Static Control and Lexmark prepare to Square Off in DMCA-Based Lawsuit

Static Control Components is preparing to duel legally with Lexmark, the No. 2 printer and printer accessories manufacturer in the world, in a hearing scheduled for Friday in U.S. District Court. Lexmark is seeking a preliminary injunction against Static Control Components, a family-owned business in North Carolina, on the grounds that Static Control's Smartek computer software chip violates Lexmark's copyright protections under the DMCA. Static Control's Smartek technology is a chip that allows printer toner cartridges to be reused. Static control sells its Smartek chips to remanufacturers of toner cartridges, who in turn refill and resell the toner cartridges to businesses.

Lexmark's beef with Static Control is over the Smartek chip itself. Lexmark claims that Lexmark's printer toner cartridges are sealed, not refillable and contain a chip inside the cartridge that prevents the cartridge from being refilled. Lexmark's legal brief filed in December argues that the Smartek chip "circumvents the technological measure" contained in the cartridge that certifies the cartridge as original and not refilled (remanufactured). Static Control countered in its pleadings filed this week that Lexmark is trying to stifle competition as well as deprive consumers of the ability to save money by purchasing remanufactured/recycled toner cartridges. Static Control also claims that Lexmark is using the 1998 Digital Millennium Copyright Act (DMCA) as a sword for purposes for which the DMCA was not intended. The brief argues that if Lexmark prevails in its claim, a dangerous precedent would be set. "One readily could envision, for example, an automobile manufacturer applying technological measures...to prevent competition in the aftermarket for replacement tires, wiper blades or other automotive parts; camera manufacturers attempting to foreclose the use of competitors' lenses or brands of film; a ball-point pen manufacturer using a technological measure and an 'ink low' program to shut out replacement ink refills; or a cell phone manufacturer applying technological measures to replacement batteries."

The basic provisions of Section 1201 of the DMCA provide that it is 'generally' unlawful to circumvent technology that restricts access to a copyrighted work or to sell a device that can do so. But Congress did allow exemptions in the DMCA explicitly permitting activities such as encryption research and interoperability of devices. Static Control is basing its defense largely on the last exemption, which permits reverse engineering "for the purpose of enabling interoperability of an independently created computer program with other programs," and claims that traditional fair use rights also protect its Smartek chip under U.S. copyright law. Static Control also claims that Lexmark's code that is allegedly protected by the DMCA is "not more than bare-bones implementations of mathematical formulae and scientific observations that cannot be protected by copyright." Lexmark's method of verifying that its cartridges are original is reportedly based on the government-standard Secure Hash Algorithm-1 (SHA-1/news:link) to calculate a 'hash' value.

One of Hewlett-Packard's top executives, Senior Vice President Pradeep Jotwani, spoke out strongly against Lexmark on Wednesday, claiming that Lexmark, HP's top competitor, is improperly trying to use the DMCA. "We think it is stretching it. The DMCA was put in place (to protect) things like movies, music and software applications."