As part of a 198-page opinion released late Tuesday, the office said Lexmark's invocation of the Digital Millennium Copyright Act (DMCA) in its lawsuit against Static Control was invalid. Lexmark is the No. 2 printer maker in the United States, behind Hewlett-Packard, and manufactures printers under the Dell brand.
The opinion is not binding on the judges who are considering the case, which is now before the 6th Circuit Court of Appeals in Cincinnati, Ohio, but it is expected to be influential. In February, U.S. District Judge Karl Forester ordering Static Control to cease selling its Smartek chip.
Static Control CEO Ed Swartz on Wednesday said the opinion was so sweeping that he may begin selling a second chip with similar functionality that would not be covered by the injunction. "It gave us a clear-cut legal path to create a chip that there are no legal issues with," he said. "We think we've done that, but we're going back and double-checking everything."
William "Skip" London, the company's general counsel, said: "We have developed code for such a chip. We've shown this code to Lexmark. Lexmark has taken the position that we can't sell it." Swartz said that he has not made a final decision on public sales yet. Static Control is a small Sanford, N.C.-based company that sells printer parts and other business supplies.
Lexmark did not respond to repeated requests for comment.
When enacting the DMCA in 1998, Congress ordered the Copyright Office to conduct regular reviews of one portion of the law. The Library of Congress, which oversees the Copyright Office and reports to Congress, was permitted to exempt specific groups from being covered by part of the DMCA.
During the October 2000 round, two exemptions were set: Filtering researchers could study blacklisting techniques, and obsolete copy-protection schemes could be legally bypassed. Those exemptions were due to expire this month, but the Copyright Office them and added two additional ones covering e-books and hardware dongles.
In an unusual move, the Copyright Office said that Static Control did not need a specific exemption for selling toner chips, because other parts of the DMCA already permitted it. "It appears that the congressional scheme sufficiently enables the non-infringing uses sought without requiring the assistance of an exemption in this rulemaking," the Copyright Office said.
That portion of the DMCA says engineers may bypass a technological measure "for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability" with other computer programs. Under a section of the DMCA, it is generally unlawful to circumvent technology that restricts access to a copyrighted work.
In hopes of boosting sales of its own brand of toner cartridges for its T-series laser printers, Lexmark embedded a technological measure that prevents third-party remanufacturing and consumer use of its remanufactured "Prebate" toner cartridges. Inside those cartridges is a simple software program called the Toner Loading Program designed to let the printer estimate how much toner remains. Before a T-series printer permits a cartridge to be used, it insists on performing a secret handshake, a kind of authentication, with the Toner Loading Program.
This system created a problem for consumers who wished to refill their own cartridges, but an opportunity for Static Control, which sold its Smartek chip that mimicked the authentication sequence used in Lexmark chips and tricked the printer into accepting aftermarket cartridges.
Swartz of Static Control said the Copyright Office was trying to send a signal to the courts. "They're not going to allow anyone to use the DMCA as a means to gain an electronic monopoly," he said. "They think the DMCA applies to entertainment, not products."
In addition to raising the DMCA claim, Lexmark's original complaint also alleged traditional copyright infringement, saying the Smartek chips contain "unauthorized, identical copies of Lexmark's copyrighted Toner Loading Programs."
If that allegation were proven to be true, the Copyright Office was careful to say, the existence of the DMCA loophole might not save Static Control from liability. "The wholesale copying of a copyrightable computer program is likely to be an infringing use," the office noted.