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THE PRINTER AND SUPPLIES INDUSTRY’S LEADER FOR NEWS AND ANALYSIS

Around the World, Canon Cracks Down on Patent-Infringing Toner Cartridges

© 2017 Actionable Intelligence » THE PRINTER AND SUPPLIES INDUSTRY’S LEADER FOR NEWS AND ANALYSIS ii

Actionable Intelligence | Around the World, Canon Cracks Down on Patent-Infringing Toner Cartridges

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© 2017 Actionable Intelligence » THE PRINTER AND SUPPLIES INDUSTRY’S LEADER FOR NEWS AND ANALYSIS 1

Canon has used the unique design of its coupling units to enhance the performance of its cartridges and improve the overall end user experience.

For more than a decade, the global markets for toner cartridges have been flooded with patent-infringing products. Seeking to gain an unfair price advantage, certain third-party supplies manufacturers routinely reverse-engineer OEM cartridge designs without regard for patented technologies. These unscrupulous firms then bring the resulting patent-infringing cartridges to market at artificially low prices. This practice has adversely affected the overall market for legitimate cartridges from hardware manufac-turers and third-party supplies vendors by putting downward pressure on prices.

Patent-infringing compatible cartridges, or so-called “clones,” have had an especially negative impact on the market for cartridges used in Canon’s single and multifunction laser printers and HP’s LaserJet machines, which are based on Canon technology. The worldwide population of Canon and HP laser devices numbers in the hundreds of millions, and most clone makers target these machines because the large installed base represents a huge opportunity. To protect the market, however, Canon has grown increasingly assertive in exercising its patent rights when it finds companies violating its intellectual property. The company remains vigilant in monitoring the market and has filed six complaints in 2017 alone.

Canon’s Technology

Because much of the image processing performed in Canon printers and HP LaserJet machines occurs within the toner cartridge itself, consumables play a big role in the overall performance of these devices. The toners and toner cartridges used in these machines often represent breakthroughs in various fields, including chemistry, electrical and mechanical engineering, optics, and much more. Canon invests heavily in upgrading its toner cartridges to ensure that the performance of machines that feature its technologies provide optimal print speeds and image quality. To protect its investments, Canon has established a substantial patent portfolio around its toners and cartridges.

One mechanism that is essential to the proper operation of Canon and HP LaserJet devices is the coupling that connects the moving parts in the toner cartridge to the motor inside the printer. The coupling must allow the cartridge to be easily inserted into or removed from a printer as well as synchronize the rotation of the cartridge’s imaging parts with the printer and prevent these parts from slipping. Canon has used the unique design of its coupling units to enhance the performance of its cartridges and improve the overall end user experience. Although the internal cartridge parts may vary from one SKU to another, Canon engineers typically rely on the same basic coupling design across imaging platforms.

To protect the patents on its unique design, the company filed suits in U.S. federal court in 2010 and 2012 against various companies based in China, Hong Kong, Mexico, the United



States, and Vietnam, alleging that they had violated patents on its twisted-prism drive component. The firm also requested that the U.S. International Trade Commission (ITC) initiate an investigation into what Canon claimed was the widespread patent infringement of its intellectual property by manufacturers inside and outside of the country along with their channel partners. All of the defendants ultimately settled with Canon and the ITC issued exclusion orders to prevent the importation of compatible Canon toner cartridges. Although the firm was successful in exercising its U.S. patent holder rights on the twisted-prism gear, the patents expired in 2016.

Dongle Gears

Early in 2014, Canon returned to federal court with lawsuits alleging that several companies had violated some of its coupling technologies, but these suits did not involve the twisted-prism gear. Instead, the case claimed that 18 companies had violated nine newer patents protecting technologies on what has become known as Canon’s “dongle gear.” A couple of months after Canon filed its lawsuit, it once again requested that the ITC investigate the matter and issue orders to exclude the importation of products that violated the nine patents in question.

Like the twisted-prism gear, the dongle coupling allows for easy replacement of new car-tridges and for the image-processing components inside the cartridge to be synchronized with the printer’s motor while preventing any slippage. Unlike the twisted element on the old gear, the dongle drive features a movable joint similar to a universal joint in an automobile. The dongle gear is more flexible and can move around as the cartridge is being inserted.

After filing suit in U.S. federal court, Canon moved swiftly in multiple geographies to protect the patents on its dongle gear. Within several months, the company filed suit in the District Court of The Hague in the Netherlands, before the Paris First Instance Court in France, in the High Court of Justice of England and Wales, and in the District Court of Düsseldorf in Germany. In addition to the initial wave of lawsuits in Europe, Canon has filed suits in Italy as well as in regions outside of the Euro zone, including Brazil and Russia. (For more details regarding the various cases, see the accompanying table.)

To date, Canon has prevailed in its cases around the world, although the results of several are still unresolved. As a result of Canon’s various courtroom wins, dozens of companies worldwide have stopped marketing cartridges that violate various patents related to the cou-plings used on many Canon and LaserJet-branded cartridges. This year alone, U.S. Customs agents have seized a number of shipments of patent-infringing Canon compatible toner cartridges and prevented them from entering the United States.

Given the string of legal victories Canon has enjoyed, we expect to see the company con-tinue to actively protect the patented technologies found in Canon and HP LaserJet toner cartridges. While it has been a couple of years since Canon filed suit in the United States, it remains active in Europe. Given the fact that many suspiciously inexpensive compatibles are still available online at sites such as Amazon, eBay, and others, we feel it is only a matter of time before Canon files more suits in U.S. federal court.

To date, Canon has prevailed in its cases around the world, although the results of several are still unresolved.



Lawsuits Filed by Canon Inc. Alleging Patent Infringement of Dongle Gear Patents

Most recent action Defendant Venue Patents Date Filed Status

N/A Coemedia GmbH, Moreinks Limited,

and Printperfect Ltd.

District Court of Düsseldorf

(Germany)

European patent

2 087 407

Aug. 2017 The court granted Canon preliminary injunctions against Coemedia, Moreinks Limited, and Printperfect, enjoining them from selling patent-infringing cartridges. All three defendants sell cartridges primarily through Amazon.

N/A Jakubowski und Gert GbR Germany European patent

2 087 407

Sept. 2017 Without filing in German court, Canon said that Amazon vendor Jakubowski und Gert GbR signed a cease-and-desist declaration agreeing to refrain from marketing patent-infringing toner cartridges. The vendor also agreed to pay damages to Canon and destroy any remaining patent-infringing cartridges in its possession.

Oct. 2017 JT Company District Court of Düsseldorf

(Germany)

European patent

2 087 407

H2 2017 Canon reported that it was awarded a preliminary injunction against the defendant and its managing director. The filing is one of a number similar lawsuits that accuse small companies that sell third-party imaging supplies on Amazon of infringing Canon’s patent.

Sept. 2017 CBD Group Inc., ICS/Cartridge King,

A Smart Choice—3G, Manoj Diora

U.S. International

Trade Commission

U.S. patents ‘278, ‘564, ‘215, ‘090, and ‘0083

Jan. 2017 The ITC issued seizure-and-forfeiture orders to these companies throughout 2017 after U.S. Customs found that their shipments contained items violating the 337-TA-918 GEO.

June 2017 M & S Vertrieb Service OHG District Court of Düsseldorf

(Germany)

European patent

2 087 407

H1 2017 The District Court of Düsseldorf awarded Canon a preliminary injunction.

June 2017 J&H Greentech & Trading Ltd. Court of Rome (Italy)

European patent

2 087 407

Aug. 2016 Canon reported it settled after J&H Greentech & Trading agreed that its Prestige Cartridge business would not market patent-infringing cartridges for Canon and HP laser printers worldwide. It appears that the litigation also spread to Germany prior to the settlement.

Jan. 2017 Consumable Direct Ltd. District Court of Düsseldorf

(Germany)

European patent

2 087 407

H1 2017 District Court of Düsseldorf grants Canon an ex parte preliminary injunction against the defendant, which sells products under the Color Direct brand on Amazon.

Continued next page




Dec. 2016 Blue Planet Trading, EC Enterprise,

Emerald Recycling, Graphic Toners,

Laser Pros International, Ninestar Technology Co.,

Quantum Tech International, SID Trading,

Smart A, Spectrum Imaging,

Tech-Optics, Topmay Inc.,

Universal Ribbon Corp., Widenrich Imaging Technologies,

Xcess Technology

U.S. International

Trade Commission

U.S. patents ‘278, ‘564, ‘215, ‘090, and ‘0083


May 2016 Two unnamed Brazilian companies

Rio de Janeiro

District Court (Brazil)

Brazilian patents

PI 0720506-6, PI 0807733-9

Unknown Few details emerged from Brazil regarding Canon’s pursuit of companies infringing the OEM’s patents in that country. Canon did report, however, that the court granted preliminary ex parte injunctions ordering the defendants to abstain from marketing the patent-infringing toner cartridges involved in the court actions. Canon said it was seeking both injunctive relief and damages.

Feb. 2016 Acecom, Inc., ACM Technologies Inc.,

American Internet Holdings, Aster Graphics companies,

Do It Wiser, Grand Image, Green Project,

Ink Technology Printer Supplies, Innotex Precision,

International Laser Group, Jiangxi Yibo E-Tech Company,

Katun Corp., Linkyo Corp., LD Products,

Nano Pacific Corp., Nectron International, Ninestar companies,

Onlinetechstores.com, Print-Rite companies,

Printronic Corp., Provantage,

Seine companies, Shenzhen ASTA Official

Consumable, The Supplies Guys,

Union Technology International, Wazana Brothers International,

Zinyaw

U.S. District Court for the

Southern District of New York

U.S. patents ‘304, ‘278, ‘744, ‘219, ‘640, ‘564, ‘669, ‘411, ‘085, ‘090, ‘215, ‘0081

Jan. 2014 Initially, Canon filed 11 separate suits in the U.S. District Court for the Southern District of New York accusing 18 companies of violating nine patents found in certain Canon and HP toner cartridges. The OEM then added three more patents to the suit and later filed an additional 10 patent-infringement complaints against 19 more firms. Later, Canon dropped certain patents from the complaints. All of the patents centered on the dongle gear used to rotate internal parts inside Canon and HP toner cartridges. Eventually, all of the defendants either defaulted or settled with Canon.

Lawsuits Filed by Canon Inc. Alleging Patent Infringement of Dongle Gear Patents (continued)

Continued next page




Feb. 2016 Badger Office Supplies Limited, Inkjet Direct Limited,

Greentrees International Limited

High Court of Justice of England and Wales (UK)

European patent

2 087 407

Aug. 2014 The defendants settled with Canon and agreed not to market certain products which Canon accused of infringement.

Dec. 2015 Amazon.com, ITC Supplies,

Lasermasters LLC, Smart and Easy Corp.

U.S. International

Trade Commission

U.S. patents ‘278, ‘564, ‘215, ‘090, and ‘0083


Sept. 2015 OOO Softtrade Moscow City Economic

Court (Russia)

Russian Patent

2467370

Nov. 2014 Canon’s second Russian case alleged the defendant sold its Hi-Black brand of cartridges on the Russian-language website hi-black.ru. The case was settled in Canon’s favor by the Moscow State Arbitration Court, which required the defendant to destroy its inventory of patent-infringing product and cease marketing the goods. The firm was also found liable for damages and paid Canon an undisclosed amount.

Aug. 2015 Thomas Zenkel (operator of titenalarm.de)


(Germany)

European patent

2 087 407

July 2014 Court ruled the defendant must stop marketing patent-infringing Canon compatible toner cartridges and awarded Canon an undisclosed amount for damages.

Aug. 2015 Acecom, Inc., ACM Technologies,

American Internet Holdings, Aster Graphics companies,

Do it Wiser, Grand Image Inc.,

Green Project, Ink Technologies Printer Supplies,

Innotex Precision, International Laser Group,

Jiangxi Yibo E-Tech Company, LD Products, Linkyo Corp., Katun Corp.,

Nano Pacific Corp., Nectron Corp.,

Ninestar companies, Onlinetechstores.com, Print-Rite companies,

Printronic Corp., Seine companies,

Shenzhen ASTA Official Consumable Corp., The Supplies Guys,

Union Technology International, Zinyaw

U.S. International

Trade Commission

(ITC)

U.S. patents ‘304, ‘278, ‘744, ‘640, ‘564, ‘085, ‘090, ‘215, and ‘0082

May 2014 After conducting an extensive investigation (ITC investigation 337-TA-918) upon Canon’s request, the U.S. ITC issued a general exclusion order (GEO) barring entry into the United States of certain toner cartridges with dongle gears and components that infringe Canon’s U.S. patents ‘278, ‘564. ‘215, ‘090, and ‘008. Numerous respondents defaulted in the investigation or were deemed non-participating respondents. Noting the patents in the order will not expire until after 2027, the commission notified U.S. Customs and Border Protection (CBP) that a GEO had been issued in the Canon investigation prohibiting imports of products covered by the patents.


Continued next page




Mar. 2015 Seine (Holland) District Court of The Hague (Netherlands)

European patent

2 087 407

May 2014 Canon sued the Seine/Ninestar group of companies’ overseas European sales firm, claiming it marketed toner compatible with Canon and HP cartridges that infringe European patent number 2 087 407. This dispute was resolved in March 2015 as part of a broader settlement agreement between Canon and Ninestar.

Feb. 2015 X-com shop Moscow City Economic

Court (Russia)

Russian Patent

2467370

Aug. 2014 This was Canon’s first suit in Russia involving the dongle gear. Canon alleged that the distributor sold patent-infringing cartridges under the Cactus and G&G brands on its website, www.xcom-shop.ru. In less than a year, the defendant settled with the OEM.

Feb. 2015 European Cartridge Warehouse Limited,

Printer Supplies Technology Limited

High Court of Justice of England and Wales (UK)

European patent

2 087 407

July 2014 This was the first of Canon’s dongle gear suits in the UK. In February 2015, Canon announced it had obtained a default judgment against both companies in which the defendants were enjoined from selling the patent-infringing toner cartridges and all patent-infringing inventory had to be turned over or destroyed.

Dec. 2014 Aster Technology Holland District Court of The Hague (Netherlands)

European patent

2 087 407

Apr. 2014 The Aster suit was one of the first filed by Canon in Europe involving the infringement of a European patent on gears used in Canon and HP toner cartridges. In December 2015, Aster settled with Canon in various courts worldwide.

Dec. 2014 (Aster)

Unknown (Zephyr)

Aster Graphics, Zephyr SAS

Paris First Instance

Court (France)

European patent

2 087 407

May 2014 Canon’s suit before the Paris First Instance Court against Aster and Zephyr SAS was the first Canon case we know of in France. Aster was named in various cases worldwide and settled with Canon. The ultimate resolution of the Zephyr case is not known.

Pending KMP PrintTechnik AG, wta Carsten Weser GmbH


(Germany)

European patent

2 087 407

May 2014 German press reports indicate KMP and wta appealed to the Supreme Court after Düsseldorf court found in favor of Canon.


Continued next page



1 Full U.S. patent numbers: 8,135,304, 8,280,278, 8,369,744, 8,433,219, 8,565,640, 8,630,564, 8,437,669, 8,494,411, 8,676,085, 8,676,090, 8,682,215, and 8,688,008

2 Full U.S. patent numbers: 8,135,304, 8,280,278, 8,369,744, 8,565,640, 8,630,564, 8,676,085, 8,676,090, 8,682,215, and 8,688,008

3 Full U.S. patent numbers: 8,280,278, 8,630,564, 8,676,090, 8,682,215, and 8,688,008


Unknown Armor SA, Artech GmbH,

and Pelikan Vertriebsgesellschaft (and other Pelikan companies)


(Germany)

European patent

2 087 407

Dec. 2014 Canon sued several of Europe’s best-known third-party supplies companies in Germany. The OEM filed complaints against the French third-party supplies vendor Armor and its German manufacturing subsidiary Artech along with Pelikan Vertriebsgesellschaft, a subsidiary of Pelikan International based in Hanover, Germany, as well as other Pelikan subsidiaries. Armor vowed to fight the case but we are not aware of the firm issuing any additional statements about the case’s outcome and neither did Canon.




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