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Epson claims victory in third-party ink case
(Monday, March 14, 2005 - 13:50 EST)

A press release issued by Epson America Inc. towards the end of last week claims that a federal judge has granted the company a summary judgement in its favor, in an ongoing case against Hong Kong-based Multi-Union Trading Co. Ltd., a company that manufactures aftermarket ink cartridges.

The ruling, granted in the U.S. District Court in Portland OR, is said by Epson to have "found that 23 models of cartridges sold for use in Epson printers infringe Epson's principal patent claims". Epson's case against Multi-Union, as well as Hong Kong-based parent company Print-Rite Holdings Ltd. and California-based subsidiary Dynamic Print USA Inc., has continued since April 2001.

No comment has been made by Multi-Union, Print-Rite or Dynamic Print USA, and no information on the case is currently available on the Oregon US District Court website. According to the Associated Press, the judge did not order that the ink cartridges be removed from the market, and the case will continue in September with the court hearing defenses against the claims, and Epson's request for monetary damages.

The inkjet printer industry revolves around a fairly controversial business model, where printer manufacturers often make little to no profit on the printers themselves (particularly for entry-level models). Prices for printers are often reduced almost to the level of an impulse-buy, with manufacturers intending to make their profit on the sale of consumables such as ink cartridges instead. Different manufacturers (and indeed, different products from the same manufacturer) invariably use completely incompatible ink cartridges that are often subject to numerous patents. This model opens the opportunity for third parties to attempt to sell compatible ink cartridges for a significantly lower price than the original manufacturer, in part since they need spend relatively little money on research and development.

In other industries, this problem simply doesn't arise to the same degree. The parallel is often made that when you purchase a car, you're not tied to the original manufacturer for purchase of parts and gas. Consumers simply wouldn't purchase a car if they had to obtain parts and gas from the original manufacturer. A quick visit to any auto parts store will find large quantities of third-party parts available to maintain your car, and auto manufacturers are forced to sell the cars themselves at a price where they don't have to rely on consumable parts to make a profit.

For as long as inkjet consumables are sold at a premium to subsidise printer costs, hence ensuring that a customer becomes tied to a particular manufacter for their consumables, third-party ink cartridge manufacturers will continue to be a headache for the original printer manufacturers. The difficulty for these third parties is that they must avoid violating the original manufacturer's patents, or eventually fight the case in court to prove the patents invalid (a difficult and expensive process).

Original Source Press Release:

Epson Achieves Favorable Ruling in Patent Enforcement Lawsuit Against Large Manufacturer of Off-Brand Ink Cartridges

Federal Judge Finds That PrintRite Brand Cartridges Infringe Epson's Patents

LONG BEACH, Calif. -- March 10, 2005 -- A federal judge has issued a summary judgment ruling in a patent infringement lawsuit against Multi-Union Trading Co. Ltd. that decisively holds that the defendant's ink cartridges infringe Epson's patents. The lawsuit was brought in April 2001 in Portland, Ore., by Epson America Inc., Epson Portland Inc. and Seiko Epson Corp. against Multi-Union Trading Co. Ltd., a Hong Kong-based company that is one of the world's largest manufacturers of aftermarket ink cartridges. The infringing cartridges are often sold in the United States under the PrintRite brand and in generic packaging.

Rejecting the defendant's arguments of non-infringement and patent invalidity, the Court found that 23 models of cartridges sold for use in Epson printers infringe Epson's principal patent claims. The lawsuit is now scheduled to go to trial in September 2005 on some defenses asserted by Multi-Union and the monetary damages and exclusion order sought by Epson.

"We are pleased by this important progress in the Multi-Union case," said Dan Crane, senior vice president, marketing, Epson. "We will continue vigorous enforcement of our intellectual property rights to protect our innovative printers and printer supplies against unfair competition of all types including patent infringement, unsubstantiated performance claims and counterfeiting."

About Epson America Inc.
Epson offers an extensive array of award-winning image capture and image output products for the consumer, business, photography and graphic arts markets. The company is also a leading supplier of value-added point-of-sale (POS) printers and transaction terminals for the retail market. Founded in 1975, Epson America, Inc. is the U.S. affiliate of Japan-based Seiko Epson Corporation, a global manufacturer and supplier of high-quality technology products that meet customer demands for increased functionality, compactness, systems integration and energy efficiency. Epson America, Inc. is headquartered in Long Beach, Calif.

About Epson Portland Inc.
Epson Portland Inc. is the U.S.-based manufacturing subsidiary of Japan's Seiko Epson Corporation. Historically a printer manufacturer (from its opening day in July of 1986 until August of 2001 Epson Portland built over 15 million dot matrix and ink jet printers for business, government and personal use), the company currently manufactures ink cartridges for ink jet printers, refurbishes optical engines for LCD projectors, performs precision injection molding of proprietary plastic parts, and also provides specialized engineering services for the Seiko Epson Group.

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