Issue #0726/2 - Pelikan admits that the cartridges bought from a third party and sold in Germany breach patents held by Hewlett-Packard and agree to withdraw the products and pay damages.
Pelikan Hardcopy Deutschland GmbH has admitted its guilt in selling new inkjet print cartridges for certain Hewlett-Packard printers under its own brand with ‘remanufactured’ indicated on the product labelling (for further information, see TCPglobal Issue #0720 "Hewlett-Packard tackles Pelikan Hardcopy GmbH").
Taken to court by Hewlett-Packard for patent infringements, the Dusseldorf Regional Court in Germany has placed three sentencing orders on Pelikan:
- Cease the import and distribution of the patent infringing cartridges
- Recall all cartridges in the channel
- Pay damages to Hewlett-Packard (amount undisclosed)
Whatever the scale of the damages paid, it will be a drop in the ocean in terms of Hewlett-Packard’s turnover and profits – the company has just returned a 16% year-on-year revenue growth for its third quarter of 2007 (ended July). But, this is not the issue. Even with perhaps as much as 15-20% of the supplies aftermarket going to third parties, the impact of sales of these particular Pelikan cartridges is insignificant and Hewlett-Packard is much more interested in protecting its intellectual property than in recovering damages.
Michael Hoffmann, senior vice president for the supplies business within Hewlett-Packard’s Imaging and Printing Group (IPG), is recorded as saying, “At HP, we take our investment in intellectual property very seriously and are pleased to resolve this matter without extensive litigation. We will remain vigilant in monitoring Pelikan and others for possible patent infringement as part of our ongoing worldwide testing and enforcement efforts.”
As noted on a number of previous occasions, Hewlett-Packard is not alone in this war against intellectual property theft and product counterfeiting activities. We have reported previously on successes by both Epson and Oki in this field.
Hewlett-Packard has also indicated that it has been successful in another recent patent infringement case, also in Germany, against InkTec GmbH and the PCE Group. Both companies admitted patent infringements and were subject to the same legal orders as Pelikan.
Full information relating to this latest case has not been released by Hewlett-Packard but the company has confirmed that the cartridges in question were definitely new as opposed to remanufactured, that they were not re-badged Hewlett-Packard originals and that they infringe patents on both the cartridge and the ink formulas.
In our article in Issue #0720 "Hewlett-Packard tackles Pelikan Hardcopy GmbH", we speculated that Pelikan could have sourced genuine Hewlett-Packard products and resold them under its own branding. This suggestion was made in the belief that there were no third party companies capable of manufacturing new cartridges with integrated inkjet print heads.
This case now reveals that a third party manufacturing organisations has acquired this capability and is actively manufacturing new print cartridges. To do so would require one of two routes:
- reverse engineer original OEM cartridges, printheads and ink formulas
- undertake extensive and expensive original R&D to design compatible cartridges
It is the first of these options that is most likely to result in the infringing of the OEM’s patents because the whole idea behind reverse engineering is to find out how the original is constructed and to replicate it. This is most relevant to the print head and inks. But, as several companies have discovered to their cost while manufacturing compatible ink tanks for Epson printers, even the basic plastic tanks themselves may be subject to patented technologies.
However, by the same token, there is also the danger of replicating features that are patented when attempting to produce a fresh design for a product in order to achieve compatibility with an OEM original.
Perhaps the main point to make here is that original R&D for these ink systems is a very expensive business. Hewlett-Packard spends in excess of half a billion Dollars in the development of a new ink system – hence its interest in protecting that intellectual property.
For a third party to replicate a new cartridge design and ink formulation that would be compatible and to an equal quality but not infringe the OEM patents would be equally expensive.
Let’s face it, the third party industry exists because it can see opportunity for huge profits by supplying a non-original product at a lower price (because little or no original R&D expenditure has been involved) that provides the user with acceptable print quality for many applications. The industry cannot afford the level of original R&D that would be required for new cartridge design and manufacture and must risk the threat of litigation by copying products, including their patented features.
So, either way, the manufacture of new cartridges and inks is fraught with danger for the third party industry – as witnessed by the number of law suits we see.
Even the use of non-original inks in a remanufactured cartridge can be a mine field – particularly for users. At the time of writing this article I stumbled on a brilliant analogy.
When cooking meat in a grill (one of the ‘lean mean fat grilling’ variety), fresh meat grilled in nothing but its own juices leaves a grill that is very easy and quick to clean – the fat just wipes off. However, as in this instance, if pre-prepared and pre-packaged meat that is sold with an industrially created marinade sauce is cooked on the grill, the residue is thick and sticky – meaning that it sticks to the grill surface and is a nightmare to remove. In fact, I had to abandon the cleaning due to time pressures and will have to return to it later, perhaps attempting to burn the sticky residue off the grill surface or use some form of cleaning product that I should need to use.
With third party inks, the formulation is never the same as the original OEM ink (or it would infringe patents) and therefore cannot behave in the same manner as the original. While any problems associated with the use of non-original ink may take some considerable time to reveal itself, or may never reveal itself obviously to users, original OEM quality, performance and trouble-free operation cannot be guaranteed.
For instance, about 16 months ago, I prepared an image for a special birthday card and printed a draft using third party inks and a non-proprietary glossy media before printing the actual card on best, OEM materials. It looked good. The draft has been on my office wall ever since, in a position that is not subject to sunlight, or even strong and direct daylight, yet it has faded to a degree that gives the image a totally different character, making it look more like a 100-year-old sepia print!
The original
Scan of the print after 16 monthsThis print, along with other examples, will be the subject of a study into proprietary vs non-proprietary inkjet supplies to be published in TCPglobal in the near future.
Hewlett-Packard has confirmed that the cartridges and inks involved in the case against Pelikan were NOT re-badged Hewlett-Packard originals and has also confirmed that both cartridges and inks were new-manufacture by a third party. As such, patents were infringed in both the print cartridge and the ink.
So, in this instance, Hewlett-Packard is keen to protect its intellectual property but there is also the issue of brand image.
TCPglobal has muted the idea previously that a high quality third party product detracts from the high quality of the original OEM products by making the third party product look just (or nearly) as good as the original. For this situation to occur where patents are infringed is totally unacceptable, clear and legitimate competition to the OEM can only exist where no patents were violated.
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