Copyright Cannot Protect Anti-Competitive Behaviour

The US 6th Circuit Court of Appeals has vacated a preliminary order barring Static Control Components (SCC) from selling computer chips to third-party manufacturers making cheaper substitutes for Lexmark International Inc's (Lexmark) printer toner cartridges (Lexmark International Inc v Static Control Components Inc, DC No. 02-00571, October 26, 2004). Lexmark sued SCC for copyright infringement and violations of the Digital Millennium Copyright Act (DMCA). In dispute was a software program embedded on a microchip contained in Lexmark's toner cartridges (Toner Loading Program or TLP). The TLP sent an encrypted signal to another chip (Printer Engine Program or PEP) located in Lexmark's printer, enabling the printer to function properly. By using this authentication sequence, Lexmark could lock out cartridges from other manufacturers. SCC's microchips replicated the TLP and were used on refurbished Lexmark toner cartridges and sold to consumers as low-cost alternatives. Lexmark argued that SCC was selling something which circumvented a device that controlled access to the copyrighted work, contrary to the DMCA. The lower court had issued a preliminary injunction on the basis that Lexmark had established a likelihood of success on the merits. The appellate court disagreed. It found that the DMCA had no application. Furthermore, it questioned the copyrightability of the TLP for three reasons: (i) issues of functionality and efficiency limit the ways in which the program may have been composed (application of the copyright doctrines of merger and scènes à faire); (ii) the program may not have sufficient originality to warrant copyright protection; and (iii) the program functioned as a "lock-out" code and became part of the method or operation of the computer. The decision indicates that the courts will not be supportive of a manufacturer's efforts to shut out competition by invoking copyright laws. The majority noted that while Lexmark's market for toner cartridges might be diminished by SCC's chips, "that is not the sort of market or value that copyright protects." This position was more strongly stated by Judge Gilbert Merritt in a concurring opinion: "Congress did not intend to allow the DMCA to be used offensively in this manner, but rather only sought to reach those who circumvented protective measures "˜for the purpose' of pirating works protected by the copyright statute." As the case was remanded to trial, it will be watched closely for the outcome on the merits. For related news reports, see: http://www.law.com/jsp/pc/LawArticleIp.jsp?id=1100535354262; or http://www.pcworld.com/news/article/0,aid,118341,00.asp. For the full text of the decision, see: http://makeashorterlink.com/?S146426F9. Summary by: Rosa Kim