Lexmark v. Static Control Components

Lexmark Int'l v. Static Control Components

Lexmark International, Inc. v. Static Control Components, Inc., 387 F.3d 522 (6th Cir. 2004), was an American legal case involving the computer printer company Lexmark, which had locked its printers using a microcontroller so that only authorized toner cartridges could be used. The United States Court of Appeals for the Sixth Circuit ruled that circumvention of Lexmark's ink cartridge lock does not violate the Digital Millennium Copyright Act (DMCA).

Facts of the case

Lexmark is a large manufacturer of laser and inkjet printers.

Static Control Components (SCC) is a company that makes "a wide range of technology products, including microchips that it sells to third-party companies for use in remanufactured toner cartridges."

In an effort to control and reduce the refilling and redistribution of toner cartridges, Lexmark began distributing two distinct varieties of its toner cartridges. Under what was then known as the Prebate Program (now the Lexmark Return Program), Lexmark sold certain printer cartridges at a discount to customers who agreed to “use the cartridge only once and return it only to Lexmark for remanufacturing or recycling.” Lexmark's "Non-Prebate" cartridges could be refilled by the user without restrictions, and were sold without any discount. "Prebate" cartridges were as much as $50 cheaper, but the user agreed (through a shrinkwrap license) to use the cartridge only once and return it to Lexmark.

Lexmark touted the Prebate Program as a benefit to the environment and to their customers, since it would allow customers to get cheaper cartridges. For Lexmark, the benefit of the Prebate Program was that they could keep empty cartridges out of the hands of competing rechargers. Many users agreed to Lexmark's condition against purchasing unauthorized refills of the prebate cartridges.

To enforce this agreement, Lexmark cartridges included a computer chip that communicated with a "Printer Engine Program" built into the printer. The chips built into "Prebate" cartridges also included a 55-byte computer program, the "Toner Loading Program", that calculated the amount of toner used during printing. When the calculations indicated that the original supply of Lexmark toner should be exhausted, the printer would stop functioning, even if the cartridge had been refilled. In addition, if the chip did not perform an encrypted authentication sequence, or if the Toner Loading Program on the chip did not have a checksum matching exactly a value stored elsewhere on the chip the printer would not use the cartridge.

In 2002 SCC developed its own computer chip that would duplicate the 'handshake' used by the Lexmark chip. SCC's chip also included a verbatim copy of the Toner Loading Program, which SCC claimed was necessary to allow the printer to function. A Prebate cartridge could successfully be refilled if Lexmark's chip on the cartridge was replaced with the SCC chip. SCC began selling its "Smartek" chips to toner cartridge rechargers.

The district court ruling

On December 30, 2002, Lexmark sued SCC in a federal court in Kentucky. The suit claimed that SCC had violated copyright law by copying the Toner Loading Program, and had violated the DMCA by circumventing the encrypted authentication sequence between the Lexmark cartridge chip and the printer.

On March 3, 2003, Judge Karl S. Forester granted a preliminary injunction to Lexmark, blocking SCC from distributing its cartridge chips.

On the copyright claim, the court found that the use of the Toner Loading Program was indeed a likely copyright violation, because the Toner Loading Program was not a "lock-out code" that SCC was entitled to copy under the DMCA, and because the Toner Loading Program could be rewritten in different ways (and therefore had enough creativity to qualify for copyright protection). The court also found that the Copyright Office's decision to grant copyright registration to the two programs showed that the programs were probably copyrightable. The court found that because of the complexity of the authentication system, SCC could not have known that it could bypass the authentication without using Lexmark's copyrighted program; but it held that this did not matter because "Innocent infringement, however, is still infringement." The court also held that fair use did not apply.

On the DMCA claims, the court found that the SCC microchip circumvented Lexmark's authentication sequence, and that the reverse engineering exception to the DMCA did not apply, because it only covers the independent creation of new programs that must interoperate with existing ones, and SCC did not create any new program.

The appellate ruling

SCC appealed the district court's ruling to the Sixth Circuit Court of Appeals. As is usual for federal appeals in the United States, three judges -- Gilbert S. Merritt, Jeffrey S. Sutton, and John Feikens (a district court judge temporarily assisting the appeals court) -- considered the case. On October 26, 2004, the judges issued their ruling. Somewhat unusually, all three judges wrote opinions.

Majority opinion

In the majority opinion, Judge Sutton (with Judge Merritt agreeing) reversed the lower court's ruling and vacated the temporary injunction, holding that Lexmark was unlikely to succeed in its case.

On the copyright claim, the court noted that unlike patents, copyright protection cannot be applied to ideas, but only to particular, creative expressions of ideas. Distinguishing between an unprotectable idea and a protectable creative expression is difficult in the context of computer programs; even though it may be possible to express the same idea in many different programs, "practical realities" -- hardware and software constraints, design standards, industry practices, etc. -- may make different expressions impractical. "Lock-out" codes -- codes that must be performed in a certain way in order to bypass a security system -- are generally considered functional rather than creative, and thus unprotectable.

With these principles in mind, the majority opinion held that the district court had erred in three ways. First, it had held that the Toner Loading Program was copyrightable simply because it "could be written in a number of different ways", without considering the practical realities. Second, because of this mistaken standard, it had refused to consider whether or not the alternative Toner Loading Programs proposed by Lexmark were practical. Third, it had concluded that the Toner Loading Program was not a "lock-out code", because it had not sufficiently considered how difficult it would be for SCC -- without Lexmark's knowledge of the code's structure and purpose -- to alter the code and still pass the printer's authentication mechanisms.

On the DMCA claims, the majority opinion first considered Lexmark's claim that the SCC chip circumvented the access controls on the Printer Engine Program. It held that Lexmark's authentication sequence did not "control access" to the program; rather, the purchase of the printer itself allowed access to the program. "Anyone who buys a Lexmark printer may read the literal code of the Printer Engine Program directly from the printer memory, with or without the benefit of the authentication sequence[...]No security device, in other words, protects access to the Printer Engine Program[...]"

Likewise, the majority opinion held that anyone purchasing a printer and toner cartridge could read the Toner Loading Program from the printer; so SCC did not circumvent an access control on the Toner Loading Program either.

The majority opinion also rejected the district court's conclusion that the interoperability defense did not apply. Since SCC had offered testimony that its chips did indeed contain independently-created programs in addition to Lexmark's Toner Loading Program, the Toner Loading Program could be seen as necessary to allow interoperation between SCC's own programs and the Lexmark printer.

Concurring opinion

In a concurring opinion, Judge Merritt agreed with Judge Sutton on the outcome of this particular case, but also indicated that he would go farther.
I write separately to emphasize that our holding should not be limited to the narrow facts surrounding either the Toner Loading Program or the Printer Engine Program. We should make clear that in the future companies like Lexmark cannot use the DMCA in conjunction with copyright law to create monopolies of manufacturer goods for themselves[...]

Judge Merritt opined that even if the programs involved were more complex (and thus more deserving of copyright protection), the key question would be the purpose of the circumvention technology. Under Judge Merritt's proposed framework, if a third party manufacturer's use of a circumvention technology was intended only to allow its products to interoperate with another manufacturer's -- and not to gain any independent benefit from the functionality of the code being copied -- then that circumvention would be permissible.

Concurring/dissenting opinion

Judge Feikens also wrote an opinion, agreeing with many of the majority opinion's results (though sometimes for different reasons), but disagreeing with its conclusion on the Toner Loading Program.

Concerning the copyrightability of the Toner Loading Program, Judge Feikens found that the record supported Lexmark's claim that the program could have been implemented in any number of ways, and therefore Lexmark's implementation was creative and copyrightable. Judge Feikens agreed that the record was inadequate for the district court to conclude that the Toner Loading Program was a "lock-out code". But he noted that Lexmark's expert had testified that the entire Toner Loading Program process could be turned off by flipping a single bit in the chip's code, and that it should have been possible for SCC to discover this; so copying the program may not have been practically necessary to.

On the DMCA counts, Judge Feikens agreed that Lexmark had not established a violation with regards to the Toner Loading Program, but for a very different reason than that found by the majority opinion. Judge Feikens noted that SCC had testified that it had not even been aware that the Toner Loading Program existed; it had copied the data on the Lexmark printer chip (including the Toner Loading Program) purely in an attempt to bypass the protection on the Printer Engine Program. Since the DMCA requires that an infringer knowingly circumvent access controls on the protected program, SCC could not have knowingly circumvented protections on a program it did not know existed. With regards to the Printer Loading Program, Judge Feikens agreed with the majority opinion, but also noted his belief that the consumer had acquired the rights to access this program by purchasing the printer, and therefore the DMCA would not apply to attempts to access it.

Request for a rehearing

Lexmark filed a request for the full Sixth Circuit to hear the case en banc. The Sixth Circuit rejected this request in February 2005. Rule 13 of the United States Supreme Court Rules of Procedure requires the losing party in a case before a court of appeals to file a petition for a writ of certiorari within 90 days from the date the court of appeals enters its judgment, or from the date of the denial of a petition for rehearing in the court of appeals. The Sixth Circuit's judgment became final for all purposes when the 90-day period expired without Lexmark filing a cert petition. SCC hailed the finality of its victory by issuing a press release. Although SCC's press release suggested that the Supreme Court had actually refused to hear Lexmark's case, in fact no petition for certiorari had ever been filed.

The Sixth Circuit's decision is noteworthy for at least two reasons. First, all three judges took pains to emphasize in their opinions that the DMCA must be interpreted consistently with the broader public purposes of the copyright statute, rather than as a grant of new powers to makers of technology products to impose additional restrictions not contemplated by copyright. Second, the case represents a rare defeat for large printer manufacturers like Lexmark, Hewlett-Packard and Epson in their ongoing battle with third-party ink sellers.

References

See also

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