Filing numerous lawsuits in federal court against various third-party supplies manufacturers and resellers in late January, Canon attorneys initiated their latest patent battle in the United States. Canon claims that the firms violated patents on some of Canon and Hewlett-Packard’s most recently released toner cartridges. A couple of months later, the company filed a related complaint with the U.S. International Trade Commission (ITC) and requested the commission investigate the matter to determine how widespread the practice of marketing infringing product has become in the U.S. Less than four months after the initial complaints were filed in the federal court, the first defendant settled with Canon and two others reached separate settlements in June. I expect to see more companies settle with Canon in the very near future.
The swiftness of the settlements is a testament to how bulletproof Canon’s patents are perceived to be by the third-party supplies industry. The Japanese firm successfully pursued a similar lawsuit in 2012, accusing dozens of companies of violating patents covering gears used to synchronize and rotate the imaging drum in many older Canon and HP toner cartridges. Over the course of 2012, all of the defendants opted to settle with Canon. Although details of the settlements were not disclosed, I suspect that Canon’s attorneys negotiated a tidy sum in remuneration for their client and the defendants also removed all of the offending products from the market giving the OEM back some share. Ultimately, the case also resulted in the ITC issuing a general exclusion order (GEO) in June 2013 limiting the number of third-party Canon and HP toner cartridges import into the country.
Canon appears to be following the same strategy in this year’s case that it used a couple of years ago. As noted, in addition to the suits in federal court, the company has requested the ITC investigate the matter. I expect that Canon will prevail in both cases and be granted another GEO. There is one new wrinkle: Canon is also suing various firms in certain European countries for violating European patents with similar technologies as the U.S. patents. Although the cases are being adjudicated in different courts in different countries, it is quite likely that information and evidence discovered in one court will be then used to support cases tried in other courts.
The Initial 2014 Case
On January 29, Canon, Inc., filed 11 separate complaints in the U.S. District Court for the Southern District of New York accusing 18 companies of violating patents found in certain Canon and HP toner cartridges. The nine patents at the heart of the suit relate to the imaging drum inside a toner cartridge and how it is rotated. All of the patents are relatively new and have been issued within the past two years.
While there are a number of similarities between the 2012 case and the case that Canon filed this year, there are some important differences. Yes, the central issue in both cases is alleged violation of patented technologies that rotate a toner cartridge’s imaging drum and how the rotation is actually accomplished when the cartridge is installed in a device. But that’s really where the similarities end. While only two patents were claimed to have been violated in the 2012 suit—U.S. patents 5,903,803 (’803) and 6,128,454 (‘454)—in the present case, a dozen patents are involved. Also, the 2014 case is related to newer patented technologies featured on cartridges released in the past couple of years. The oldest patent in Canon’s recent case was issued in 2012 and some of the patents were awarded as recently as 2014. Issued in May 1999 and October 2000, respectively, the ‘803 and ‘454 patents in the 2012 case are now rather long in the tooth.
Canon’s 2012 and 2014 complaints both center on a “coupling” or gear patents, but the mechanisms are distinctly different. Canon’s older gears, which were covered in part by the ‘803 and ‘454 patents, featured a twisted protrusion used to rotate the drum. The design of the gear mechanism in the 2014 case is nothing like the twisted protrusion. It is similar to a universal joint used in a car’s drivetrain and connects the OPC drum (or developer roll in a color printer) to the printer. Like the protrusion on the old gear, the design of the new gear allows for easy cartridge insertion and removal while providing for a smooth driving force to rotate the drum (or roller). The parts incorporated into the new design are called “dongle gears,” presumably because they are free to move within certain constrains imposed by the cartridge.
The list of 2014 defendants looked rather familiar, but again there were some key differences. As it did in 2012, Canon sued Acecom, Green Project, and Onlinetechstores.com. This time around, however, the OEM did not include the third-party supplies industry’s largest player, Clover Technologies Group, in its suits. Instead, Canon sued various Chinese companies including Print-Rite and several of its wholly owned subsidiaries such as UTec and Innotex. Assorted Ninestar entities were also added to the new Canon suits as well as Aster Graphics of Guangdong, China and its CA-based sales subsidiary. A couple of other notable new companies on the 2014 defendant list are the North American remanufacturers International Laser Group (ILG), which was recently acquired by the Turbon Group, a German remanufacturer. Canon also named Micro Solutions Enterprises (MSE) as a defendant, a U.S.-based reman owned by Wazana Brothers International.
The Amended Complaint and ITC Action
On April 1, Canon, Inc., amended the 11 patent-infringement lawsuits it filed in January in the New York City federal court. While Canon did not add any new defendants or file additional complaints, it expanded the total number of patents alleged to have been violated from 9 to 12. In the amended complaint, Canon dropped allegations that one U.S. patent (8,532,533 or ‘533) had been violated, but added claims that the defendants infringed four newer U.S. patents, including 8,676,085 (the ‘085 patent), 8,676,090 (the ‘090 patent), 8,682,215 (the ‘215 patent), and 8,688,008 (the ‘008 patent). The four patents were all issued this year, and one, the ‘008 patent, was issued on the very day Canon filed the amended complaints.
About a month after Canon filed its amended complaint in the federal court, it filed a complaint with the ITC and requested a new 337 investigation to gauge how many third-party supplies manufacturers and resellers have infringed the OEM’s patents by importing and selling toner cartridges that are compatible with various HP and Canon laser machines. If the commission finds that there are widespread violations of the patents in question, Canon, Inc. and its affiliates Canon U.S.A. and Canon Virginia are looking for a GEO to protect the U.S. market. If granted, the GEO would prohibit the importation of infringing cartridges regardless of manufacturer. (See table for list of accused cartridges.)
Whereas Canon named 18 companies as defendants in the lawsuits pending in federal court, Canon named more firms in its ITC complaint —33 in total. In addition to naming manufacturers noted earlier (Aster, ILG, Ninestar/Seine, and Print-Rite), the ITC complaint accused one other manufacturer, Shenzhen ASTA Official Consumable Co., Ltd., of infringing Canon’s patents. The ITC complaint also lists eight new resellers along with many of the firms named in the district court litigation. The new respondents include ACM Technologies, Do It Wiser LLC, Grand Image Inc., Katun Corporation, LD Products, Nectron International, Printronic Corporation, and Zinyaw LLC. A couple of companies named in the federal court case were not named as respondents in the ITC matter including the Wazana Brothers International (a.k.a MSE) and the retailer Provantage, LLC.
In addition to the ITC filing on May 7, Canon filed new patent-infringement complaints in the federal court. The new defendants included many of the companies that appeared in the ITC filing but not in the case filed in federal court. The firm include Katun Corporation, LD Products, Nectron International, Printronic Corporation, Zinyaw LLC, Shenzhen ASTA Official Consumables Co., Zinyaw LLC, Shenzhen ASTA Official Consumable Co., ACM Technologies, Grand Image, Do It Wiser LLC, and last, but by no means least, eight Ninestar entities: Ninestar Image Tech Limited; Zhuhai Seine Technology Co., Ltd.; Ninestar Technology Company, Ltd.; Seine Tech (USA) Co., Ltd.; Seine Image Int’l Co., Ltd.; Ninestar Image Tech, Ltd.; Seine Image (USA) Co., Ltd; and Nano Pacific Corporation.
On July 8, Canon further refined its defendant list. Several defendants including Ninestar Image Tech., Ltd. and Seine Image (USA) Co., Ltd., were dropped from the suit. It appears that Canon had mistakenly named in its ITC complaint a pair of third-party supplies companies that either do not exist or are no longer in operation.
All of the defendants will most likely be made to wait for their day in federal court. I suspect the cases will be stayed as the ITC conducts its 337 investigation.
Overseas Actions
In addition to the legal wrangling in the U.S., Canon has become quite active in European courts this year, suing firms alleged to have violated patents on the dongle gear. On April 28, Canon announced that it has filed suit against Aster Technology Holland B.V. before the District Court of the Hague in the Netherlands. Located in Venlo, Aster Technology Holland is Aster Graphics’ distribution, marketing, and sales arm in Europe. Canon accuses Aster Technology Holland of infringing European patent number 2 087 407, “Process cartridge, electrophotographic image forming apparatus, and electrophotographic photosensitive drum unit.” The European patent Aster alleged to have infringed is related to U.S. patent 8,280,278 (’278) and 8,630,564 (‘564). The accused products are toner cartridges used in various HP laser printers.
Several weeks after filing the Aster suit, Canon announced that it has filed a second patent-infringement lawsuit against a third-party toner cartridge seller in the Netherlands for violating the same European patent (2 087 407). On May 7, Canon named Seine (Holland) B.V., the overseas sales company for the Seine/Ninestar group of companies in Holland, as a defendant. Canon accused the firm, formerly known as Ninestar Image (Holland) B.V. Seine, of importing and selling toner cartridges for use in various HP laser devices.
Canon has also filed complaints in other countries in Europe. On May 29, Canon filed a patent-infringement suit in France before the Paris First Instance Court against Zephyr SAS, whose trade name is Green Eco, and the Hong Kong and Chinese companies that both use the name Aster Graphics Company Limited. The patent alleged to have been infringed in the French lawsuit is allegedly violated in the other European cases: Canon’s European Patent (FR) number 2 087 407. The French suit followed actions initiated on May 23 in Germany against two remanufacturers: wta Carsten Weser GmbH and KMP PrintTechnik AG. As with the other European cases, Canon is alleging the German firms infringed European patent 2 087 407.
Another Win for Canon?
While I have not heard that any of the firms involved in the cases in Europe are looking to settle, as mentioned earlier, three companies in the U.S. have settled and I suspect more will chose to make a deal with the OEM this summer. It appears that Canon is on its way to another big legal victory.
Canon announced on May 19 that it has resolved its dispute with Provantage of North Canton, OH. In its complaint against Provantage, the OEM alleged the firm marketed only one infringing monochrome cartridge SKU, the AC-H0255AC. According to Canon’s complaint against the Aster group of companies, it appears that the Chinese firm manufactured this SKU. Provantage agreed to a consent judgment and permanent injunction and was dismissed from the litigation. Provantage did not contest that the asserted patents (‘304,’278, ‘744, ‘533, ‘640, and ‘564 patents) are valid and enforceable and admitted it had sold the accused products. Provantage agreed to stop making, using, selling and offering for sale in the United States, and from importing into the United States the offending SKU. Each party agreed to pay its own court costs and attorneys’ fees. As is always the case, it is not spelled out what, if anything, Provantage agreed to pay Canon to settle this matter.
After Provantage’s settlement in May, two firms settled with Canon. On June 9, Canon announced it had successfully concluded its patent-infringement complaint against Printronic Corp. of Santa Ana, CA, which does business as Printronic.com and InkSmile.com. The firm stipulated to a consent judgment and permanent injunction in district court. According to court documents, Printronic concluded “this litigation at Canon’s initial pleading stage without contesting infringement, validity, or enforceability of any claims of the Asserted Patents.” Like Provantage, Printronic is permanently enjoined from making, using, selling and offering for sale in the United States any accused cartridges or other cartridges or drums or otherwise infringing the 12 asserted patents. Each party paid its own court costs and attorneys’ fees. Like most settlements, additional details about the deal were not released.
The third settlement was announced on June 26 by Canon, which said it had concluded its patent-infringement lawsuit against OnlineTechStores.com, Inc. and Online Tech Stores, LLC, (collectively Online Tech Stores) in the U.S. District Court for the Southern District of New York. The firm was accused of violating all 12 of the Canon patents in question by marketing an assortment of infringing SKUs including CHCE310A, CHCE311A, CHCE312A, CHCE313A, PT119HY, PT120, PTCE255A, PTCF280A, PTCE255X, PTCE255XJ, PTCF280XJ, PTCE505A, PTCE505AJ, PTCE505X, PTCE505XJ, VTCE505X, and VTCE505A. The settlement with OnlineTechStores.com, Inc. and Online Tech Stores, LLC was similar to Provantage and Printronic’s deals with Canon. Specific terms of the settlement were not released.
So, it appears that Canon is on track to be as successful with its recent case as it was with its 2012 suits. As I’ve suggested several times in this piece, you can expect to see more settlements come in the months ahead. Defendants will weigh the considerable costs of defending themselves in these complaints against any pain they might suffer by agreeing to a permanent injunction and whatever else Canon may be asking for in terms of financial compensation. Most will opt to accept Canon’s deal and move on. I also suspect that we’ll see more suits from Canon, rather than less, as it gathers evidence in other courts and uses that information to initiate new cases.
