Sunday, November 7, 2010

The Lexmark Prebate program is ruled invalid - again

Eight years ago, Lexmark sued Static Control over patent infringement and inducement of patent infringement, predicated on Lexmark's employment of single-use restrictions on their prebate toner cartridges. Lexmark used their prebate program to sell their toner cartridges for an upfront discount (hence the term 'prebate'), on "condition" that the end-user returns the empty back to Lexmark (in effect, telling the customer that they don't own the cartridge they're buying, they only own the right to use the toner powder inside it). So basically, Lexmark would offer the cartridge at a much lower cost upfront, and then turned around and sued or threaten to sue companies that would attempt to remanufacture an empty toner cartridge that was sold to a consumer under the Lexmark prebate program (or in the case of Static Control, a company that supplied chips / parts that were used in the process of remanufacturing Lexmark toner cartridges). That was eight years ago, and the courts ruled out of Lexmark's favor in April 2009. Prebate was declared invalid.

But Lexmark sought a retrial, and the United States District Court ruled on 28 October 2010 that the motion for a retrial would be denied, in effect rendering the Lexmark prebate program invalid - again.

There are many components to remanufacturing a toner cartridge. The empty shell (or empty core as it is referred to in industry terms) is of course a key component. The core needs to be filled with toner, and moving parts inside the cartridge also need to be replaced. These include parts such as toner wiper blades, doctor blades, OPC drums (photosensitive drums), magnetic rollers, and other parts that make a toner cartridge function). These parts are either refurbished / reused from the OEM parts, or new compatible parts are placed in lieu of the OEM parts. Some cartridges also have memory devices or chips, which often need to be replaced so that the printer can recognize the refilled toner cartridge as "full" and accept it in the machine.

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