Static Control Components Inc. won the latest round of the battle with Lexmark

The online business source BizJournals announced that Static Control, a world-known manufacturer of high-end supplies for printer cartridges, won a new round in its battle with Lexmark. Essentially, the federal court ruling this week hurts, but does not end, a Lexmark program known as the “prebate.” That program has put a dent into Static Control’s business, which involves making and distributing parts and supplies for remanufacturers of cartridges for printers.

Under terms of the prebate program, Lexmark places restrictions on its printer cartridges. Users agree to buy the cartridges at an up-front discount; in return, they agree to return the empty cartridges to Lexmark. The terms of the deal are placed on the box the cartridge comes in, with users agreeing to abide by the terms by opening the box.

Lexmark says its patents on the cartridges allow it to enforce the terms of the prebate after the cartridges are sold to customers. A federal court in Kentucky had previously agreed.

But on March 31, the court overturned that ruling. The court ruled that the result in a recent Supreme Court case, Quanta Computer Inc. v. LG Electronics Inc., established new case law. The net effect of the Supreme Court ruling, the Kentucky court says, is that Lexmark can no longer claim any patent rights on printer cartridges once they are sold.

The court did rule, however, that state contract law may still apply to the prebate program, which would mean that the program is still legal. Lexmark, based in Kentucky, says it plans to continue the program.

This week’s ruling is just the latest in the battle between Static Control and Lexmark, which has ebbed and flowed like a heavyweight title fight since 2002. Lexmark originally sued Static Control claiming that Static Control products violated the Digital Millennium Copyright Act – a law meant to protect copyrights in the technology world.

Courts disagreed with that assertion, giving a victory to Static Control in the realm of copyright law. But claims concerning patent law and contract law continue to this day.

Source: www.bizjournals.com

Key words: Static Control, Lexmark, patent rights, prebate.