Ink Companies Clamp Down On Counterfeit Cartridges

RENEE MONTAGNE, host:

Now to the business of selling printer ink; it's competitive and lucrative. Ounce for ounce, printer ink can be more expensive than vintage champagne or Russian caviar, which explains why ink companies spend a lot of time clamping down on counterfeits.

Kristian Foden-Vencil of Oregon Public Broadcasting reports on one legal battle involving dark allegations of corporate espionage.

KRISTIAN FODEN-VENCIL: Have you ever wondered why printer ink is so expensive? Companies like Epson and Hewlett-Packard sell their printers relatively cheap and then they rely on the sales of replacement cartridges to bolster profits. But as Oregon shoppers Scott Davis(ph) and Allissa Gail(ph) illustrate, it's a business model that doesn't fit well with some consumers.

Mr. SCOTT DAVIS: Computer cartridges, the ink is just way too expensive. It's ridiculous.

Ms. ALLISSA GAIL: Every time I go to buy a new cartridge, it's 40, $50.

FODEN-VENCIL: Does that seem like a good deal to you?

Ms. GAIL: No. No, it's very expensive.

FODEN-VENCIL: But Tricia Judge, with the International Imaging Technology Council, says it's the same way people have bought razors for years. The original razor is relatively cheap but replacement blades are expensive.

Ms. TRICIA JUDGE (Executive Director, International Imaging Technology Council): It's a fair way of doing business and companies have used it for years.

FODEN-VENCIL: But given the expense, it's easy to understand why dozens of companies have sprung up to provide cheap toner refills. What they do is snap off the top of the old printer cartridge, fill them up, snap the cap back on, and then sell them. It's all perfectly legal. What courts disagree about is whether U.S. patent law applies when the original toner cartridge is purchased overseas.

In April, Epson filed suit against several companies complaining they were doing just that. One of those companies, Green Project, is headed by Joseph Wu. He's adamant his company doesn't collect cartridges abroad and, what's more, he's filing a countersuit against Epson. He claims Epson has been spying on his company.

It all started, according to Wu, when a man identifying himself as KC Wells turned up at a Green Project trade show booth. He was asking some pretty technical questions. A few weeks later, Wells phoned, asking for a sales package and pricelist. Then, Wu claims, he turned up at Green Project but not at the front door.

Mr. JOSEPH WU (President, Green Project Incorporated): He had snuck through the back door of our warehouse and into our warehouse.

FODEN-VENCIL: Wu claims he recognized the man as KC Wells from the trade show and was immediately suspicious.

Mr. WU: I asked him, I was like, KC, you know, I believe you work for Epson. You know, do you work for Epson? And, of course, he would deny it. And, you know, he said, no. No, I don't work for Epson. I just want to buy from you guys and, you know, run my business.

FODEN-VENCIL: When Wells left, Wu says he searched the Internet for his business; there was nothing. But the world of replacement printer cartridges is small, and word on the street was that Epson had an investigator called Herbert Seitz. So he looked for a picture of Seitz on the Web. And when he found one, he says he recognized Seitz right away.

Mr. WU: In that picture is a picture of KC Wells. And at that point, honestly, it just hit me. I was like, wow. You know, I can't believe, number one, that Epson sent a spy into our business and, number two, I can't believe I was able to tie this together to find out who he is.

FODEN-VENCIL: NPR made several attempts to reach Herbert Seitz and KC Wells through calls, emails and registered letters, all with no success. In a written statement, Epson's public relations office said, quote, "As is common to protect intellectual property rights, Epson conducted a reasonable investigation using legally acceptable measures." The company also added that claims like Green Project are frequently asserted in countersuits to patent infringement cases.

Jim Crowne, the director of the American Intellectual Property Law Association, says it's true that defendants like Green Project will use all kinds of legal maneuvers.

Mr. JAMES CROWNE (Director of Communications, American Intellectual Property Law Association): Certainly, a defendant would probably look for any and every opportunity to deflect the charge that was being made. It's not the kind of thing that I would see on a regular basis. But it's not surprising that a defendant might raise it.

FODEN-VENCIL: In California, where the alleged spying took place, licensed private detectives are supposed to carry ID cards and identify themselves. The California Bureau of Security has opened an investigation into the case.

For NPR News, I'm Kristian Foden-Vencil in Portland.

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