawsuit that, at first, seems fairly simple. It's the battle between printer giant Lexmark International (the bad guy) and little Static Control (the good guy) over the right to manufacture Lexmark-compatible printer supplies.

The two companies are scheduled to square off Feb. 7 in a Lexington, Ky., federal courtroom. But while the issue seems at first to be about printer cartridges, it could impact how many other items are designed and manufactured.

HERE'S THE GIST: Lexmark recently began building a small computer chip into each of its replacement toner cartridges. Without that chip, the printer won't work. This tactic is supposed to ward off companies like Static Control that manufacture aftermarket cartridges.

Static Control responded by creating its own version of the Lexmark chip, which allows its replacement cartridges to (once again) work in Lexmark printers. On Dec. 30, Lexmark filed suit against the company, claiming the Static Control chips violate its copyright on the intellectual property each chip contains.

One reason this case matters is the economics of the printer industry. The business model for printers is the same as the model for TiVo, cell phones, and even razor blades. In each case, the hardware itself is sold below market value (even below cost sometimes), and the "consumables" (monthly fees, airtime minutes, razors, or, in this case, toner and ink cartridges) provide the ongoing profits.

That model explains why printer cartridges cost so much. (Don't believe me, go over to ZDNet Shopper and check the prices there. We're talking $50 to $100 for toner cartridges, $20 to $50 for ink refills.)

Those prices, in turn, explain why companies like Static Control--whose main business is making those antistatic plastic bags that electronics parts come in--can make a buck selling knock-off replacement cartridges. (In many cases, the third parties collect, refill, and sell used original equipment cartridges).

Should Lexmark be able to keep other companies from offering Lexmark-compatible printer supplies?
Yes
No
I DON'T LIKE this business model. For one thing, I think it distorts the marketplace. Printer manufacturers get people in with a cheap up-front offer and then charge them an arm and a leg once they're hooked. Who hasn't looked at a $50 bag of OEM inkjet cartridges and not felt ripped off? Higher, more realistic prices for printers, coupled with a more competitive supplies market, would be better for consumers.

Then there's the environmental angle. The European Union has already blocked the use of chips in printer cartridges, claiming that their use increases the number of such cartridges that end up in landfills. The chips, in other words, are an environmental threat.

The chips have also spawned another creative use of the Digital Millennium Copyright Act (DMCA). That law was originally intended to curb the copying of movies and music. But in December, Lexmark filed a DMCA claim against Static Control, saying that the latter's chips circumvented the measures Lexmark had taken to protect its intellectual property.

If this legal strategy is successful, how long will it be until all sorts of products include small chips just to head off competitors? If you can imagine a world in which the only parts we could buy for our cars came from the original manufacturers, and were priced accordingly, you get the idea.

I'm not in favor of Lexmark, or anyone else, losing control of its intellectual property. But I do think printer cartridges should be fair game for competition. That might eventually force real world pricing on an industry that today seems more drug pusher (get 'em hooked and make 'em pay!) than high-tech.

This case also gives us yet another reason to revamp the DMCA, this time with closer attention to preventing unforeseen applications like this.

Which side are you on? Does Lexmark have the right to keep other companies out of its printer-supply business? Or should we have access to printer supplies from other vendors? Take my QuickPoll above and TalkBack to me below! 

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