Canon Sues Ninestar and Others over Toner Patents

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Jun 30, 2010

According to recent news, Canon Inc. (Tokyo), Canon U.S.A., Inc. and Canon Virginia, Inc. filed a 337 complaint on Monday, June 28, 2010, with the U.S. International Trade Commission to investigate whether Ninestar Image International Ltd. and others infringed two patents for a series of toner cartridges that can be used in Canon and Hewlett-Packard printers. Reportedly, Canon has also filed a companion lawsuit in federal court in New York. The ITC complaint (Docket No: 2743) alleges that 20 respondents have unlawfully imported infringing toner cartridges and related products into the United States. Canon would like to block these imports.

According to the ITC website,” under Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), the ITC conducts investigations into allegations of certain unfair practices in import trade. Section 337 declares the infringement of certain statutory intellectual property rights and other forms of unfair competition in import trade to be unlawful practices. Most Section 337 investigations involve allegations of patent or registered trademark infringement. Other forms of unfair competition, such as misappropriation of trade secrets, trade dress infringement, passing off, false advertising, and violations of the antitrust laws, may also be asserted.”

According to Ninestar, one of the major respondents involved, the toner cartridges in question have not been imported into the U.S. for a long time and the company is analyzing the patents involved and the contents of the claim. The claim targets toner cartridges made by Ninestar and nine related businesses in Hong Kong and China and 10 U.S. companies that are presumed to be retailers or representatives for Ninestar. All the respondents are listed in the table below:

Ninestar Image Int’l, Ltd. (Zhuhai, China) Ninestar Technology Co., Ltd. (Zhuhai, China) Ninestar Management Co., Ltd. (Zhuhai, China) Zhuhai Seine Technology Co., Ltd. (Zhuhai, China) Seine Image Int’l Co., Ltd. (Shatin, Hong Kong)
Ziprint Image Corp. (Walnut, CA) Nano Pacific Corp. (South San Francisco, CA) Ninestar Tech Co., Ltd. (City of Industry, CA) Town Sky, Inc. (South San Francisco, CA) ACM Technologies, Inc. (Corona, CA)
LD Products, Inc. (Long Beach, CA) Printer Essentials.com Inc. (Reno, NE) XSE Group, Inc. d/b/a Image Star (Middletown, CT) Copy Technologies, Inc. (Atlanta, GA) Red Powers, Inc. d/b/a LaptopTraveller.com (Carlsbad, CA)
Compu-Imaging, Inc. (Doral, FL) EIS Office Solutions, Inc. (Houston, TX) Refills, Inc. (Irwindale, CA) Ninestar Image Co. Ltd. (Shatin, Hong Kong) Direct Billing International, Inc. d/b/a OfficeSupplyOutfitters.com (Carlsbad, CA)

Most are familiar names but some were a bit of a surprise as many people assume that smaller companies would often stay under the radar in cases like this. This complaint and lawsuit along with the Epson ITC case and lawsuits proves that anyone is at risk if a patent owner believes there to be infringing products, no matter where you sit in the supply chain.

While many details are still unknown publicly, the patents are reportedly related to the rotating drums inside the toner cartridges and how they connect to the printer. It is unknown if the affected cartridges are new build or remanufactured product. In any case, the legal scene is certainly heating up recently with several inkjet cases involving HP and other cases that have been pending for years such as Xerox and Media Sciences. One can only wonder if this pace can keep up and how long the various respondents can remain in the game while paying steep legal fees and potential penalties.

Where will all this lead? This could be the beginning of the OEMs fiercely protecting its intellectual property as the market is affected by a recession that is marked by less printing and aftermarket gains due to more attractive pricing. As everyone watched and took notes during the Epson case as it meandered its way through the process, it is clear that this was an effective way to reduce the impact of infringing product. The end result was that there is less imports of Epson product into the United States and companies are wary of getting involved with questionable product.

While inkjet cases were and are numerous, there was much speculation on when the various printer OEMs would take notice and act on the toner supplies making their way into the U.S. market that are widely thought as infringing. There are many viewpoints to this issue but two bubble up to the top. There are those that dread this kind of news as it is possible they could be named next even if they think that they are clear of IP issues. And there are others that welcome these cases since it becomes clearer after an issue is settled what is acceptable and what is not acceptable. This in turn effectively begins to level the playing field for those that wish to operate within the law but who suspect that others may be taking shortcuts and gaining an unfair advantage.

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