Recycler Magazine was granted an exclusive interview with Ninestar to hear their views on the ITC’s recommended fine and the legal case between Ninestar and Epson. At the time, the ITC had recommended a fine of $20.5m USD, which was the largest fine ever recommended by the ITC.
This article was published in the July issue of Recycler Trade Magazine and is reproduced here:
$20 million fine: could there be any silver lining?
On April 17, 2009, an administrative law judge for the United States International Trade Commission (US ITC), Paul J. Luckern ruled that Ninestar and the other third party vendors have continued to sell infringing inkjet cartridges for use in Epson machines in the US and have violated the commission’s orders, banning the importation of infringing Epson inkjet cartridges.
The judge recommended that the ITC impose fines totalling 20 million US dollars against Ninestar Technology Co., Ltd, as well as its two affiliated US companies, Ninestar LA [K1] and Town Sky. If this penalty is confirmed by the ITC, the fines will be the largest that have ever been made by the ITC. How will Ninestar respond to the fines? What will happen next? This has become a hot topic in the industry recently. With these questions, Recycler China interviewed Mr. Scott Zang, marketing director of Ninestar Management Co,. Ltd. on May 19.
Recycler China: What was your first reaction on receiving the results of this trial from the ITC?
Scott Zang? It doesn’t really make sense, since Epson’s original complaints with the ITC only refer to Epson compatible cartridges, not mentioning the remanufactured inkjet cartridges. In addition, the general exclusion orders also specified the related models of Epson compatible cartridges. While in this initial determination it is considered that remanufactured Epson inkjet cartridges in the US market also violated the general exclusion order, it raises the question if the ITC could add new content, which is not in the original Epson complaints.
In accordance with the legal doctrine arising from the Jazz Photo case, why didn’t Ninestar collect the empties in the US and then sell them to the market?
Since 2007, Ninestar has purchased empties in the US. But it is very hard to tell which cartridges are first sold by Epson in the US market, and which are sold by Epson from other countries to the US market. Epson is under the obligation to disclose the relevant information to enable remanufacturers to know the possibility of remanufacturing legally. But only Epson knows which products are first sold in the US, and it’s impossible for the other companies to differentiate without knowing its internal sales code of products. This case has a completely different legal foundation than the Jazz Photo case, and it is questionable that the unilateral regional sales code can be persuasive evidence for the court.
Did you ever consider that it would violate the general exclusion order when exporting the inkjet cartridges?
The empties of remanufactured inkjet cartridges that Ninestar exported to the US were purchased from the US, and this should not be considered as infringement of intellectual property. Furthermore, the remanufactured inkjet cartridges should not be covered in the ITC case, even if these cartridges include the ones which are not first sold in the US, since the general exclusion order made no mention of the remanufactured cartridges. It is understood that the ITC’s enforcement determination should not go beyond the scope of the original complaints.
The Jazz Photo case focused on the recycled products, instead of the new build compatible products, while the ITC case was all about the infringement of Epson compatible cartridges, and the remanufactured cartridges