With its latest round of patent-infringement suits targeting 49 manufacturers, distributors and resellers of toner cartridges as well as photosensitive drum units—complaints filed with both the U.S. International Trade Commission (ITC) and various U.S. District Courts—Canon is turning up the heat on many players in the aftermarket universe. The move could have sobering consequences for the dealer community and their end-user clientele.
The OEM claims that nine of its recently issued patents have been infringed upon. An exhaustive look at the history of Canon’s litigation involving U.S. Patent No. 8,280,278 B2, penned by Ian Elliott—a 35-year veteran of the imaging supplies industry—can be found here. For our purposes, we will provide a glimpse of the role the dongle gear plays in this latest round of litigation.
Patents asserted in the initial lawsuit by Canon in 2014 stipulated that an OEM-style aftermarket gear that uses a tilting dongle is a patent infringement. In the aftermath of that litigation, notes Luke Goldberg, executive vice president sales and marketing for Clover Imaging Group (CIG), manufacturers of new-builds/clones devised so-called IP-safe dongle gear designs.
Canon’s newly-obtained patents now cover the movement of the tip of the dongle toward and away from the OPC drum, which Goldberg notes is a characteristic found in every available aftermarket dongle replacement. As such, should Canon be successful in its patent infringement claims, a major loophole for aftermarket alternatives has been closed by the OEM.
“With the tilting dongle and the existing aftermarket dongle options all off the table, making a cartridge that goes smoothly in and out of the printer becomes extremely difficult, if not impossible,” Goldberg said. “Even if someone does figure (a workaround) out, there’s nothing stopping Canon from obtaining new patents covering that design as well.”
New-Build Dilemma
New-build/clone manufacturers seem to be caught between a rock and a patent infringement. New-builds are entirely new cores and parts that provide significant cost savings (although Goldberg argues their plastics lack the quality integrity of used OEM assemblies), but are not protected by the right to repair that is enjoyed by CIG and other remans that use the reverse logistics process of collecting spent cores. Using the OEM dongle assembly isn’t even an option for new-builds, as building a new cartridge with them still would not provide the right to repair protection, he noted.
Goldberg and CIG believe these newest patents create “almost insurmountable” barriers for future workarounds by the new-build manufacturers. Given that there are a finite number of ways for the dongle to couple, Canon appears to have addressed them in this latest round of litigation. Again, Canon could easily file additional continuation patents to close future loopholes, Goldberg noted.
The litigation and its consequences could also prove to be a hardship for dealers who include new-build/clone cartridges as part of their MPS agreements with clients, as their CPP is based on the low cost of these cartridges.
Luke Goldberg,
Clover Imaging Group
“Fortunately for the MPS channel, most dealers don’t use new-builds due to lower quality, which leads to higher activity-based costs,” Goldberg observed. “For those few dealers who might be using accused new-builds for their contracts, it is likely that they will try and continue for as long as they can since transitioning to a reman wouldn’t be sustainable for them, given what is likely very low CPP. I believe it is incumbent on them to revisit their strategies and really analyze total cost of ownership using new-builds versus quality remans. Not only are quality remans the best IP-safe alternative, they are also the best choice in MPS because they cause fewer service calls and make higher yields.”
Customers Feeling the Pinch
In its note to customers, CIG pointed out that end users are receiving cease and desist letters regarding the offending new-builds/clones. Resellers risk being stuck with infringing inventory when the case concludes and face de-authorization and/or litigation themselves for selling new-builds/clones. Canon is clearly poised to rigorously defend these new patents, and dealers may well find themselves in an untenable position at the conclusion of the litigation.
“Clearly, it’s very disruptive for dealers and the relationships they have with users if those users receive letters accusing them of buying infringing products,” Goldberg said. “IP infringement is not top of mind for users and therefore it’s an assumed benefit they would expect to derive from their dealers. Getting a letter like this in many cases would be a breach of trust and no doubt would influence future business.”
