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Partners See Winners And Losers In Supreme Court’s Printer Cartridge Ruling

By Kyle Alspach on May 31, 2017 on CRN.com

A ruling by the U.S. Supreme Court this week that gives legal blessing to the common practice of using remanufactured printer ink cartridges has potential upsides and downsides for solution providers, depending on what their business model is, partners told CRN.

Remanufactured printer cartridges are those that have been refurbished and refilled with ink by a third party, and then resold for a price below that of new cartridges.

The Supreme Court ruled against printer vendor Lexmark, which had accused a cartridge remanufacturer, Impression Products, of violating Lexmark’s patent rights. “We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them,” the Supreme Court ruling states.

Joe Balsarotti, president of St. Peters, Mo.-based solution provider Software To Go, said that while his firm does tend to use new OEM printer cartridges when serving customers’ printer needs, his company does occasionally purchase remanufactured cartridges. “It’s like anything else—you have to find a reputable company that’s doing a good job” with remanufacturing printer cartridges, he said.

As for the Supreme Court ruling itself, “I’m happy to finally see a decision that clarifies it,” Balsarotti said.

“The idea of competition [from remanufactured cartridges] is good. It creates opportunities. There are going to be winners and losers,” he said. “I would imagine the printer manufacturers will have to rethink their artificially low prices for the hardware with the thought that they’ll make it up with the consumables. So it will probably put some common sense in the initial hardware pricing.”

However, Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, said the Supreme Court ruling will lead to more printer breakdowns as a result of inferior ink supplies–as well as sowing confusion around warranties.

“If I’ve got a refilled printer cartridge on a $3,000 printer, and that printer blows up—gets a ‘toner bomb’ as we call it—who’s responsible for that?” he said. “So Big Brother coming in and setting up a precedent causes more damage than good out there in the market … This is definitely going to be a negative impact on the partner community.”

Venero said the ruling will force many partners to change their pricing methodology around servicing printers.

“If [a customer is] using the right equipment for it, then their cost is going to be X, because you know the equipment is going to perform. But you can’t have the same level of certainty on non-branded and re-filled cartridges,” he said. “There may be a short-term win as far as cost is concerned. But the long-term cost impact, I believe, is going to be higher, based on the fact that you’re going to have things go wrong. We see it every week when a customer puts something cheap in.”

Bruno Tirone, president and CEO of Long Branch, N.J.-based MRA International Inc., agreed that using remanufactured cartridges can often lead to issues with printers, such as toner cartridge leaks inside the printer.

“I would not prefer remanufactured toner in a device, because it will shorten the life of your device,” he said. “At first, you save some money, but the IT folks are going to wind up paying.”

But Tirone said companies like his will most likely end up selling more printers and servicing more printers if remanufactured cartridges become more prevalent. “Either way I’m making money,” he said.

The precedent of the ruling could extend beyond printers to areas such as digital goods.

“Today’s decision will help on other fronts, as we push back against abusive terms of use and ‘end user license agreements’ that purport to strip you of your rights on pain of copyright infringement,” the Electronic Frontier Foundation, a consumer advocacy group that had backed Impression Products in the Supreme Court case, wrote in a blog post. “The next logical step will be for courts to recognize that people who buy digital goods are owners of those goods, not mere licensees, and can resell and tinker with their digital goods to the same extent as purchasers of tangible property.”