Canon Fires All Guns



The Canon lawyers are certainly keeping busy both in the United States and in Europe.

On February 6th, Canon filed lawsuits against 18 respondents in New York alleging patent infringement, seeking damages and injunctive relief. On May 7th, Canon filed a formal complaint against 33 companies with the International Trade Commission (ITC) in Washington, again for patent infringement. Additionally, on May 8th, Canon filed lawsuits for patent infringement against those companies named in the ITC complaint but not previously sued in the February 6th action. Also, at the end of April 2014, Canon filed a patent infringement case against Aster Technology Holland BV. Then again, on May 8th, 2014, Canon filed a lawsuit against Seine Holland BV. Both of these last two lawsuits mentioned will have court proceedings in The Hague, Netherlands. So, recent Canon legal actions are now in both North America and Europe.

All these recent cases concern patent infringement over the so called “dongle gear”. Canon claims their patents covers 50 different laser cartridges including those of HP, like CE505A/X, CE255 and CE310/350. Of the 14 patents that Canon is using in these cases, there are more than 680 different claims relating to the “dongle gear” and OPC assembly.

Canon’s actions are in two forms: lawsuits and the ITC request for an investigation into the 33 named companies. Canon has decided to omit two companies from the ITC complaint that the company sued on February 6th in New York. There is no explanation available as to why this is. However, 17 companies were added to the ITC complaint that were not sued previously by Canon in February, but have now been sued in the same New York Southern District Court. In all the lawsuits now filed, Canon is seeking damages and injunctive relief.

For the ITC investigation, should the ITC sanction the investigation, Canon is seeking a General Exclusion Order (GEO) which will, if granted and signed by the President of the United States, prohibit unlicensed import into the U.S. of “certain toner cartridges and components thereof” from any source, NOT JUST FROM THOSE NAMED AND FOUND GUILTY OF PATENT INFRINGMENT. Alternatively, if the ITC finds that the outcome of the investigation does not warrant a GEO, Canon requests the ITC to issue a Limited Exclusion Order (LEO), which will prohibit those that are found guilty of patent infringement only, from importing for sale and distribution “certain toner cartridges and components thereof”.

In 2012, Canon’s complaint against 16 companies was upheld and a General Exclusion Order was subsequently signed by President Barack Obama, on June 28th 2013, prohibiting the import of infringing toner cartridges and component parts (twisted triangular OPC geared drums and cartridges that contain the same). In 2012, the subject patents involved the twisted triangular drive gear. Now, Canon turns its litigation toward the Dongle gear patents.

Understand the new actions and what it means to U.S. cartridge remanufacturers. As a remanufacturer, you will be using a used OEM cartridge that originated in the USA and, as such, becomes a good cartridge candidate for remanufacturing. The used cartridge will have a used rotating arm (dongle) attached to the worn OPC drum and the rotating arm can be reused. Reusing the OEM is good since it enables more of the cartridge to be recycled for reuse. When you reuse the rotating arm you alleviate your company from hundreds of the OEM patent claims contained in the OEM patents.

So, as a remanufacturer you have no reason or purpose to buy a replacement OPC drum with gears and a dongle. If you are buying a new OPC drum with a dongle for whatever reason, you will need a very good story of why you need to buy it, since you are paying more for a drum with a dongle than it would cost for one without and you have a dongle on the empty cartridge you will remanufacture. However, if you are not buying a dongle with the OPC drum and replacing the worn OPC, you could still be infringing the remaining hundreds of claims that are not specifically on the dongle but refer to the female coupling and drive gear and flange on the ends of the replacement OPC.

Those companies that are making a clone cartridge or using an empty clone cartridge core for “remanufacturing” will of course need to buy an OPC drum and dongle. These companies obviously know what they are doing and face the consequences of their actions. But it remains uncertain if all the lawsuits are against clone cartridge users. ILG and MSE are reputable and large cartridge remanufacturers and both have been sued. Is it because they were using new OPC drums and dongles, or have they been sued over the patents only concerning the OPC gear and flange?

Very deliberately, Canon claims in their filing documents to the ITC that, “The infringing component, such as photosensitive drum units are contained in the subject cartridges and/or are separately imported into the United States and used by domestic manufacturers and remanufacturers to make infringing toner cartridges”.

None of those companies sited in the legal action by Canon are OPC drum manufacturers or suppliers. Canon’s strategy is to seek out alleged infringers who are making cartridges, distributing cartridges, buying and retailing cartridges and cartridge REMANUFACTURERS.

Any OPC company making OPCs would be very clear about the patents surrounding the product, as is any supplier. It is incomprehensible that they would not know of these patents as soon as the OEM releases the new cartridge. In fact, many companies who see the patents undergo a workaround program immediately see the new OPC drum and gears and file for their own patents as can be evidenced from their new patent-free designs that appear almost immediately after the OEM takes legal action.

So clearly these companies know and understand that they offer and sell infringing products to remanufacturers. Yet it is remanufacturers and retailers who know almost nothing about component patents and find themselves involved in costly litigation. As a result, the risk of unwittingly infringing and subsequently being sued or named in an ITC investigation is very real indeed. Remanufacturers need to become far more aware of OEM patents and specifically component part patents.

An individual or company with a patent gains exclusive use of the new technology for a defined period of time subject to the Right to Repair Doctrine.

The Doctrine of Repair and Reconstruction in United States patent law distinguishes between permissible repair of a patented article, which the right of an owner of property to preserve its utility and operability guarantees, and impermissible reconstruction of a patented article, which is patent infringement. The Doctrine is explained in the Aro Mfg.Co v Convertible Top Replacement Co , case I & II. The Aro case states the rule in these terms (Aro Mfg. Co. v. Convertible Top Replacement Co. 377 US 476 (1964):

The decisions of this court require the conclusion that reconstruction of a patented entity, comprised of unpatented elements, is limited to such a true reconstruction of the entity as to “in fact make a new article”, after the entity, viewed as a whole, has become spent. In order to call the monopoly, conferred by the patent grant, into play for a second time, it must, indeed, be a second creation of the patented entity… Mere replacement of individual unpatented parts, one at a time whether of the same part repeatedly or different parts successively, is no more than the lawful right of the owner to repair his property.

Canon says (as taken from the ITC complaint), it is a multi-billion dollar global operation, has the capacity to produce, and does produce millions of toner cartridges each year that utilize the technology of the asserted patents. Canon in 2009 built and opened a new $650 million (approx.), 700,000 square foot Advanced Cartridge Manufacturing (ACM) Plant in Virginia, USA, which Canon uses to manufacture millions of toner cartridges that utilize the technology of the asserted patents and compete directly with the infringing toner cartridges, and which Canon will use to produce even more cartridges in the near future. Canon also manufacturers millions more toner cartridges overseas that utilize the technology of these patents and competes directly with infringing toner cartridges. Canon has the capacity to replace the volume of infringing toner cartridges that would be subject to Canon’s remedial orders in a commercially reasonable time in the USA.

Canon goes on to say, numerous well- known companies sell LBPs (Laser Beam Printers) in the United States in direct competition with Canon and HP LBPs, such as, for example, Brother, Dell, Epson, Lexmark, Ricoh, Samsung, and Xerox. Thus, if a consumer of the infringing toner cartridges did not wish to purchase toner cartridges made by Canon, then the consumer could turn to many readily available Brother, Dell, Epson, Lexmark, Ricoh, Samsung, or Xerox LBPS, for example, along with their respective cartridges.

Canon, in this argument, does not even recognize the genuine cartridge remanufacturer as a viable and legitimate alternative to the consumer for these cartridges, claiming instead that if the consumer does not like it they can buy an alternative OEM brand printer and buy consumables from them. Canon wants us out. The company makes it clear that its intention is to be the only consumer choice for Canon-made cartridges. It makes no mention of the legitimate aftermarket industry, and that is what they want the ITC to believe as well.

Canon’s ITC action is a Section 337 investigation.

Section 337 specially declares the infringement of the following statutory rights to be unlawful import practices: A U.S. patent or a U.S. copyright registered under Title 17, a registered trademark, a mask work registered under chapter 9 of Title 17.

In cases involving infringement of these intellectual property rights, there is no injury requirement needed to be proven by Canon to bring this complaint and request an investigation.

In addition to the above, Section 337 declares unlawful unfair methods of competition and unfair acts in the importation and sale of products in the United States, the threat or effect of which is to destroy or substantially injure a domestic industry, prevent the establishment of such an industry, or restrain or monopolize trade and commerce in the United States. In these types of investigations, threatened or actual injury must be shown.

Maybe a qualified attorney can shed more light on this but, to me, this is exactly what Canon is doing. They do not recognize the legitimacy of genuine cartridge remanufacturing. They do not acknowledge our legitimate domestic industry and have stated in the ITC complaint documents that remanufacturers buy photosensitive drums in order to produce infringing cartridges.

In the early days of our industry, we never had OPC drums with gears available. Drums came with no gears or flanges or grounding plates. Remanufacturers needed to remove the gears and flange and grounding plate from the used, worn-out drum and reuse use them with a replacement drum. That would appear to be a good idea to go back to with the cartridges in question on these patents.

In summary, Canon’s intentions have never been clearer: They do not want remanufactured cartridges to be made available, period. They are throwing all they have in the United States and now we see legal action in Europe and will probably see even more in the future. This industry must unite and galvanize, pressure component part suppliers to only offer non-infringing replacement parts, reuse as much of the original cartridge as possible for permissible repair, stick to the principles of permitted repair and become far more familiar to OEM patents in the future if the domestic remanufacturing industry is to survive. Other OEMs are watching Canon’s actions very closely and will no doubt follow similar roads if Canon is hugely successful.

Canon reports a 16% gain in profit for the first fiscal quarter of 2014. Canon made $467 million from cartridge sales between January and March 2014 out of $8.5 billion, 6% up from the previous year as healthy laser printer and copier demand offset shrinking camera sales.

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