Saturday, January 11, 2003

DMCA vs. Sherman Act 

It is the old Razors and Razor Blades lesson. Shaving product companies sell Razors for low-low prices in order to make a large profit selling the replacement razor blades.

Some people might say it is not 'fair', or some might even say its not 'ethical', but there is nothing illegal about selling products this way - nor should there be.

No where is this paradigm more prevalent than in the computer printer market. Printers by Epson, Hewlett-Packard, Lexmark, and other companies have the ability to print photographic quality pictures from a home computer. These printers can be obtained for less than $100. If you want to shop around, you can probably find the printers even cheaper than buying direct from the manufacturer.

However, the printer toner cartridges is where the manufacturers make up the lost profits. Toner cartridge kits for these photo-quality printers can easily approach $50, half the price of the original printer.

So as the old cliché goes, "What does this have to do with the price of tea in China?" Or more accurately, what does razor blades and printers have to do with the topic of this article.

The Digital Millennium Copyright Act was passed in 1998. The main purpose behind the Act was to protect intellectual property rights in the digital world. At the time the bill was being considered, many organizations warned that the Act's language was such that it could easily be used to squash competition in the marketplace.

As this article at news.com reports, it is apparently going to be used just for that purpose.

Lexmark is suing a company that makes chips that allows other companies to produce "generic" replacement toner cartridges for a greatly reduced price. As an example, I bought black and color toner carts made by 'G&G' and 'Meritline' for my Epson C60 printer for about $7 each. If I had bought the Epson brand carts, it would have cost me $25-$30 each. Lexmark puts computer chips in the toner carts so that the printer can identify the cartridge type to be sure that it is the correct type. No chip, no printing. However, a company named 'Smartek' has created its own chip that sends the correct signal to the printer, thus allowing the use of 'generic' toner cartridges.

There are only two reasons I can see for having the computer chip in the toner carts in the first place. One is to be sure that the consumer doesn't accidentally damage their printer by inserting the wrong cart. The other is to be sure that the consumer can buy and/or use no other brand of toner carts other than the Original Equipment Manufacturer's (OEM) brand.

I'm guessing its more the second reason than the first. All the OEMs have to do is make the carts different sizes to assure that they aren't used in the wrong printer. Most of the carts that have the chip are already different sizes than carts used in other printers that are made by the same OEM. Therefore, a reasonable person would be led to believe that it was for no other purpose than to prevent competition. Maybe it does send information to the printer indicating ink levels, but that could be done with a sensor built into the printer just as well.

Lexmark is using the DMCA in their suit, but it seems to me that their actions themselves violate the Sherman Anti-Trust Act. They are attempting to stifle competition and create a monopoly of replacement parts for their printers. Lets go back to the razors and razor blades example. You can now buy replacement blades for your razor from another company other than the one who originally produced it. The DMCA covers 'digital' property, and was originally intended to stop Internet piracy, so why don't razor OEMs have the same protection under a different law? They don't and it would be silly for anyone to consider that they should. So why do technology companies get this protection from competition? If you follow the same logic, they shouldn't. If someone can produce a replacement supply part, then why shouldn't they be able to sell it? And the DMCA covers copyrighted material. Is toner or ink copyrightable?

Some may argue that it if you let someone copy a toner cartridge, then they could just as easily produce a copy of the entire printer just as easily. I may see someone coming to that conclusion, but it is already being done by the OEMs themselves. Could someone please explain to me how the common operation of any consumer level inkjet printer is different across the three OEMs I mentioned earlier? Epson, HP, and Lexmark inkjet printers all do the same things in almost the exact same way. They feed along a "U" or "J" shaped path, a printer head moved by belts and gears sprays toner onto the paper from similarly shaped toner carts, and then pushes the paper out of the front of the printer. If you took all of the brand marking off of the common inkjet printers and put them in front of a person who didn't know the styling of the plastic cases, I doubt any of them could tell you which printer was made by which manufacturer, and how they worked differently.

In Jack's opinion the DMCA is a bad piece of legislation that needs to be repealed and re-written. Technology companies need protection of their intellectual property, but in a more reasonable fashion.

But until then, the next time a lawyer from some tech company pins you up against the wall and asks you if you've paid your licensing fees under the DMCA, you tell him "the check is in the mail"...