Lexmark Intern. v. Static Control Components
| Decision Date | 27 February 2003 |
| Docket Number | No. 02-CV-571.,02-CV-571. |
| Citation | 253 F.Supp.2d 943 |
| Court | U.S. District Court — Eastern District of Kentucky |
| Parties | LEXMARK INTERNATIONAL, INC. Plaintiff v. STATIC CONTROL COMPONENTS, INC. Defendant |
Michael J. Conlon, Conlon, Frantz, Phelan, Pires LLP, Washington, DC, for Automotive Parts Rebuilders Association.
William H. Hollander, Wyatt, Tarrant & Combs, Louisville, KY, Eva Christine Lewis Wyatt, Tarrant & Combs LLP, Lexington, KY, Skip London, Static Control Components, Inc., Sanford, NC, W. Craig Robertson, III, Wyatt, Tarrant & Combs LLP, Lexington, KY for Static Control Components, Inc.
George W. Keeley, Keeley, Kuenn & Reid, Automotive Aftermarket Industry, Chicago, IL, for Automotive Aftermarket Industry Association.
FINDINGS OF FACT
1. The Plaintiff, Lexmark International, Inc. ("Lexmark") is a Delaware corporation with its principal place of business in Lexington, Kentucky. Lexmark is a worldwide developer, manufacturer, and supplier of, inter alia, laser printers and toner cartridges. Lexmark Complaint ("Complaint") ¶ 2.
2. The Lexmark products that are the focus of this dispute are Lexmark's T520/522 and T620/622 laser printers and toner cartridges, and in particular, certain computer codes resident on microchips that are within the toner cartridges. See generally, Complaint 11122-23; Declaration of Michael Robert Yaro ("Yaro Dec") 11.
3. The Defendant, Static Control Components, Inc. ("SCC") is a North Carolina corporation with its principal place of business in Sanford, North Carolina. SCC manufactures and sells, inter alia, components for remanufactured toner cartridges. Affidavit of William K. Swartz ("Swartz Aff.") 114-5.
4. In the complaint in this action, filed December 30, 2002, Lexmark asserts three causes of action. Count One alleges that the "SMARTER" microchip manufactured by SCC (for use in replacement toner cartridges for the T520/522 and T620/622 ("Series") Lexmark printers) infringes Lexmark's copyright in its "Toner Loading Programs." Counts Two and Three assert that the SMARTER microchip circumvents a technological measure that controls access to Lexmark's Toner Loading Programs and its Printer Engine Program, in violation of the Digital Millennium Copyright Act of 1998, 17 U.S.C. § 1201 et seq. ("DMCA").
5. Concurrent with the filing of its Complaint, Lexmark moved for a preliminary injunction to prevent SCC from manufacturing, distributing, selling, or marketing the SMARTER microchips.
6. On January 8, 2003, the Court, upon agreement of the parties, entered an order that enjoined SCC from making, selling, distributing, offering for sale, or otherwise trafficking the SMARTER microchips until the hearing on Lexmark's motion for a preliminary injunction.
7. On February 7, 2003, the Court held an evidentiary hearing on Lexmark's motion for a preliminary injunction, at which time the parties presented evidence and argument regarding the issue involved in the motion. At the conclusion of the hearing, the Court extended the temporary injunctive relief until February 28, 2003.
8. The computer programs at issue in this case are used by laser printers and are sold either within the laser printers or within toner cartridges that are used with the laser printers.
9. A toner cartridge is a device that is inserted within a laser printer and contains the toner necessary for the printer to print.
10. Lexmark sells two types of toner cartridges for use with its T-Series printers, namely regular cartridges and Prebate cartridges. Lexmark's Reply in Support of its Motion for Preliminary Injunction ("Lexmark Reply"), Ex. G., Second Declaration of Michael Robert Yaro ("2nd Yaro Dec") ¶ 2.
11. Customers can choose to buy either regular cartridges or Prebate cartridges for use with Lexmark's T-Series printers. 2nd Yaro Dec. ¶ 2.
12. Lexmark sells the Prebate cartridges at an up-front discount to consumers. Yaro Dec. ¶ 9; 2nd Yaro Dec. ¶ 2. The up-front discount could amount to approximately $50 depending on the type of toner cartridge. Yaro Dec. ¶ 5.
13. In exchange for this discount, consumers agree to use the Prebate toner cartridge only once and return the used cartridge to Lexmark for remanufacturing and recycling. Yaro Dec. ¶ 9.
14. The Prebate agreement between Lexmark and the consumer is in the form of a shrink-wrap agreement that is placed across the top of every Prebate toner cartridge box.1 Yaro Dec. ¶ 9 15. Consumers that find the Prebate conditions objectionable can choose to purchase regular toner cartridges instead of Prebate toner cartridges. Yaro Dec. ¶ 10; 2nd Yaro Dec. ¶ 4.
16. Regular toner cartridges do not contain the "use and return" conditions that accompany the Prebate cartridges. 2nd Yaro Dec. ¶ 4.
17. When consumers purchase regular toner cartridges, they do not receive upfront discounts and are not obligated to return the used regular cartridges to Lexmark. 2nd Yaro Dec. ¶ 4.
18. Consumers can purchase regular toner cartridges and refill them themselves or have them refilled by a third party remanufacturer. 2nd Yaro Dec. ¶ 4.
19. Consumers can purchase regular toner cartridges from numerous resellers or directly from Lexmark. 2nd Yaro Dec. ¶ 4.
20. Third party remanufacturers offer refilled versions of Lexmark's regular toner cartridges for sale. 2nd Yaro Dec. ¶ 4. SCC has sold and continues to sell products for the remanufacturing of Lexmark's regular toner cartridges. Hearing, p. 176, lines 11-20.
21. Lexmark's regular toner cartridges contain microchips that utilize a technological measure. This technological measure, however, does not prevent third parties from remanufacturing the regular cartridges. Neither does this technological measure prohibit consumers from using remanufactured regular cartridges. 2nd Yaro Dec. ¶ 5.
22. Lexmark's T-Series printers utilize computer programs to control various operations of the printer and to monitor operational characteristics of its associated toner cartridge. The computer programs at issue in this case are the Printer Engine Program and the Toner Loading Programs. Lexmark's Memorandum in Support of its Motion for Preliminary Injunction ("Lexmark Memo"), Ex. B, Declaration of Douglas Able ("Able Dec") 114.
23. Lexmark is the legal owner of the Printer Engine Program and the Toner Loading Programs. Lexmark Memo, Exs. D-F.
24. The Printer Engine Program resides within the Lexmark T-Series printers and controls various operations of the printer including, for example, paper feed, paper movement, motor control, fuser operation, and voltage control for the electrophotographic (EP) system. Able Dec. ¶ 5.
25. Slightly different Printer Engine Programs are used in each of the T-Series printers with the differences being minor variations to account for differences in operational characteristics and available options of the particular printer model. Able Dec. ¶ 5.
26. Lexmark has obtained a Certificate of Registration from the Register of Copyrights for its Printer Engine Program. The Printer Engine Program for the T620 model printers is covered by Certificate of Registration No. TX 5-624-273. Lexmark Memo, Ex. F.
27. The Printer Engine Programs used by each of the remaining T-Series models, namely the Lexmark T520/522 and T622 laser printers, are slight modifications of each other and are covered by the copyright registrations either as original or derivative works. Lexmark Memo at 2.
28. Lexmark applied for a Certificate of Registration for the Printer Engine Program under the Rule of Doubt due to trade secret information being contained in the program. Hearing, p. 68, lines 16-23. There has never been any question about the Printer Engine Program's eligibility for copyright protection. Hearing, p. 64, lines 18-25.
29. The Rule of Doubt for computer programs does not mean that it is not copyrightable. It merely means that the Copyright Office cannot determine copyrightability due to the deposit being in human-unreadable object code. (Hearing, p. 64, line 18—p.65, line 25).
30. The Printer Engine Program contains a substantial amount of computer codes. Hearing, p. 67, lines 4-9.
31. The former head of the Copyright Office, Ralph Oman, in his expert opinion, testified at the preliminary injunction hearing that if the copyright registration application for the Printer Engine Program were filed with twenty (20) pages of its source code, there would be absolutely no question that the Printer Engine Program would have been registered without the Rule of Doubt. According to Oman, under the Copyright Office procedures, the Printer Engine Program meets the test for registrability because the Printer Engine Program contains the requisite amount of original expression. Hearing, p. 68, lines 7-15.
32. SCC does not dispute the copyrightability of the Printer Engine Program. SCC's computer programming expert, Dr. Benjamin Goldberg, has not offered any opinion on the Printer Engine Program and acknowledged at the preliminary injunction hearing that he did not review the Printer Engine Program source code. Hearing, p. 212, lines 14-17.
33. The Toner Loading Programs reside within microchips attached to the toner cartridges for Lexmark's T-Series printers. Able Dec. ¶ 6. The Toner Loading Programs enable the printers to approximate the amount of toner remaining in the toner cartridges. Hearing, p. 88, lines 16-20; p. 101, lines 7-16. The printers, using the Printer Engine Program, use this information to display a "toner low" condition on the printer screen at the appropriate time. Able Dec. ¶ 6; Hearing, p. 102, lines 16-19.
34. The Toner Loading Programs are located on the toner cartridge for the purpose of allowing for future changes to the Toner...
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