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Static Releases Statement on Lawsuit

February 11, 2003

Sanford, NC – On Feb. 7, in Lexington, Ky., federal district court, Judge Karl Forester stated he would reach a decision on a motion for preliminary injunction by Lexmark by Feb. 28. Judge Forester indicated he needed time to review the case and directed the parties in the case to submit additional information for his consideration by Feb. 14.

William London, Static Control VP and general counsel, summarized the case in light of Judge Forester’s ruling, "Really, little happened that we didn’t expect. There are two key issues – determining the copyrightability of Lexmark’s Toner Loading Programs and the applicability of the Digital Millennium Copyright Act (DMCA). Lexmark presented their case and their expert software witness and we in turn did the same. It was very obvious to all present that there are some significant discrepancies between what Lexmark stated in its original complaint and what their expert witness stated, and I would surmise those are some of the issues Judge Forester will be deliberating."

Reflecting on the overall merits of the case, London remains confident, "Our legal team is utterly confident that we will ultimately prevail in this case. The copyright issues of lockout codes have been definitively decided in previous cases in our favor, and the attempt of Lexmark to attempt to invoke the Digital Millennium Copyright Act is unprecedented. Even Lexmark’s primary competitor, Hewlett Packard, that could conceivably reap billions of dollars in additional profits if the DMCA could be used in this fashion, concluded it could not and stated it would not be going down this path with Lexmark."

Overwhelming opposition has been mounting in this case due to the catastrophic potential for free trade that could result if Lexmark was successful in its attempts to use the Copyright Act and the DMCA as a means to lock-out competition. Multiple amicus cariae (friend of the court) legal briefs have been filed by parties who could be impacted by such a decision. The Automotive Aftermarket Industry Association, representing a $250 billion dollar industry employing 3.7 million people in the U.S. stated, "Lockout devices could be used to destroy the market for motor vehicle replacement parts produced by the independent automotive aftermarket."

An amicus curiae brief filed by a group of 38 law professors specializing in copyright law pointedly summarizes the potential impact of such an expansion of the scope of the DMCA:

"If the (DMCA) could be applied to such functional software (as Lexmark’s Toner Loading Programs), then it could be susceptible to widespread abuses across a plethora of industries. It could enable automobile manufacturers to prevent competitors from selling replacement oil filters, or tires, that did not have a compatible semiconductor chip. Photocopy machine manufacturers could prevent use of paper that does not bear the correct watermark. Floppy drive manufacturers could prevent use of computer floppy disks that do not have their authenticating chip."

Ed Swartz, CEO and founder of Static Control, commented on the efforts of his staff since Lexmark filed suit on December 30, "I would like to thank all of our people who have worked tirelessly to help inform dozens of groups, associations and parties who could be negatively impacted by the outcome of Lexmark’s attempts to misuse copyright law. I believe these efforts led to Hewlett Packard, the #1 printer manufacturer in the world, to make a public statement regarding Lexmark’s use of copyright law and the DMCA to restrict competition in the market for Lexmark toner cartridges. On Feb. 5, HP Senior Vice President Pradeep Jotwani held a media briefing to state that in HP’s analysis, what Lexmark is doing is wrong and that HP will not be following Lexmark down the same path. He further stated that HP supported the right of aftermarket toner and inkjet cartridges to exist in the marketplace as a matter of customer choice."

"This is absolutely huge for the American public and our industry," Swartz said. "I’ve worked 17 years building this company and this industry, and there are some 34,000 people employed in the U.S. as part of this industry whose livelihoods are at stake. I would like to publicly express my appreciation and admiration that in this age of corporate greed typified by companies like Enron and WorldCom, HP had the guts to do what was right. I would like to encourage anyone and everyone that the next time you purchase a printer, remember what HP has done to help insure your right of choice and buy HP. I believe it is the American thing to do."