Hewlett-Packard, the biggest PC maker in the world, actually makes the most profit from its printer business: 46 percent of its total earnings in the most recent fiscal quarter were generated by its Imaging and Printing Group. And ink is a key.
As mentioned, remanufacturing cartridges isn't necessarily a problem. There are plenty of companies that refill cartridges and resell them, offering many consumers and businesses cheaper alternatives to the cartridges sold by printer manufacturers.
"There's absolutely nothing wrong with that; it's an accepted part of a competitive industry," according to Tuan Tran, vice president of marketing and sales for HP's supplies business. "That is a legal competition in our minds."
About 11 percent of the money spent on inkjet cartridges and 25 percent of the money paid for monochrome laserjet cartridges goes to companies that resell cartridges they did not manufacture, according to John Shane, director of marketing at InfoTrends.
"The vast majority of that is perfectly legal. Most people believe [the U.S. market for illegal cartridges is] a lot smaller than the illegal market, say, in China," Shane said.
When faced with competition from counterfeiters, HP's Tran said, companies like HP are forced to turn to their "primary weapon" in fighting patent violations, the legal system.
"There are other folks who want to avoid the [proper] process altogether and design a cartridge to work with an HP printer," he said.
In a high-profile 2003 case, Lexmark International, the company that makes printers for Dell, took printer-supplies specialist Static Control Components to court for selling a chip that allowed Lexmark printers to accept any kind of ink cartridge. Lexmark ultimately lost the case, but it hasn't stopped others from trying fiercely to protect their business.
Just last month, HP's German subsidiaryaccused a Swiss print supplier, Pelikan Hardcopy, of using its patented ink formula and last week filed a separate suit claiming the company is selling remanufactured cartridges labeled as new. In 2005, HP sued another cartridge refiller, Cartridge World, for using an ink formula that it said infringed on its patents.
There are other, less litigious ways to keep counterfeiters at bay. HP uses a holographic security label on its ink cartridges to identify them as legitimate HP products.
InfoTrends' Shane also noted that the printing quality of printer manufacturers' cartridges holds up longer over time when the cartridges are used with the corresponding printers, whose technical specifications can present problems for remanufacturers and counterfeiters.
But a technology like CRI's at least has the potential to cut down on future legal fees and weed out counterfeiters early on in the manufacturing process. The idea is intruiguing to printer makers, although companies like HP say they will wait and see until CRI's chip is actually available.
"If there was a technology that enabled us to protect our intellectual property, absolutely, any company would be interested in it," Tran said.
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