One court, Two verdicts: Examining two recent off-brand ink cartridge infringement cases in Japan

On November 8, 2007, the Japanese Supreme Court upheld Canon’s assertion that the import and sale of Canon’s used ink cartridges by the third-party ink seller, Recycle Assist, did indeed infringe on Canon’s patent. This is the second time the higher courts have overturned an earlier 2004 decision in the Tokyo District Court which ruled that the resale was not a patent infringement.

The very next day, the same Supreme Court denied another printer manufacturer’s appeal to enjoin all sales of yet another ink cartridge remanufacturer. This time, the printer maker was Seiko Epson and the off-brand ink cartridge seller was Ecorica Inc. based in Osaka. In this hearing, the judge reiterated a ruling made by the IP High Court earlier that year, and denied Epson’s claims of infringement based on the ruling that the patent itself was invalid.

Judging from the two separate outcomes of the two cases, the legal determination of what constitutes an infringement in the reselling of ink cartridges in Japan is by no means a clear-cut matter.

In Canon’s ruling, the residing judge, the Honorable Kazuko Yokoh, rejected the defendant’s argument of non-infringement and patent invalidation, stating for the first time what she thought constituted an infringement. She stated that infringement in this case can be described as “when a product is seen as impermissibly remanufacturing or reconstructing the principal patent claims.” The judge went on to say that, in determining whether the reseller’s product constituted an infringement, she sought to answer the following questions: 1) what was the essential nature of the original product, 2) what was the unique objective of the patented invention, and 3) what was the manufacturing process of the aftermarket ink cartridge.

Working backwards, Honorable Yokoh concluded that the ink reseller’s manufacturing process consisted of boring a hole in the ink tank, washing the dried and hardened sponges, and refilling them with fresh ink. “The unique objective of the invention” was the prevention of any ink from leaking out of the opened cartridge and this was achieved by placing two sponges adjacent to each other in the inkwell and forming a sealant film. Furthermore, the ink was designed to dry up after use so as to prevent the same problem from occurring after the cartridge was empty. And finally as to point three, the judge determined that the “essential nature of the original product” was that of a “single use product” which, therefore, would obviously not have pre-existing holes drilled in its ink tank for the purpose of refilling.

From these points, the judge ruled that the respondent’s remanufactured product “constituted a recovery of the function of the original ink cartridge as stated in the unique objective of the patented invention, i.e., the prevention of ink leaking out of the opened cartridge.” From this, she concluded that the cleaned and refilled ink cartridges served to reconstitute “Canon’s principal patent claims” and therefore was a clear breach of the patent.

On the other hand, in Seiko Epson’s case, the issue of whether the third party ink reseller infringed on the patent was not even raised since the patent itself was judged invalid due to a lack of novelty and inventive step. In addition, the judge also ruled that the scope of claims for the patent was drawn too broadly in an obvious attempt to stem third-party ink resellers from “recycling” their products. The judge ruled that that alone was grounds for an invalidation.

The two actions in Japan are the latest in a spate of attempts by Japanese printer giants to curtail generic cartridge manufacturers from producing unlicensed ink cartridges world wide. Judging from the victories and losses experienced by both Canon and Epson around the world, the outcome is hardly predictable.

Printer makers operate under what’s often referred to as “the razor and blades” business model, where manufacturers sell printers at little or no profit, only to recapture their losses by selling ink cartridges at a premium price. So long as printer makers continue to rely on this over inflated business model, third-party ink cartridge resellers will continue to fulfill a need for both environmentally and price-conscious consumers. The task in moving forward would be to find a balance between protecting the printer maker’s patent rights while providing a more competitive product that is environmentally sound.

(Posted on February 1, 2008)

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