Sunday, April 15, 2007

Epson Patent Litigation Against Inkjet Cartridge Manufacturers

Epson Wins Preliminary ITC Ruling on Printer
PatentsNineStar Technology Co. Ltd. Announces Plans to Appeal

April 11, 2007

The ability of third party manufacturers to import and for retailers to sell, inexpensive generic inkjet cartridges for many Epson printers will be determined by the U.S. International Trade Commission (“ITC”) on July 30, 2007.

On March 30, 2007 the Honorable Paul J. Luckern issued an Initial Determination which found that certain ink cartridges produced by third party manufacturers within and outside the United States infringe Epson’s patents. He recommends a General Exclusion Order barring the respondents and all others from importing infringing cartridges and Cease and Desist Orders barring the respondents from selling infringing cartridges imported before the exclusion order becomes effective.

Ninestar Technology Co., Ltd., the U.S. affiliate of a major Chinese cartridge manufacturer announced that it will appeal the judge’s ruling when the matter is considered by the ITC.

The judge’s ruling arises from a complaint filed with the ITC by Epson Portland Inc., Epson America Inc., and Seiko Epson Corp. in February 2006 that accused 24 U.S., Korean, German and Chinese companies of importation and sales of infringing ink cartridges. The Epson companies filed parallel actions in the U.S. District Court in Portland, Oregon against the same 24 companies for compensatory damages and injunctive relief.

Judge Luckern conducted a trial in January 2007 that was defended by Dataproducts USA LLC, a division of Clover Technologies Group LLC, Ninestar Technology Co. Ltd., Zhuhai Gree Magneto-Electric Co. Ltd., and their affiliated companies. Based on the evidence presented at the trial, the judge found that more than 750 models of cartridges imported by the defending and defaulting respondents infringe one or more of 11 Epson patents, which he upheld as enforceable, that apply to cartridges for desktop inkjet printers. The judge’s Initial Determination was submitted for review to the ITC for a Final Determination scheduled for July 30, 2007. Until that time, cartridge importation is unaffected.

“We are gratified that Judge Luckern upheld the validity and enforceability of Epson’s ink cartridge patents,” said Elizabeth Leung, director of Consumer Supplies, Epson America. “Epson has invested continuously in R&D and manufacturing to produce high quality, innovative ink cartridges. These lawsuits were filed as part of Epson’s worldwide efforts to protect the company from unfair competition. We urge manufacturers, distributors and retailers of ink cartridges to recognize this further validation of Epson’s patent rights and act accordingly. Resellers should be mindful that, in addition to the import restrictions that can be ordered by the ITC, patent infringements can result in very substantial compensatory damages in District Court actions. We will continue taking whatever action is necessary to protect Epson’s invaluable intellectual property rights.”

Since Epson’s filing of its action in February 2006, many of the major international cartridge manufacturers have developed their own “patented” Epson compatibles, which utilize different shapes and sizes to avoid any similarity to Epson products.

A significant portion of the third party inkjet cartridge market is comprised of generic inkjet cartridges similar to those Epson seeks to bar through their patent infringement suits. These inkjet cartridges are manufactured in high technology plants operated by multi-million dollar manufacturers and are regularly sold in the United States for prices ranging from a small fraction to half the retail price of Epson’s own product. Sales of these generic cartridges now account for a significant percentage of the replacement inkjet cartridge market in the United States.

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