Should the DMCA Be Used to Fend Off Competition?

For years, Lexmark International, the second-largest U.S. maker of computer printers, thrived on a business model that practically guaranteed that customer satisfaction would decline over time: Sell the hardware cheap, but charge an arm and a leg for the medium that makes the hardware useful. Lexmark, of course, sold its printers cheap and its printer cartridges not so cheap. Customers bought the printers because they were a bargain and they bought the cartridges because they had bought the printer. For Lexmark, life was swell, at least until the Lexington, Ky.-based company discovered that many customers were not buying new cartridges; they were refilling empty cartridges and sticking them back in the machines.

Lexmark’s first defense was technological. The company outfitted its printers and cartridges with microchips that prevented the cartridges from working once their ink had been used. That strategy worked nicely, but only for a while. In the spring of 2002, a company called Static Control Components (S.C.C.) developed a counter-chip, that, when installed in printer cartridges, told the cartridge to disregard the digital lock and get back to work.

Lexmark sued, claiming that S.C.C. had violated the Digital Millennium Copyright Act (DMCA), which makes it illegal to reengineer technology in order to break digital locks that protect intellectual property, and a federal judge in Kentucky ordered S.C.C. to stop selling its “keys” until the case was settled. S.C.C. then filed a request with the U.S. Copyright Office, asking for an exemption that would allow the company to make and sell its chip.

About that time, some legal experts began to fret that the DMCA, which had been pushed through Congress by the entertainment industry and was intended to prevent the theft of music and movies, could be used in some dangerous ways. It could, for example, put the fear of a very expensive lawsuit into young technology companies whose success depended on the compatibility of their products with the products of market leaders. It could, to put it bluntly, squelch competition even before it became competition. And while that would be good for market leaders, it would be bad for technological innovation.

On Tuesday, the dispute between Lexmark and S.C.C. lurched forward, when the Copyright Office declared that S.C.C. did not need an exemption, because the law already allowed for the kind of reverse-engineering that the company had used. That ruling has encouraged the legal counsel at S.C.C., who claims that it provides just the kind of ammo that the company will need to prevail when the case comes to trial. Lexmark, on the other hand, claims the recommendation is largely irrelevant, because the company’s grievance is not about S.C.C.’s reverse-engineering, but about illegal copying of software.

With both sides claiming legal advantage, the battle approaches the courtroom where Lexmark and S.C.C. will fight things out some time this winter. Who should win? Should companies be allowed to use the DMCA to defend technology that locks out competition? Or is that a dangerous legal precedent? Tell us what you think.

This ties in nicely with the piece I just did on the garage door opener case.
I think, if the DMCA is used to discourage competition, it is working in direct opposition to the original mission statement incorporated in original copyright in the US. Instead of encouraging invention and innovation, it is stifling it.

Its a very dangerous legal precedent and could further the monopolistic powers of incumbents. Contrary to what the businesses want the public and government to believe, companies have lifespans as well. Its natural for them to fade and eventually disperse. They shouldn't have the ability to stifle or destroy competition because they want their share.

The business world is similar to nature in to the extent that extinction(without human intervention) is a natural process. Species will die out, completely due to lack of evolution(businesses not evolving with the marketplace and customers wants) and drastic changes like the ice age(introduction of a new product that replaces ones currently in production).

This is something that though the public might overall agree with, it seems in most cases they are overly indifferent to the topic.

Suikio

I'm on board with Suikiogiaz. People are trying to force the lifespan of a market passed its experation. I greatly disslike the idea that a company can force one to use its products. I won't be buying such a product. As consumers we should be getting some level of respect. We want certain things but companies are bound and determined to only give us what tid bits they feel we should have. At what point did the consumer loose all power? Now you can be punished for not buying the way they want you to. The rich get richer, the poor surender their cash to the rich, and everyone in between can go to jail.

Companies that use the DMCA to eliminate competition are in direct violation of the Sherman Anti Trust Act. So why isn't it being handled THAT way?

Yeah they are gready bastarsd, we need to get rid of DMCA. Well the govt. is f'n corrupt that's why these oviously anti trust lawsuits haven't taken place against the DMCA using corporations and groups including the RIAA.

I'd like to see what insights Leflaw could give us on this one. If the software isn't digit for digit identical, I would assume that SCC would still win, thus being able to forever market that product.

Well..then those Universal remotes would qualify as a law suit...as a matter of fact...buying an "EverReady FlashLight" comes with "EverReady Batteries" so i guess when i use "Energizer" i am wrong? Come to think of it...i bought my son a "Blues Clues" outfit...only he had on "Fruit of the Loom" underware. As rediculous as all that sounds....we are soon to be told what all aspects of life will have to be....I hope we all dont become Winstons



INGSOC FREE WORLD

Stifling innovation is the what the DMCA does best.. I would personally be afraid of inventing something similiar to a product already on the market due to being sued, even if my product just improved on a current one. This is how innovation comes about. Americans and Henry Ford invented the assembly line and the car business, then the Japanese improved on it. Isn't a new auto maker violation copyright infringement when they develop a car considering that the car obviously had to be invented by one person or establishment in the first place? It's an extreme comparison I guess but the DMCA is an extreme pain in all of our asses unless you are a corporation that can use it to sue someone elses balls off for stupid reasons..

Maybe if we're lucky as more of this kind of thing happens the courts will see sense over the DMCA. I don't put much hope in Congress seeing as they're still firmly in big business' pocket

Not to mention the DMCA's having the effect of driving this country (and all other "developed" Western nations) down to the level of primitive Third World countries.

Talk about a radical coup d'etat . . .

Agree totally with Code, Justin, and Suikiogiaz. It is obvious that DMCA and other copyright laws are being used for purposes other than the original intent of copyright law - and implications go far beyond commercial music.

Some companies have been know to use patent law to stifle competion as well. But notice the huge incentive to get intellectual property/creations classified as copyrightable rather than patentable.
Terms for patents are still (for the most part) reasonable - 10 to 17 yrs typical. But copyrights last almost a century or more.