A Blast from the Past (Lexmark prebate program in the news).

I wrote about Lexmark's "Prebate Return Program" way back in 2008, when I was the IT director at a private school. At the time, what I considered remarkable about the program was the fact that the court had ruled that the user of one of their "prebate program" printer cartridges was bound by law to the agreement printed on the package (what is known in the software world as a "click-wrap" agreement*). What made this notable to me was the fact that this was the first time I was aware of a court ruling that the agreement printed on the packaging of a physical product (as opposed to just software) is binding to the consumer, by the act of the consumer opening the packaging. Legally, users of these cartridges were agreeing, just by opening the box, to return the cartridge to Lexmark, as opposed to selling them to recyclers (or anyone else), and Lexmark, in return, priced these cartridges significantly less than cartridges that did not have this restrictive agreement. I felt that this threatened the first sale doctrine, though I didn't opine about it greatly at the time.

This program and Lexmark's surrounding business practices are in the courts again. In 2002, Lexmark sued a company who reverse-engineered the computer chip which determined whether a replacement cartridge was "genuine" or not, when said cartridge is inserted into a Lexmark Printer. Lexmark alleged that this company, Static Control Components, was violating the "no circumvention" clause of the DMCA. The logic was that since the chip somehow protects access to Lexmark's intellectual property, and a reverse-engineered chip mimics the authentication sequence used by Lexmark chips, and tricks the printer into accepting an aftermarket cartridge, it was circumventing Lexmark's intellectual property scheme. Or it may be simply because Lexmark's authentication scheme was patented, or both. If it was the former, I am not sure what intellectual property this embedded authentication chip scheme protected in the first place, unless they were referring to the automatic copyright on Lexmark's quarterly earnings statement (ha ha). Not only did Lexmark sue Static Control Components, but they also waged an agressive letter-writing campaign to companies who refilled printer cartridges (SCC's potential customers, who would potentially buy and embed SCC's chips on the cartridges they refilled, so that the refilled cartridges would work when a customer installed them into a Lexmark printer). These letters from Lexmark stated that Lexmark believed that SCC was violating copyright law.

The Supreme Court just ruled that Lexmark does have to stand trial over the false advertising that was allegedly committed by Lexmark when they sent out all those letters calling SCC lawbreakers, thereby damaging SCC's reputation.

Lexmark, meet chickens, chickens, meet roost (oh, you have already met). But not for the reason that had troubled (and continues to trouble) me in 2008.

*Of course, these days, in the software world, an end user license agreement is much more likely to be only a "click through" agreement than a click-wrap agreement, since there is no packaging on apps that simply download.