The Best-Laid Plans of Copyright Law...
It's no surprise the entertainment industry uses copyright law to protect its products. But a printer maker? Lexmark International (LXK ) is doing just that--and it could cost you money.
If you have an Optra T620 laser office printer, you can buy a Lexmark-branded high-yield toner cartridge for $395. Or you can buy a remanufactured cartridge made by other companies for $170. Lexmark, which makes most of its money selling supplies--as do all printer makers--wants you to buy its toner. So it's using the Digital Millennium Copyright Act of 1998 (DMCA) to try to shut out rivals.
Congress rewrote copyright law with the stated intention of giving the owners of creative material, including music, books, and films, new weapons to fight the piracy made possible by digital media. Critics warned that the law was so broadly drawn that all sorts of companies might use it to stifle competition. Like most observers, I dismissed these warnings as paranoid ravings. But if Lexmark prevails in a lawsuit it has filed against Sanford (N.C.) chipmaker Static Control Components, their worst fears may come to pass.
Lexmark took advantage of a DMCA provision that bars tampering with copy-protection systems by prohibiting the sale of products designed "to circumvent a technological measure that effectively controls access" to copyrighted material. Lexmark puts chips in some cartridges that report the amount of toner left. The chip also generates a numeric code, and the printer won't work unless that code matches the number it expected. Static Control studied the chip and produced its own version, which it sells to cartridge remanufacturers.
In a suit filed in federal court in its home town of Lexington, Ky., Lexmark seeks to block the sale of the Static Control chips, which would effectively stop remanufacturers from selling most cartridges for Optra T-series printers. Lexmark argues that the chip code is a "technological measure" designed to prevent access to its copyrighted software.
Lexmark could lose the case on a technicality--specifically, that the program on its chip is too generic to qualify for copyright protection. Lexmark's legal ploy also has drawn considerable opposition, including a friend-of-the-court brief from the Computer & Communications Industry Assn. More important, Hewlett-Packard (HPQ ), which dominates both the printer and the $7 billion toner market, has no intention of following Lexmark's course. "We believe in customer choice," says Pradeep Jotwani, the senior vice-president who heads HP's lucrative imaging-supplies business. "If they want to buy from remanufacturers, that's fine. It's our job to make them not want to."
There is a danger, however, that all sorts of companies facing competition in parts and supplies businesses could add technological protections, then use DMCA as a weapon against third-party suppliers. One example: The auto industry, which long has wanted to shut down the independent crash-parts business, could put chips in fenders. In a Chicago lawsuit, Chamberlain Group, which makes garage-door openers, is invoking DMCA to stop a Canadian company, Skylink Technologies, from supplying remote controls.
Some interim steps might slow a rush of lawsuits. Static Control has asked the U.S. Library of Congress' Copyright Office to rule that small, embedded programs such as Lexmark's chip do not rate copyright protection. And the Justice Dept.'s somnolent Antitrust Div. might keep a close eye on companies using the DMCA as a high-tech method to force bundling of products and services.
Even in the world of media, where it was intended to apply, DMCA has produced mostly rancor and litigation. Movie studios and others have found it easier to sue than to fix badly flawed copy-protection schemes, such as the Content Scrambling System, used with DVDs. Ultimately, only Congress can correct a truly awful law. So far, it has shown little inclination to act. A bill by Representative Rick Boucher (D-Va.) to create modest consumer exemptions to the anti-circumvention provisions is languishing on Capitol Hill. Eventually, the spread of DMCA litigation into an ever-widening circle of industries may force action. But it would be good for all concerned if Congress were to move before things turn ugly.