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Int’l ITC files report with the U.S. International Trade Commission on Asian Violations of intellectual Property Rights

11 Aug, 2010

Int’l ITC files report with the U.S. International Trade Commission on Asian Violations of intellectual Property Rights

The International Imaging Technology Council (Int’l ITC) filed a report with the U.S. International Trade Commission (USITC) at its invitation on July 9.  The report is entitled “Effect of Infringement of Intellectual Property Rights in China on the Toner and Inkjet Cartridge Remanufacturing Industry.” In the report, the Int’l ITC pointed out the damaging effects to the imaging aftermarket caused by this unfair competition.

The report specifically targeted the “new, compatible” cartridges that may violate the OEMs’ intellectual property, specifically its patents.  “Recently certain types of cartridges began to appear in the U.S., chiefly out of China,” the report reads.  “They included ‘new, compatible’ cartridges that are brand new cartridges that look identical to the OEM versions, but are not sold as new OEM.  Also appearing were brand new cartridges that were sold as ‘remanufactured.’  These cartridges may violate the OEMs’ intellectual property rights.  Epson, Hewlett-Packard and recently Canon have all taken some action against the more blatant producers, importers and sellers of these products.” 

“The aftermarket is in particular danger because of these products.  Remanufacturers must wait until the OEMs decide to take action, and the OEMs have not undertaken these actions swiftly (Canon just filed its action a few weeks ago).  This is understandable as the offending Chinese companies take no risk of being punished in their own country.”

“The Int’l ITC filed the report after receiving a request and discussing the investigation with employees at the U.S. ITC, who were enthusiastic to learn more about our industry,” said Int’l ITC Executive Director Tricia Judge.  “As this is a two-part investigation, I am sure we will continue to work with the U.S. ITC.”

The report also addressed the rights of OEMs and those of legitimate Chinese remanufacturers.  “The Int’l ITC and its members respect the legitimate intellectual property rights of the OEMs.  The Int’l ITC also has legitimate members that remanufacture in China, so not all Chinese producers are committing these violations.  The “new compatible” or “new remanufactured” cartridges are coming on the market at prices that are far less than what the remanufacturers would spend to rebuild one.  These products are often inferior to legitimate remanufactured cartridges and are therefore giving “remanufactured” branded products a bad reputation.” 

 The report also identified internet sales as an easy channel for the sale of these products, “as unscrupulous companies can easily and readily sell the offending cartridges anonymously and without concern for repercussions.  Often our members have customers who direct them to such pages showing deeply discounted cartridges and are asked to match the price.”

The concern about pollution of the core supply was also addressed.”  The core is the empty shell of the cartridge, and it is a sophisticated piece of plastic and metal that is the lifeblood of the industry.  Without cores, there can be no remanufactured cartridge.  The cores from the offending products can look identical to legitimate cores.  “Therefore a remanufacturer runs the risk of unknowingly buying a core that violates intellectual property rights and subsequently selling it after remanufacture.  He is therefore a potential target of a lawsuit by an OEM.”

The gravity of the problem was reinforced by statements submitted by actual remanufacturers.  “Bill Henry, the owner of American Laser Products in Middleton, Wisconsin said, ‘The impact from the market being deluged with clones has definitely impacted our bottom line.  We are being asked constantly to reduce our prices to compete with new Chinese product.  Naturally we respond by explaining the extra value we offer, but it seems eventually we are forced into some price concession. That in conjunction with the huge increase in the price of empties has put a large dent in our net income. I believe this will put many American remanufacturers out of business in the not too distant future.’”

The USITC launched the first of two investigations into the effect on the U.S. economy and U.S. jobs of intellectual property rights infringement in China in April 2010. The investigations were requested by the Committee on Finance of the U.S. Senate.

In its letter requesting the investigations, the Committee stated: “Despite widespread evidence of the harm to U.S. industries, authors, and artists resulting from IPR infringement in China, the U.S. Government has not conducted a comprehensive economic analysis of the effect of China's ineffective IPR protection and enforcement on the U.S. economy and U.S. jobs." The USITC will deliver two reports to the Committee, with the second one due in November.

The International Imaging Technology Council is a not-for-profit trade association serving imaging supplies remanufacturers and dealers.   For more information, contact the Int’l at exec@i-itc.org or visit its website at www.i-itc.org.

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