In the Supreme Court of the United States Appendix(1).pdfIn the Supreme Court of the United States...

In the Supreme Court of the United StatesIn the Supreme Court of the United StatesIn the Supreme Court of the United StatesIn the Supreme Court of the United StatesIn the Supreme Court of the United States

LEXMARK INTERNATIONAL, INC.,Petitioner,

v.

STATIC CONTROL COMPONENTS, INC., Respondent.

On Writ of Certiorari to the United StatesCourt of Appeals for the Sixth Circuit

JOINT APPENDIX

Petition for Writ of Certiorari filed January 14, 2013Petition for Writ of Certiorari granted June 3, 2013

NO. 12-873

STEVEN B. LOY

Counsel of RecordANTHONY J. PHELPS

CHRISTOPHER L. THACKER

MONICA H. BRAUN

STOLL KEENON OGDEN PLLC300 West Vine StreetSuite 2100Lexington, KY 40507(859) [email protected]

Counsel for Petitioner

August 15, 2013

SETH D. GREENSTEIN

Counsel of RecordCONSTANTINE CANNON LLP1301 K Street NWSuite 1050 EastWashington, DC 20005(202) [email protected]

Counsel for Respondent

i

TABLE OF CONTENTS

Relevant Docket Entries United States DistrictCourt for the Eastern District of Kentucky,Case No. 5:02-cv-00571-GFVT-JBT . . . . . . . . JA 1

Relevant Docket Entries United States DistrictCourt for the Eastern District of Kentucky,Case No. 5:04-cv-00084-GFVT-REW . . . . . . . JA 2

Relevant Docket Entries United States Court of Appeals for the Sixth Circuit, Nos. 09-6287, -6288, -6449 . . . . . . . . . . . . . . . JA 6

Static Control’s Second Amended Answer andCounterclaim in the United States DistrictCourt for the Eastern District of Kentucky,Case No. 5:02-cv-00571-KSF(December 23, 2003) . . . . . . . . . . . . . . . . . . . . JA 8

Order Denying Static Control’s Motion forReconsideration of the Court’s OrderDismissing Static Control’s Claims or, in theAlternative, to Amend Its Pleading in theUnited States District Court for the EasternDistrict of Kentucky, Consolidated Case Nos.5:02-cv-00571 and 5:04-cv-00084(June 1, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . JA 55

ii

Civil Minutes—Trial in the United StatesDistrict Court for the Eastern District ofKentucky, Case No. 5:04-cv-00084-GFVT(June 19, 2007) . . . . . . . . . . . . . . . . . . . . . . . . JA 62

Amended Final Judgment in the United StatesDistrict Court for the Eastern District ofKentucky, Consolidated Case Nos. 5:02-cv-00571 and 5:04-cv-00084(October 27, 2009) . . . . . . . . . . . . . . . . . . . . . . JA 66

iii

The following opinions, decisions, judgments, ordersand statute have been omitted in printing this jointappendix because they appear on the following pages inthe appendix to the Petition for a Writ of Certiorari:

Appendix A Opinion and Judgment ofthe United States Court ofAppeals for the Sixth Circuit(August 29, 2012) . . . . . . . . . . . . . App. 1

Appendix B Order of the United StatesDistrict Court for theE a s t e r n D i s t r i c t o fKentucky Central Divisionat Lexington(September 28, 2006) . . . . . . . . . App. 67

Appendix C Order Denying Rehearing ofthe United States Court ofAppeals for the Sixth Circuit(October 26, 2012) . . . . . . . . . . . App. 90

Appendix D Statutory Provision Involved15 U.S.C. § 1125 . . . . . . . . . . . . . App. 92

JA 1

RELEVANT DOCKET ENTRIES

United States District Court for the Eastern District of Kentucky at Lexington

5:02-cv-00571-GFVT-JBT

Lexmark International, Inc. v. Static ControlComponents, Inc.

DateFiled # Docket Text

* * *12/23/2003 172

Static Control’s Second AmendedAnswer & Counterclaims

* * *

JA 2

United States District Court for the Eastern District of Kentucky at Lexington

5:04-cv-00084-GFVT-REW

Static Control Components, Inc. v. LexmarkInternational, Inc.

DateFiled # Docket Text

* * *12/07/2005 176 Lexmark’s Motion to Dismiss the

Counterclaim of Defendant StaticControl, Under F.R.Civ.P. 12(b)(6)and to Dismiss or Strike CertainAffirmative Defenses

* * *12/28/2005 182 Static Control’s Opposition to

Lexmark’s Rule 12(b)(6) Motion toDismiss the Counterclaim and toDismiss or Strike AffirmativeDefenses

* * *01/17/2006 191 Lexmark’s Reply Memorandum in

Support of Motion to Dismiss theCounterclaim of Defendant StaticControl, Under F.R.Civ.P. 12(b)(6)and to Strike Certain AffirmativeDefenses

* * *

JA 3

01/24/2006 195 Static Control’s Motion for Leaveto File Surreply to Lexmark’s Rule12(b)(6) Motion to Dismiss theCounterclaim and to Dismiss orStrike Affirmative Defenses

* * *02/02/2006 199 Lexmark’s Response to Static

Control’s Motion for Leave to Filea Surreply to Lexmark’s Rule12(b)(6) Motion to Dismiss theCounterclaim and to Dismiss orStrike Affirmative Defenses

* * *08/18/2006 357 Static Control’s Motion for Leave

to File a Supplemental Brief inOpposition to Lexmark’s Rule12(b)(6) Motion to Dismiss theCounterclaim and to Dismiss orStrike Affirmative Defenses


Control’s Motion for Leave to Filea Supplemental Brief inOpposition to Lexmark’s Rule12(b)(6) Motion to Dismiss theCounterclaim and to Dismiss orStrike Affirmative Defenses

* * *09/28/2006 391 Order (denying Static Control’s

Motion for Leave to File Surreplyto Lexmark’s Rule 12(b)(6) Motionto Dismiss the Counterclaim andto Dismiss or Strike AffirmativeDefenses, D.E. 195)

JA 4

09/28/2006 392 Order (granting Lexmark’s Motionto Dismiss the Counterclaims ofDefendant Static Control, D.E.176)

* * *10/13/2006 407 Static Control’s Motion for

Reconsideration of the Court’sOrder Dismissing Static Control’sClaims or, in the Alternative, toAmend Its Pleading

* * *10/30/2006 422 Lexmark’s Memorandum of Law

in Response to Static Control’sMotion for Reconsideration of theCourt’s Order Dismissing StaticControl’s Claims, or, in theAlternative, to Amend ItsPleading

* * *11/13/2006 463 Static Control’s Reply Brief in

Support of Its Motion forReconsideration of the Court’sOrder Dismissing Static Control’sClaims or, in the Alternative, toAmend Its Pleading

* * *06/01/2007 1259 Order (denying Static Control’s

Motion for Reconsideration of theCourt’s Order Dismissing StaticControl’s Claims or, in theAlternative, to Amend ItsPleading, D.E. 407)

* * *

JA 5

06/15/2007 1318 Static Control’s Motion to AmendPleadings to Conform to theEvidence Under Fed.R.Civ.P. 15(b)


Control’s Motion to AmendPleadings to Conform to theEvidence Under Fed.R.Civ.P. 15(b)

* * *06/21/2007 1359 Civil Minutes-Trial (denying

Static Control’s Motion to AmendPleadings to Conform to theEvidence Under Fed.R.Civ.P.15(b), D.E. 1318)

* * *10/27/2009 1461 Amended Final Judgment

* * *11/10/2009 1465 Static Control’s Second Amended

Notice of Appeal in Case No. 5:02-cv-571-GFVT

* * *

JA 6

United States Court of Appeals for the Sixth Circuit

09-6287, -6288, -6449

Static Control Components, Inc v. LexmarkInternational, Inc.

Date Filed Docket Text

01/10/2011 First Brief of Plaintiff-AppellantCross-Appellee (Static Control)

* * *

03/07/2011 Second Brief of Defendant-AppelleeCross-Appellant (Lexmark)

* * *

04/12/2011 Third Brief of Plaintiff-AppellantCross-Appellee (Static Control)

* * *

08/29/2012 Opinion and Judgment

* * *

09/12/2012 Petition for Rehearing En Banc andPetition for Panel Rehearing(Lexmark)

* * *

10/11/2012 Response to Petition for RehearingEn Banc and Petition for PanelRehearing (Static Control)

JA 7

10/26/2012 Order Denying Rehearing

* * *

JA 8

UNITED STATES DISTRICT COURTEASTERN DISTRICT OF KENTUCKY

AT LEXINGTON

CASE NO. 02-571-KSF

[Filed December 23, 2003]_________________________________________LEXMARK INTERNATIONAL, INC. )

PLAINTIFF )v. )

)STATIC CONTROL COMPONENTS, INC. )

DEFENDANT )_________________________________________ )

SECOND AMENDED ANSWER ANDCOUNTERCLAIM

(Jury Trial Demanded)

Defendant Static Control Components, Inc. (“SCC”)hereby answers Plaintiff Lexmark International, Inc.’s(“Lexmark”) Complaint as follows:

1. SCC admits that the Complaint in this actionpurports to seek injunctive relief based uponallegations under the Copyright Act, 17 U.S.C. § 101 etseq., and the Digital Millennium Copyright Act, 17U.S.C. § 1201 et seq. Except as expressly admitted,SCC denies the averments contained in Paragraph 1.

2. SCC does not have knowledge or informationsufficient to form a belief as to the truth of Paragraph2, and therefore denies the averments containedtherein.

JA 9

3. SCC admits that it is a North Carolinacorporation with a principal place of business inSanford, North Carolina, and that SCC manufacturesand sells components for remanufactured tonercartridges in numerous jurisdictions. SCC denies theremaining averments contained in Paragraph 3.

4. Lexmark’s averments in Paragraph 4 insupport of the Court’s jurisdiction and venue are legalconclusions, and as such are not subject to denial oradmission.





9. SCC does not have knowledge or informationsufficient to form a belief as to the truth of Paragraph

JA 10

9, and therefore denies the averments containedtherein.



12. SCC admits that Lexmark distributes tonercartridges for use in its installed base of laser printers,and that Lexmark currently is the exclusive source fornew printer toner cartridges for the printers itmanufactures. SCC does not have knowledge orinformation sufficient to form a belief as to the truth ofthe remaining averments contained in Paragraph 12,and therefore denies same.

13. SCC admits that in 1997, Lexmarkannounced its “Prebate” program. SCC denies theremaining averments contained in Paragraph 13.

14. SCC denies that Lexmark’s Prebate programis a “discount” program. SCC does not have knowledgeor information sufficient to form a belief as to the truthof the remaining averments contained in Paragraph 14,and therefore denies same.

15. SCC denies the averments contained inParagraph 15.

JA 11

16. SCC denies that in acquiring a Prebate tonercartridge, a customer agrees to certainlicense/agreement terms in return for a lower price orupfront rebate. SCC does not have knowledge orinformation sufficient to form a belief as to the truth ofthe remaining averments contained in Paragraph 16,and therefore denies same.

17. SCC does not have knowledge or informationsufficient to form a belief as to the truth of whether thePrebate program has significantly increased tonercartridge returns to Lexmark, and therefore deniessame. SCC denies the remaining averments containedin Paragraph 17.





22. SCC admits that Lexmark markets T520/522and T620/622 laser printers and toner cartridges. SCCdenies the remaining averments contained inParagraph 22.

JA 12




26. SCC admits that Lexmark obtainedCertificates of Registration from the Register ofCopyrights. SCC denies the remaining avermentscontained in Paragraph 26.


28. SCC admits that calculations by, andcommunications between, the printer and the tonercartridge each time a toner cartridge is installed in theprinter, the printer is powered on, or whenever theprinter is opened and then closed, are used to preventprinter functionality. SCC further admits that both theprinter and the microchip on the toner cartridgecalculate a code referred to as a Message AuthorizationCode. SCC denies the remaining averments containedin Paragraph 28.

29. SCC admits the averments of the firstsentence of Paragraph 29. SCC denies the remainingaverments contained in Paragraph 29.

JA 13

30. SCC admits the averments contained inParagraph 30.

31. SCC admits that it manufactures and sells aline of replacement microchips sold under the brand“SMARTEK,” and that certain microchips labeledunder the “SMARTEK” brand are designed for use inLexmark’s T520/522 and T620/622 laser printers. SCCdenies the remaining averments contained inParagraph 31.


33. SCC admits that the toner cartridges for theLexmark T520/522 and T620/622 laser printers aresold as “Prebate” toner cartridges and “Regular” tonercartridges. SCC does not have knowledge orinformation sufficient to form a belief as to the truth ofremaining averments of Paragraph 33, and thereforedenies same.

34. SCC admits that the Lexmark’s “Prebate”toner cartridge has been designed to no longer operateafter its initial use if it is refilled with toner. SCCdenies the remaining averments of Paragraph 34.

35. SCC admits that a Regular toner cartridgefor a Lexmark T520/522 or T620/622 printer may berefilled. SCC does not have knowledge or informationsufficient to form a belief as to the truth of Paragraph35, and therefore denies the averments containedtherein.

JA 14

36. SCC admits that toner cartridges containinga SMARTEK microchip may be able to function withLexmark’s T520/522 and T620/622 laser printers. SCCdenies the remaining averments contained inParagraph 36.



39. In response to Paragraph 39, SCCincorporates herein by reference its responses to eachand every allegation of Paragraphs 1-38 of theComplaint, as if set forth fully herein.





44. SCC admits that Paragraph 44 correctlyquotes 17 U.S.C. § 1201(a)(2)(A)-(C), and that this is asection of the Digital Millennium Copyright Act. SCCdenies all other averments contained in Paragraph 44.

JA 15







RELIEF REQUESTED

Paragraphs A-G set forth prayers for relief as towhich no response is required. To the extent that theseparagraphs may be deemed to set forth any factsasserting entitlement to such relief, SCC denies thatLexmark is entitled to any of the relief it seeks underparagraphs A-G, inclusive.

AFFIRMATIVE DEFENSES

SCC asserts the following affirmative defenses,applicable to each and every cause of action alleged inthe Complaint:

JA 16

1. The Complaint fails to set forth factssufficient to state a claim upon which relief may begranted against SCC. The Complaint further fails toset forth facts sufficient to entitle Lexmark to the reliefsought, or any relief whatsoever, from SCC.

2. The Complaint should be dismissed for lackof personal jurisdiction over SCC.

3. SCC did not copy any protectable elements ofany copyrightable work owned by Lexmark.

4. Lexmark’s Copyright Registrations for itsToner Loading Programs and/or Printer EnginePrograms are invalid because said programs do notcontain the requisite degree of authorship andtherefore are not protectable by copyright.

5. Lexmark’s Copyright Registrations for itsToner Loading Programs and/or Printer EnginePrograms are invalid because said programs consistonly of ideas, procedures, processes, systems, methodsof operation, concepts, principles, plans, discoveries,plans, devices, or words and short phrases andtherefore are not protectable by copyright.

6. Lexmark’s Copyright Registrations for itsToner Loading Programs are invalid because theprograms consist entirely of an unprotectable “lock-outcode.”

7. Lexmark’s Copyright Registrations for itsToner Loading Programs are invalid because saidprograms consist of mathematical formulae andconstants, which are not protectable by copyright.

JA 17

8. SCC’s copying of and reverse engineering ofLexmark’s Toner Loading Programs are protected asFair Use under 17 U.S.C. § 107.

9. SCC’s activities constitute lawful reverseengineering for purposes of attaining interoperability,and thus are protected from liability under 17 U.S.C.§ 1201(f).

10. The alleged technological measureincorporated in the Lexmark printer and tonercartridge chip does not control “access” within themeaning of 17 U.S.C. § 1201(a)(2).

11. The Toner Loading Programs and PrinterEngine Program are not the type of “work” that isprotected under 17 U.S.C. § 1201(a)(2).

12. Lexmark is barred from prosecuting acopyright infringement or DMCA claim because it hasmisused its copyrights in order to assert control overnoncopyrighted material and such leveraged use of acopyright is violative of the public policy embodied inthe grant of copyright.

13. Lexmark is barred from prosecuting acopyright infringement or DMCA claim because it hasmisused its copyrights to assert control overnoncopyrighted material. Such leveraged use of acopyright is violative of the antitrust laws.

14. The Complaint, and each claim for relieftherein that seeks equitable relief, is barred by thedoctrine of unclean hands.

JA 18

15. SCC reserves the right to assert additionalaffirmative defenses at such time and to the extentwarranted by discovery and the factual development ofthis case.

JURY TRIAL REQUESTED

SCC requests a trial by jury of all issues so triable.

PRAYER FOR RELIEF

WHEREFORE, Defendant Static ControlComponents, Inc., prays as follows:

(1) That no relief be afforded to Lexmark andthat the Complaint be dismissed in its entirety;

(2) That Lexmark’s Copyright Registrationsattached to the Complaint as Exhibits A, B and C beadjudged invalid;

(3) That Lexmark’s Copyright Registrationsattached to the Complaint as Exhibits A, B and C beadjudged unenforceable until such time, if any, as ithas purged the effects of the misuse of its copyrights;

(4) That judgment be granted in favor of SCCand against Lexmark on Counts 1-111 of theComplaint;

(5) That SCC be awarded its costs of defense andreasonable attorneys’ fees incurred because of thislitigation; and

JA 19

(6) For such other relief in favor of SCC as theCourt may deem just and proper.

COUNTERCLAIM

Defendant and counterclaim plaintiff, STATICCONTROL COMPONENTS, INC. (“SCC”) suesPlaintiff and counterclaim defendant LEXMARKINTERNATIONAL, INC. (“Lexmark”) and says:

OVERVIEW

1. SCC brings this action, in part, under theUnited States antitrust laws and North Carolinacompetition laws against Lexmark for its illegalconduct arising from anticompetitive acts affecting themarkets for remanufactured toner cartridges used incertain Lexmark printer models, for components usedto remanufacture toner cartridges used in the sameLexmark printer models, and for microchips used intoner cartridges for the same Lexmark printer models.Lexmark has conspired to restrain trade withmicrochips suppliers, including refusals to deal withSCC and other competitors, which has resulted inreduced output and higher prices. Lexmark also hasconspired with microchips suppliers and other brandname computer equipment suppliers to monopolize themarket for refurbished toner cartridges for certainLexmark manufactured printers and the market forcomponents used to refurbish certain Lexmarkmanufactured printers. Moreover, Defendant hasmonopolized or attempted to monopolize the relevantmarkets. All of this anticompetitive conduct hasinjured competition and consumers in the UnitedStates and foreign countries by reducing output,

JA 20

excluding competitors, and raising prices. As a resultof Lexmark’s anticompetitive conduct, SCC hassustained injuries for which it seeks money damages,injunctive relief to end the illegal conduct, and otherappropriate relief to compensate it for its harm.

2. SCC brings this action, in part, againstLexmark under the Lanham Act and North Carolinaunfair competition law for its illegal, misleadingintimidation of SCC’s customers and for misleadinginformation it disseminated to customers andend-users. Lexmark has falsely informed customersthat SCC’s products infringe Lexmark’s purportedintellectual property. Lexmark has misled end-users ofLexmark toner cartridges and customers of SCC’sproducts that license agreements prohibitremanufacturing Lexmark toner cartridges, when nolicense agreements actually exist. Lexmark also hasmisled its consumers and end-users into purchasingprinters that contain toner cartridges, which arepurported to be subject to license agreements.Lexmark’s false and misleading statements causeconsumers and others in the trade to believe that SCC’sproducts are illegal and unlawful, that SCC is engagedin unlawfid conduct, and that SCC is a dishonest anddisreputable business. As a result of Lexmark’s illegalconduct, SCC has sustained injury for which it seeksmoney damages, injunctive relief, and otherappropriate relief to compensate it for the harm it hassuffered.

JURISDICTION AND VENUE

3. SCC brings this action, in part, pursuant toSections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15

JA 21

and 26, against Lexmark for injuries SCC sustained asa result of Lexmark’s violations of Sections 1 and 2 ofthe Sherman Act, 15 U.S.C. §§ 1 and 2, as allegedherein. SCC seeks injunctive relief and damages,including treble damages, costs of suit, and reasonableattorneys’ fees.

4. SCC brings this action, in part, under 28U.S.C. §§ 1331 and 1338 for damages sustained by SCCas a result of Lexmark’s violations of Section 43(a) ofthe Lanham Act, 15 U.S.C. § 1125(a), as alleged herein.

5. SCC also brings this action under 28 U.S.C.§ 1332, to recover damages, including treble damages,costs of suit, and reasonable attorneys’ fees, againstLexmark for injuries sustained by SCC as a result ofviolations of North Carolina’s competition laws, N.C.Gen. Stat. §§ 75-1,75-1.1,75-2.1; and common law civilconspiracy as alleged herein.

6. Personal jurisdiction exists over the Lexmarkpursuant to Lexmark’s Complaint in this action,Section 12 of the Clayton Act, 15 U.S.C. § 22, and theKentucky Long Arm Statute, Ky. Rev. Stat. § 454.210.

7. Venue is proper in this Court pursuant toSection 12 of the Clayton Act, 15 U.S.C. § 22, and 28U.S.C. §§ 1391(a), (b), (c), and 1400(a). Lexmarkmaintains offices, has representatives, may be found,and/or transacts business within this District withinthe meaning of Section 12 of the Clayton Act, 15 U.S.C.§ 22.

8. Lexmark illegally contracts, combines, andconspires with persons and entities that have

JA 22

committed, and continue to commit, overt acts withinKentucky in furtherance of the contract, combination,and conspiracy alleged in this Complaint.

9. Lexmark’s conduct has unlawfully restrainedthe domestic and foreign commerce of the UnitedStates and injured consumers in the United States andforeign countries.

10. As a result of Lexmark’s anticompetitive acts,as alleged in this Complaint, consumers and SCC havesustained harm in North Carolina.

PARTIES

11. SCC is a North Carolina corporation with itsprincipal place of business in Sanford, North Carolina.

12. Lexmark, on information and belief, is aDelaware corporation with a principal place of businessin Lexington, Kentucky. Lexmark is an originalequipment manufacturer (“OEM”) of laser tonerprinters and compatible laser toner cartridges.

13. On information and belief, Lexmark has formany years engaged in substantial business activitiesin North Carolina and Kentucky and continues toengage in such activities by, among other things,promoting and selling its goods and services tocustomers located in North Carolina and Kentucky.

JA 23

INTERSTATE COMMERCE

14. Lexmark’s activities, including activitiesrelated to its illegal, anticompetitive conduct, are in theflow of and substantially affect interstate commerce.

15. Among other things, Lexmark’santicompetitive conduct results in communicationsacross state lines using interstate telecommunicationsnetworks, the Internet, and the U.S. mail. Lexmarkalso ships products, which are at issue in thisComplaint, across state lines. Lexmark reapssubstantial revenues from sales of products, which areat issue in this Complaint, amounting to millions ofdollars, throughout the United States.

RELEVANT MARKET AND LEXMARK’SMARKET POWER

16. The relevant geographic market for purposesof SCC’s claim is worldwide, including the UnitedStates and other relevant submarkets thereof.

17. The relevant product markets for purposes ofSCC’s claims comprise:

(a) Lexmark toner cartridges for use inOptra S series, Optra SE, Optra Tseries, T520/522, T620/622, e320/322,e220, T630/632/634, e321/323, andT420 Lexmark printer models and themultifunctional peripheral versions ofthese models (“Cartridges Market”);

JA 24

(b) components and toner used toremanufacture Lexmark tonercartridges for use in Optra S series,Optra SE, Optra T series, T520/522,T 6 2 0 / 6 2 2 , e 3 2 0 / 3 2 2 , e 2 2 0 ,T630/632/634, e321/323, and T420Lexmark printer models and themultifunctional peripheral versions ofthese models (“Components Market”);

(c) and microchips used in Lexmark tonercartridges for use in Optra SE, OptraT series, T520/522, T620/622,e320/322, e220, T630/632/634,e321/323, and T420 Lexmark printermodels and the multifunctionalperipheral versions of these models(“Microchips Market”).

18. Lexmark has and exercises market powerwithin the relevant markets. On information andbelief, Lexmark has approximately an 85% share ineach of the relevant markets.

19. As alleged herein, no substitutes areavailable to customers and end-users for productswithin the Cartridges, Components, and MicrochipsMarkets. As alleged herein, barriers to entry into theCartridges, Components, and Microchips Marketsinclude Lexmark’s unlawful anticompetitive activitiesto exclude competition.

20. Lexmark’s anticompetitive conduct in therelevant markets has excluded competitors andresulted in consumers paying higher prices than would

JA 25

have prevailed in competitive markets. Consumerspaying higher prices and the exclusion of competitorsare indicia of Lexmark’s market power and unlawfulanticompetitive conduct.

LEXMARK’S ANTICOMPETITIVE ACTIVITIES

21. This action arises out of Lexmark’santicompetitive activities in the relevant markets. Thatanticompetitive conduct includes:

(a) a conspiracy by Lexmark and itsmicrochip suppliers to restrain trade,including refusals to deal with SCCand competitors, that has restrictedoutput and increased prices;

(b) a conspiracy by Lexmark, microchipsuppliers, and resellers of Lexmarkmanufactured printers to monopolizethe relevant markets; and

(c) Lexmark’ s unilateral monopolizationand attempted monopolization of therelevant markets.

22. Lexmark makes a variety of laser tonerprinter models and sells them directly to consumersand end-users. Many, if not the majority, of Lexmark’sconsumers are individuals as opposed to businesspurchasers. Lexmark also supplies printers to othercomputer equipment manufacturers, which in turnresell those printers under their own brands.

JA 26

23. To function properly, a Lexmark laser tonerprinter, like all such printers, must contain acompatible laser toner cartridge. Toner cartridges aredepleted during a printer’s normal operation.

24. Lexmark also makes and sells replacementlaser toner cartridges that are compatible only with itslaser toner printers. Lexmark designs its printers soonly a Lexmark-designed toner cartridge will workwith a particular Lexmark printer model. No othermanufacturer makes new toner cartridges compatiblewith Lexmark printers. As with its printers, Lexmarkalso supplies toner replacement cartridges to othercomputer equipment manufacturers, which in turnresell those cartridges under their own brands.

25. Lexmark sells its printers for very little, ifany profit. Lexmark sells replacement tonercartridges—a major component of its total suppliessales—for a substantial profit. Lexmark perceives itsrevenue for supplies as critical to its business. Lexmarkhas stated, “Recurring supplies add stability/growth.”In 2002, Lexmark derived 54% of its total revenue fromsupplies sales, as compared to 33% in 1999.

26. Lexmark perceives its initiatives indeveloping laser printers as “opportunities” that“drive[] supplies.” Lexmark introduces new modelprinters and compatible toner cartridges every fewyears. Generally, Lexmark discontinues an old modelprinter upon introducing a new model. Lexmarkcontinues to sell replacement toner cartridges for adiscontinued printer model for many years.

JA 27

27. Laser toner cartridges contain toner andother components. Toner is the ink in the xerographicprocess used in laser printers. Most of the othercomponents in the toner cartridge have a usable lifebeyond the initial toner load. If the toner cartridge isrepaired and/or overhauled and new toner added, thetoner cartridge can be reused. This constitutesremanufacturing toner cartridges.

28. Remanufacturing toner cartridges is the mostenvironment-friendly way of handling depleted tonercartridges. The plastic toner cartridge is made of heatresistant plastic that is difficult to recycle for otheruses. Moreover, toner cartridges thrown away inlandfills require hundreds of years to begin todecompose.

29. Remanufacturers disassemble used OEMlaser toner cartridges, inspect and clean them, replaceany worn components, and add toner. The resultingremanufactured laser toner cartridge sells at asubstantial discount compared to the price of a newtoner cartridge. On information and belief, third-partyremanufactured Lexmark toner cartridges for Optra Sseries, Optra SE, Optra T series, T520/522, T620/622,e320/322, e220, T630/632/634, e321/323, and T420Lexmark printer models and the multifunctionalperipheral versions of these models are pricedapproximately 50-75% of the price of new tonercartridges for the same Lexmark printer models.

30. SCC is a leading supplier to toner cartridgeremanufacturers. SCC supplies, among other things,toner and other components used by SCC’s customersin remanufacturing Lexmark toner cartridges.

JA 28

31. Because Lexmark printer owners can buytoner cartridges only from Lexmark orremanufacturers, every remanufacturer’s sale is a lostLexmark sale. No substitutes are available toconsumers and end-users that need toner cartridges forLexmark printers.

32. Lexmark has taken a series of actionsdesigned intentionally to inhibit and excludecompetition in the relevant markets. These actions,discussed in detail below, include (1) promoting a shamPrebate program; (2) incorporating into Lexmark tonercartridges “killer microchips” that Lexmark designed inconcert with microchips suppliers solely to preserveLexmark’s market position and exclude competition;(3) revoking the status of Lexmark-authorized serviceproviders when those providers sell remanufacturedLexmark toner cartridges; (4) putting in place aprogram to price selectively toner cartridges toundercut identified remanufacturers; and(5) conspiring to threaten competitors.

33. Lexmark specifically launched its Prebateprogram to intimidate and to exclude competition fromremanufacturers. Exploiting Prebate, Lexmark alsoeffects its deliberate, unlawful, anticompetitive intentto raise prices and exclude competition. Lexmarkpurports to offer two toner cartridges for each of itsprinter models—one cartridge labeled “Prebate” and aphysically identical, higher priced cartridge that lacksthe Prebate label. Lexmark charges substantially morefor toner cartridges not labeled Prebate, and it does notmake non-Prebate toner cartridges readily available.Lexmark asserts that customers who buy Prebatecartridges are bound by a licensing agreement to use

JA 29

Prebate cartridges only once and to return depletedPrebate cartridges only to Lexmark.

34. On information and belief, computerequipment manufacturers that purchaseLexmark-manufactured laser printers and replacementtoner cartridges for resale also restrict end-users’ useof the toner cartridge with the sham Prebate license orsimilar anticompetitive marketing schemes.

35. Lexmark sent letters to most of thecompanies in the toner cartridge remanufacturingbusiness upon introducing Prebate. Lexmark falselyclaimed that remanufacturing Prebate-labeled tonercartridges violates Lexmark’s intellectual propertyrights and that Prebate toner cartridges could not belegally remanufactured. Lexmark falsely informedremanufacturers that if they used SCC’s products toremanufacture Lexmark toner cartridges, thecustomers would violate the law. Lexmark hasthreatened suing its competitors that remanufacturePrebate toner cartridges. Because Lexmark sellsvirtually all its toner cartridges with the Prebate label,its program has the intended effect of excludingcompetition and increasing prices to consumers in therelevant markets by restricting the supply of Lexmarktoner cartridges.

36. Lexmark’s actions are designed to eliminatecompetition and to ensure that only it suppliesreplacement toner cartridges, whether new orremanufactured. On information and belief, Lexmarkpackages each printer it sells with a Prebate tonercartridge. Lexmark does not sell printers that comepackaged with non-Prebate cartridges.

JA 30

37. Because of Lexmark’s deception andfraudulent inducement, customers and end-users donot know that, at the time they purchase Lexmarkprinters, they are locked-in to purchasing replacementtoner cartridges for these printers only from Lexmark.Lexmark intentionally does not inform customers andend-users of its Optra S series, Optra SE, Optra Tseries, T520/522, T620/622, e320/322, e220,T630/632/634, e321/323, and T420 Lexmark printermodels and the multifunctional peripheral versions ofthese models that the only toner cartridges thataccompany these printers are Prebate toner cartridges.Lexmark’s deliberate nondisclosure of this factfraudulently induces customers’ use of Prebatecartridges. Customers and end-users thus do not haveany practical choice other than to use Prebatecartridges with their newly purchased Lexmark laserprinters. Lexmark also deceptively omits frompackaging containing new printers any informationabout Prebate, thereby exploiting consumers’ lack ofinformation about choices in replacement cartridges.As a result, Lexmark printer customers do not knowthat Lexmark asserts that Prebate toner cartridgescannot be reused or refilled by third parties.

38. Customers and end-users are unable tocalculate life-cycle costs of operating Lexmark printersdue to, among other things, Lexmark’s deceptivedissemination of misleading information. Lexmark isaware that it unlawfully deceives consumers aboutlife-cycle costs, and has boasted to investors thatexploiting consumers’ ignorance will increaseLexmark’s profitability: “Most companies don’t know[the] total cost of printing. . .” Lexmark’santicompetitive exploitation of consumers’ and

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end-users’ lack of adequate information increasesprices and reduces output in the relevant markets.

39. On information and belief, after an end-userpurchases a Lexmark printer, Lexmark purposefullymisleads end-users to believe that they have arestricted license on Lexmark toner cartridges—to theextent that consumers are even aware of thislicense—and that the license requires customers andend-users to purchase toner cartridges only fromLexmark. Lexmark, however, knows that its end-usershave no such restricted license agreement. Lexmark’ssole purpose for deceiving end-users to believe they arecontractually bound by this agreement to use onlyLexmark toner cartridges is to preserve, maintain, andenhance its unlawful monopoly power in the relevantmarkets.

40. Through Prebate, Lexmark also seeks toextend its patent rights beyond their scope, whichconstitutes patent misuse. By using the sham Prebatelicense to deceive customers and end-users that theyare bound by a restrictive license agreement, Lexmarkmisuses its patent rights to preserve, maintain, andenhance its unlawful monopoly power in the relevantmarkets.

41. On information and belief, there is nosubstantive difference in the sales process when acustomer or end-user purchases a separately packagedPrebate-labeled Lexmark replacement toner cartridge,which includes the sham restricted license, or when acustomer or end-user purchases a separately packagednon-Prebate Lexmark replacement toner cartridge.Customers or end-users do not know—and Lexmark

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deliberately fails to disclose-that a consumer’s purchaseof a Lexmark replacement toner cartridge labeledPrebate creates a sham restrictive license betweenLexmark and the customer or end-user. Manycustomers and end-users purchase replacement tonercartridges either on the Internet, through phoneorders, or from large retail outlets. Lexmark does notinform consumers and end-users that their simpletransactions, which occur without customers orend-users actually viewing the replacement tonercartridge boxes, create purportedly restricted-uselicenses.

42. On information and belief, for the purpose ofeffectuating Lexmark’s illegal exclusionary conduct,Lexmark tracks customers and end-users that insist onpurchasing non-Prebate cartridges. Lexmark isolatesand targets customers and end-users that prefer to useremanufactured toner cartridges as opposed to usingPrebate-labeled toner cartridges, which Lexmarkinsists can be used only once. Lexmark thus is able tounlawfully exclude competition and increase prices tocustomers and end-users.

43. Those end-users and remanufacturersintimidated by Lexmark’s Prebate program—but stillseek ing to use remanufac tured tonercartridges—ordered Lexmark toner cartridges withoutthe Prebate label. Lexmark has sent representatives tothese customers and attempted to undercut theremanufacturer’s price. If the end-user insisted onbuying a remanufactured toner cartridge (typicallybecause of environmental concerns), then Lexmarkoffered to sell a Lexmark-remanufactured tonercartridge to these end-users. These Lexmark

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“remanufactured toner cartridges” were often, oninformation and belief, actually new toner cartridgeslabeled “remanufactured.” They were also labeled“Prebate.”

44. Lexmark began to incorporate electroniccomponents (microchips) into its toner cartridges withthe Optra SE printer’s introduction. Several Lexmarkprinter models now incorporate these anticompetitivemicrochips, including the Optra SE, Optra T series,T520/522, T620/622, e320/322, e220, T630/632/634,e321/323, and T420 Lexmark printer models and themultifunctional peripheral versions of these models.Lexmark’s co-conspirator microchip manufacturersmake these anticompetitive microchips. Lexmarkconspired to create and use an algorithm in eachmicrochip that “authenticates” the toner cartridge,making the cartridge unusable with a Lexmark printerwhen remanufactured by a competitor. Theanticompetitive microchips share a basic design featureas well as a single, anticompetitive purpose—i.e., theprinter will not print unless it identifies a compatiblemicrochip in the toner cartridge. When the initial tonerload in a new toner cartridge is exhausted, themicrochip is rendered unusable. Thus, aremanufactured toner cartridge cannot be used inLexmark’s “chipped printers” unless the cartridgeincludes a replacement microchip supplied by themicrochip manufacturer. Lexmark and itsco-conspirator microchip suppliers refuse to deal withSCC and other competitors to supply such a microchip.

45. Lexmark and its co-conspirator microchipsuppliers, from time to time, have acted in concert toredesign the anticompetitive microchips to include

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multi-layered, multi-stage encryption. Lexmark’s solepurpose for redesigning the anticompetitive microchipsis to exclude competitors from the relevant markets,restrict output, and increase end-user prices.

46. Lexmark has conspired with its microchipsuppliers so that only Lexmark can purchase theanticompetitive microchips. To ensure that onlyLexmark receives the anticompetitive microchips,Lexmark and its co-conspirators have created a systemwhereby the microchip supplier allocates certain serialnumbers to identify each individual anticompetitivemicrochip, thereby enabling Lexmark and itsco-conspirators to track every single anticompetitivemicrochip that enters the market to ensure that onlyLexmark has access to them.

47. Lexmark’s purpose for using theanticompetitive microchips with the Lexmark tonercartridges is to exclude competition, restrict output,and increase end-user prices in the relevant markets.As a result of Lexmark’s conduct involving theanticompetitive microchips, Lexmark has excluded andotherwise unlawfully restrained competitors from therelevant markets, thereby enhancing Lexmark’sdominant, monopoly market position and increasingprices.

48. On information and belief, Lexmark installsanticompetitive microchips in toner cartridges bothwith the Prebate label and in toner cartridges notlabeled Prebate. Customers and end-users thatpurchase non-Prebate labeled toner cartridges believethat the non-Prebate labeled toner cartridges can beremanufactured without any restriction. Because

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Lexmark and its co-conspirator microchip suppliers,acting in concert, have illegally used theanticompetitive microchips to exclude competition inthe relevant markets by, among other conduct, refusingto deal with SCC and remanufacturers, thosecustomers and end-users are not aware that thenon-Prebate toner cartridges—all of which incorporatethe anticompetitive microchips—cannot beremanufactured without any restriction.

49. On information and belief, other printer tonercartridge manufacturers, such as Hewlett-Packard, donot use microchips for the same anticompetitivepurpose that Lexmark does. Other printer tonercartridge manufacturers do not similarly restrictcustomers’ abilities to have their toner cartridgesremanufactured. Thus, the industry practice is topermit customers to purchase either new orremanufactured replacement toner cartridges from anysource, which is less restrictive than Lexmark’s use ofthe anticompetitive microchips and other exclusionarypractices. As a result of Lexmark’s anticompetitiveactivities, however, Lexmark printer customers believethat at the time they purchase a Lexmark printer theywill be able to use either new replacement tonercartridges or remanufactured toner cartridges from anysource with their Optra SE, Optra T series, T520/522,T620/622, e320/322, e220, T630/632/634, e321/323, andT420 Lexmark printer models and the multifunctionalperipheral versions of these models.

50. On information and belief, approximately35% of Hewlett-Packard toner cartridges areremanufactured. On information and belief,approximately 14% of Lexmark toner cartridges are

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remanufactured. The disparity in these percentagesindicates that Lexmark’s exclusionary conduct ishaving an unlawful anticompetitive effect in therelevant markets.

51. On information and belief, U.S. sales ofLexmark toner cartridges that are remanufactured—asa percentage of total sales of all Lexmark tonercartridges, new and remanufactured—has decreasedsince 1998. Over the same period, U.S. sales ofHewlett-Packard toner cartridges that areremanufactured—as percentage of total sales of allHewlett-Packard toner cartridges, new andremanufactured—has increased. These trends indicatethat Lexmark’s exclusionary conduct is having anunlawful anticompetitive effect in the relevantmarkets.

52. On information and belief, the prices ofLexmark-supplied replacement toner cartridges in therelevant markets have increased since 1998. Over thesame period, the prices of Hewlett-Packard-suppliedreplacement toner cartridges have remained flat ordecreased. These trends indicate that Lexmark’sexclusionary conduct is having an unlawfulanticompetitive effect in the relevant markets.

53. Lexmark certifies authorized serviceproviders that are able to perform warranty service onLexmark printers. Many of these authorized serviceproviders sell new and remanufactured Lexmark tonercartridges. Lexmark has embarked on a campaign torevoke the status of authorized service providers. Oninformation and belief, Lexmark is revoking the status

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of authorized service providers because Lexmark doesnot want competitive remanufactured toner cartridgesavailable in the relevant markets. If an authorizedservice provider remanufactures toner cartridges,Lexmark terminates that service provider’scertification. Lexmark’s purpose for terminating theauthorized service provider is to preserve, maintain,and enhance its monopolies in the relevant markets.

54. Certain suppliers have offered, or havecontemplated offering, replacement microchips forLexmark toner cartridges. On information and belief,Lexmark and its microchip suppliers, acting in concert,have threatened these suppliers in a scheme designedto discourage such offerings. For example, in 2000, SCCmet with Lexmark and informed Lexmark that it wascontemplating selling microchips. One week after SCCmet with Lexmark, Lexmark’s microchip supplier senta letter to SCC threatening patent infringementlitigation. Other suppliers of replacement microchipsreceived similar letters. After SCC entered the relevantmarkets with replacement microchips for tonercartridges for the T520 and T620 Lexmark printermodels, Lexmark’s microchips supplier sent anotherletter to SCC alleging infringement based solely on apicture of a microchip on SCC’s web site.

55. On information and belief, Lexmark hasconspired with its microchips supplier to extend thescope of Lexmark’s patents and the microchipssupplier’s patents beyond the legitimate coverage ofthose patents’ issued claims to intimidate and preventcompetitors such as SCC from competing in therelevant markets.

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56. In addition, Lexmark has brought itscopyright action against SCC not for the purpose ofobtaining a favorable judgment or perfecting the claimsstated therein, but instead to harass SCC and interferewith SCC’s ability to compete with Lexmark in therelevant markets, thus preserving Lexmark’ sdominant and monopoly position in the relevantmarkets.

57. Lexmark has misused the copyrights at issuein this action and has used them in violation of theantitrust laws as to render them unenforceable.Lexmark also has imposed restrictions on the use of itspurportedly copyrighted material at issue in this casethat anticompetitively extend the scope of thosecopyrights in violation of the antitrust laws.

58. On information and belief, there is a closelink between the downward price pressure onLexmark’s laser printers and Lexmark’s need toincrease its revenue and profit growth from its suppliesbusiness. Lexmark considers its toner cartridge supplybusiness to be critical to its profitability. Lexmark hasissued press releases describing its supplies-drivenbusiness model, which emphasizes the profitability ofLexmark’s toner cartridges sales. Lexmark has recentlyreported that its supplies revenue for the 2003 thirdquarter increased 13% from the same period in 2002.Consequently, on information and belief, Lexmarkconsiders the remanufacturing of Lexmark printertoner cartridges by third parties to be a significantthreat to Lexmark’s revenue, profit growth, andmonopolization of the relevant markets.

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59. On information and belief, Lexmark hasacted with the intent to restrain and monopolize therelevant markets to ensure that Lexmark will obtainartificially inflated monopolistic profits from Lexmark’snew and remanufactured printer toner cartridge sales.

FIRST CLAIM FOR RELIEF

(Violation of Sherman Act § 1—Restraint ofInterstate Commerce)

60. SCC realleges and incorporates by referencethe allegations in Paragraphs 1 through 59 above.

61. Lexmark has engaged in an unlawfulcontract, combination or conspiracy to unreasonablyrestrain interstate commerce in the relevant marketsin the United States in violation of Section 1 of theSherman Act, 15 U.S.C. § 1.

62. Lexmark’s aforesaid unlawful combinationand conspiracy to restrain interstate commerce in therelevant markets has consisted, among other things, ofLexmark’s conspiring to engage in the above allegedpredatory and/or anticompetitive conduct for thepurpose of restraining interstate commerce.

63. Lexmark’s actions, as alleged above, haveunlawfully injured competition and business activitiesin interstate commerce.

64. On information and belief, Lexmark willfullyengaged in the actions, as alleged above, whichconstitute violations of Section 1 of the Sherman Act,

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15 U.S.C. § 1, and Lexmark intended to restraininterstate commerce.

65. Lexmark’s actions intentionally have hadthese adverse effects, among others, on the relevantmarkets: (a) reduced output within the relevantmarkets and (b) increased prices of products within therelevant markets.

66. Lexmark’s actions, as alleged above, haveproximately caused injury to SCC by diverting salesfrom SCC to Lexmark and inhibiting SCC fromeffectively competing in the relevant markets. As aresult, SCC has suffered damages to its business orproperty by Lexmark in an amount to be established attrial in excess of $18 million, exclusive of costs andinterest.

67. SCC is entitled to an award of damages,including an amount up to three times the amountfound as actual damages, reasonable attorneys’ fees,and costs, under Section 4 of the Clayton Act, 15 U.S.C.§ 15.

68. SCC will continue to suffer damages as aresult of the unlawful actions of Lexmark unlessLexmark, its officers, agents, servants, employees,attorneys, and those persons acting in concert withLexmark are permanently enjoined from continuingsuch anticompetitive actions.

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SECOND CLAIM FOR RELIEF

(Violation of Sherman Act § 2—Conspiracy toMonopolize, Attempted Monopolization, and

Monopolization)


70. Lexmark has conspired with its microchipssuppliers and other brand name computer equipmentmanufacturers to monopolize the relevant markets inviolation of Section 2 of the Sherman Act, 15 U.S.C. § 2.

71. Lexmark’s aforesaid conspiracy to monopolizethe relevant markets has consisted of, among otherthings, Lexmark’s conspiring to engage in the abovealleged predatory and/or anticompetitive conduct infurtherance of its conspiracy to monopolize the relevantmarkets.

72. On information and belief, Lexmark willfullyengaged in conspiratorial actions, as alleged above,which constitute violations of Section 2 of the ShermanAct, 15 U.S.C. § 2, and Lexmark specifically intendedto monopolize the relevant markets.

73. Lexmark has individually attempted tomonopolize the relevant markets in the United Statesin violation of Section 2 of the Sherman Act, 15 U.S.C.§ 2.

74. Lexmark’s activities are anticompetitive andpredatory and were undertaken with the specific intentto inhibit competition, exclude competitors, control

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prices, and create and maintain Lexmark’s monopoly inthe relevant markets.

75. There is a dangerous probability thatLexmark will succeed in its attempt to monopolize ormaintain its monopolies in the relevant markets.

76. On information and belief, Lexmark willfullyengaged in the actions, as alleged above, whichconstitute violations of Section 2 of the Sherman Act,15 U.S.C. § 2, and specifically intended to monopolizethe relevant markets.

77. In addition, Lexmark has monopolized therelevant markets in the United States in violation ofSection 2 of the Sherman Act, 15 U.S.C. § 2.

78. Lexmark’s aforesaid monopolization of therelevant markets has consisted of Lexmark obtainingand maintaining monopoly power with, on informationand belief, approximately an 85% share of eachrelevant market.

79. Lexmark’s actions, as alleged above, haveunlawfully injured competition and business activitiesin interstate commerce.

80. Lexmark’s concerted actions with itsco-conspirators and Lexmark’s unilateral actions inviolation of Section 2 of the Sherman Act, as allegedabove, have proximately caused injury to SCC bydiverting sales from SCC to Lexmark and inhibitingSCC from effectively competing in the relevantmarkets. As a result, SCC has suffered damages caused

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by Lexmark to its business and property in an amountthat is estimated to be at least $18 million.

81. Lexmark’s concerted actions with itsco-conspirators and Lexmark’s unilateral actions inviolation of Section 2 of the Sherman Act, as allegedabove, have resulted in excluding competitors from therelevant markets and increasing prices to consumers inthe relevant markets.

82. SCC is entitled to an award of damages,including an amount up to three times the amountfound as actual damages, attorneys’ fees and costs,under 15 U.S.C. § 15.

83. SCC will continue to suffer damages as aresult of the unlawful actions of Lexmark unlessLexmark, its officers, agents, servants, employees,attorneys, and those persons acting in concert withLexmark are permanently enjoined from continuingsuch actions.

THIRD CLAIM FOR RELIEF

(Violation of Lanham Act § 43(a)—FalseAdvertising, Product Libel, and Unfair

Competition)


85. The communications regarding Lexmark’salleged intellectual property rights and Lexmark’salleged unlawful conduct, as alleged above, constitutematerial misrepresentations and/or omissions of the

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nature, characteristics, and qualities of Lexmark’s andSCC’s goods, services and/or commercial activities, andare thus in violation of Section 43(a) of the LanhamAct, 15 U.S.C. § 1125(a). Lexmark’s misrepresentationsand omissions were made willfully and in bad faith incommercial advertising and promotion.

86. Lexmark made misrepresentations andomissions about its own products and SCC’s competingproducts. All these products are marketed and sold ininterstate commerce, and in commerce between theUnited States and foreign countries.

87. Lexmark’s misrepresentations and omissionsconcerning Lexmark’s and SCC’s products havedeceived and are likely to deceive a substantialsegment of the intended audience.

88. Lexmark’s misrepresentations are materialand likely to influence purchasing decisions in therelevant markets. Such misrepresentations haveproximately caused and are likely to cause injury toSCC by diverting sales from SCC to Lexmark. Suchconduct has also irreparably harmed SCC by leadingconsumers and others in the trade to believe that SCCis engaged in illegal conduct and is a dishonest anddisreputable business. Lexmark’s illegal conduct hassubstantially injured SCC’s business reputation.

89. SCC is entitled to an award of damages,including an amount up to three times the amountfound as actual damages, attorneys’ fees and costs,under 15 U.S.C. § 1117(a).

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90. SCC will continue to suffer damages as aresult of the unlawful actions of Lexmark unlessLexmark, its officers, agents, servants, employees,attorneys, and those persons acting in concert withLexmark are permanently enjoined from continuingsuch actions and appropriate corrective advertising isawarded.

FOURTH CLAIM FOR RELIEF

(Violation of N.C. Gen. Stat. § 75-1—Restraint ofNorth Carolina Commerce)


92. Lexmark has engaged in an unlawfulcontract, combination or conspiracy to unreasonablyrestrain commerce in the relevant markets in NorthCarolina in violation of N.C. Gen. Stat. § 75-1.

93. Lexmark’s aforesaid unlawful combinationand conspiracy to restrain commerce in the relevantmarkets in North Carolina has consisted of, amongother things, Lexmark’s conspiring to engage in theabove alleged predatory andor anticompetitive conductfor the purpose of restraining commerce.

94. Lexmark’s actions, as alleged above, haveinjured competition and adversely affected commerceand business activities within North Carolina.

95. On information and belief, Lexmark willfullyengaged in the actions, as alleged above, whichconstitute violations of N.C. Gen. Stat. § 75-1, and

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Lexmark intended to restrain commerce within NorthCarolina.

96. Lexmark’s actions have had the followingadverse effects, among others, on the relevant marketsin North Carolina: (a) reduced output within therelevant markets and (b) increased prices of productswithin the relevant markets.

97. Lexmark’s actions, as alleged above, haveproximately caused injury to SCC by diverting salesfrom SCC to Lexmark and inhibiting SCC fromeffectively competing in the relevant markets. As aresult, SCC has suffered damages caused by Lexmarkto its business or property in an amount to beestablished at trial in excess of $75,000 exclusive ofcosts and interest.

98. SCC is entitled to an award of damages,including an amount up to three times the amountfound as actual damages, reasonable attorneys’ feesand costs, under N.C. Gen. Stat. §§ 75-16 and 75-16.1.

99. SCC will continue to suffer damages as aresult of the unlawful actions of Lexmark unlessLexmark, its officers, agents, servants, employees,attorneys, and those persons acting in concert withLexmark are permanently enjoined from continuingsuch anticompetitive actions.

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FIFTH CLAIM FOR RELIEF

(Violation of N.C. Gen. Stat. § 75-1.1—Unfairand Deceptive Trade Practices)


101. Lexmark has engaged in acts or practicesthat affect commerce and business activities in thestate of North Carolina.

102. Lexmark’s anticompetitive and predatoryactions, as alleged above, constitute unfair anddeceptive acts or practices in violation of N.C. Gen.Stat. § 75-1.1.

103. Lexmark willfully engaged in the acts orpractices, as alleged above, which constitute violationsof N.C. Gen. Stat. § 75-1.1.

104. Lexmark’s unfair and deceptive acts havecaused SCC to suffer damages in an amount to beestablished at trial in excess of $75,000 exclusive ofcosts and interest.

105. SCC is entitled to recover treble damages forinjuries caused by the aforesaid conduct, as well asattorneys’ fees and costs of suit for Lexmark’s willfulconduct, under N.C. Gen. Stat. §§ 75-16 and 75-16.1.

106. Lexmark’s actions are ongoing and, unlessenjoined, will continue to cause irreparable harm toSCC.

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SIXTH CLAIM FOR RELIEF

(Violation of N.C. Gen. Stat.§ 75-2.1—Conspiracy to Monopolize, Attempted

Monopolization, Monopolization)


108. Lexmark has conspired to monopolize therelevant markets in North Carolina in violation of N.C.Gen. Stat. § 75-2.1.

109. Lexmark’s aforesaid conspiracy to monopolizethe relevant markets has consisted of, among otherthings, Lexmark’s conspiring to engage in the abovealleged predatory and/or anticompetitive conduct forthe purpose of monopolizing the relevant markets inNorth Carolina.

110. On information and belief, Lexmark willfullyengaged in the concerted actions, as alleged above,which constitute violations of N.C. Gen. Stat. § 75-2.1,and Lexmark specifically intended to monopolize therelevant markets within North Carolina.

111. Lexmark, in addition to acting in concert withits co-conspirators as alleged above, has individuallyattempted to monopolize the relevant markets withinNorth Carolina in violation of N.C. Gen. Stat. § 75-2.1.

112. Lexmark’s aforesaid attempt to monopolizethe relevant markets in North Carolina has consistedof, among other things, Lexmark engaging in the abovealleged predatory and/or anticompetitive conduct to

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acquire monopoly power in the relevant markets withinNorth Carolina.

113. On information and belief, Lexmark willfullyengaged in the actions, as alleged above, whichconstitute violations of N.C. Gen. Stat. § 75-2.1, andspecifically intended to monopolize the relevantmarkets within North Carolina.

114. There is a dangerous probability thatLexmark will succeed in its attempt to monopolize ormaintain its monopolies in the relevant markets withinNorth Carolina.

115. In addition, Lexmark has individuallymonopolized the relevant markets within NorthCarolina in violation of N.C. Gen. Stat. § 75-2.1.

116. Lexmark’s aforesaid monopolization of therelevant markets has consisted of Lexmark obtainingand maintaining monopoly power with, on informationand belief, approximately an 85% share of eachrelevant market within North Carolina.

117. On information and belief, Lexmark willfullyengaged in the actions, as alleged above, whichconstitute violations of N.C. Gen. Stat. § 75-2.1.Lexmark also intended to monopolize the relevantmarkets within North Carolina.

118. Lexmark’s actions, as alleged above, haveinjured competition and adversely affected commerceand business activities within North Carolina.

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119. Lexmark’s concerted actions with itsco-conspirators and Lexmark’s unilateral actions inviolation of N.C. Gen. Stat. § 75-2.1, as alleged above,have proximately caused injury to SCC by divertingsales from SCC to Lexmark and inhibiting SCC fromeffectively competing in the relevant markets withinNorth Carolina. As a result, SCC has suffered damagesin an amount to be established at trial in excess of$75,000 exclusive of costs and interest.

120. Lexmark’s concerted actions with itsco-conspirators and Lexmark’s unilateral actions inviolation of N.C. Gen. Stat. § 75-2.1, as alleged above,have resulted in excluding competitors from therelevant markets and increasing prices to consumers inthe relevant markets within North Carolina.

121. SCC is entitled to recover treble damages forinjuries caused by the aforesaid conduct, as well asattorneys’ fees and costs of suit for Lexmark’s willfulconduct, under N.C. Gen. Stat. §§ 75-16 and 75-16.1.

122. Moreover, Lexmark’s actions are ongoing and,unless enjoined, will continue to cause irreparableharm to SCC.

SEVENTH CLAIM FOR RELIEF

(Civil Conspiracy)


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124. Lexmark conspired, as alleged above, tocommit unlawful acts, or to do lawful acts in anunlawful way.

125. Lexmark and/or one of its co-conspirators, infurtherance of their illegal conspiracy, committed anovert act in furtherance of the aims of their conspiracy.

126. SCC has suffered actual injury as aproximate result of the overt acts committed byLexmark and/or one of its co-conspirators infurtherance of their conspiracy.

127. SCC is entitled to recover damages, costs,attorneys’ fees, and expenses necessary to counteractthe effects of Lexmark’s illegal civil conspiracy.

JURY DEMAND

128. SCC demands a jury trial of all matters sotriable raised in this Complaint.

PRAYER FOR RELIEF

WHEREFORE, SCC prays the Court to enter ajudgment:

1. That SCC recover damages from Lexmark inan amount to be determined at trial in excess of $18million for Lexmark’s violation of Sections 1 and 2 ofthe Sherman Act, 15 U.S.C. §§ 1 and 2;

2. That SCC recover enhanced damages for aswell as an enhanced accounting of Lexmark’s unjustenrichment profits in an amount not less than $75,000

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for Lexmark’s violations of the Lanham Act under 15U.S.C. § 1125(a);

3. That Lexmark be permanently enjoined fromviolating the Lanham Act and be required to make anddisseminate corrective advertising to remedy itsLanham Act violations against SCC in a form andfrequency acceptable to SCC and the Court;

4. That Lexmark be ordered to give a report inwriting, under oath, stating that Lexmark hascomplied with the Court’s injunction and describing thesteps taken to comply with the Court’s injunction;

5. That SCC recover damages from Lexmark onSCC’s claims under North Carolina law in an amountto be established at trial in excess of $75,000, plusinterest as allowed by law;

6. That SCC recover Lexmark’s unjustenrichment profits in an amount not less than $75,000for Lexmark’s violations of North Carolina law;

7. That said recovery be trebled, whereapplicable, under 15 U.S.C. § 15, 15 U.S.C. § 1117(a),and/or N.C. Gen. Stat. § 75-16;

8. That the Court enjoin Lexmark fromenforcing its patents, copyrights, and the relatedPrebate restrictions against its customers andend-users, SCC, and SCC’s customers.

9. That the Court award SCC its reasonableattorneys’ fees and costs and prejudgment and post

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judgment interest under 15 U.S.C. § 15; 15 U.S.C.§ 1117(a); and/or N.C. Gen. Stat. § 75-16.1

10. That a trial by jury be had on all issues sotriable; and

11. For such other and further relief as the Courtmay deem just and proper.

Dated December 4, 2003

Respectfully submitted,

/s/ E. Christine Lewis W. Craig Robertson IIIE. Christine LewisWYATT, TARRANT & COMBS, LLP250 West Main Street, Suite 1600Lexington, KY 40507859.233.2012

William H. HollanderSteven L. SnyderWYATT, TARRANT & COMBS, LLPCitizens Plaza500 West Jefferson StreetLouisville, KY 40202-2898502.589.5235

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Skip LondonStatic Control Components, Inc.3010 Lee AvenuePost Office Box 152Sanford, NC 27331919.774.3808

Seth GreensteinMelise R. BlakesleeJohn R. FuiszCarrie ShufflebargerMCDERMOTT, WILL & EMERY600 13th Street NWWashington, D.C. 20005202.756.8000

Attorneys for Static Control Components, Inc.

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CENTRAL DIVISIONLEXINGTON

CONSOLIDATED CIVIL ACTION NOS.5:02-571 AND 5:04-84[Filed June 1, 2007]

_________________________________________STATIC CONTROL COMPONENTS, )INC., )

)Plaintiff/Counterclaim Defendant, )

)V. )

)LEXMARK INTERNATIONAL, INC., )

)Defendant/Counterclaim Plaintiff )

_________________________________________ )

ORDER

*** *** *** ***

Static Control Components, Inc’s (“SCC”) Motion forReconsideration of the Court’s Order Dismissing SCC’sClaims or, In the Alternative, to Amend Its Pleading isbefore the Court for consideration. [R. 407]. For thereasons set forth below, SCC’s motion will be denied.1

1 This denial is consistent with the notice that the Court gave toSCC at trial prior to opening arguments that the Court had

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I.

BACKGROUND

For contextual purposes, the factual background ofthis case may be found, e.g., at Record No. 1081 butneed not be repeated here. In its current Motion, SCCinvites the Court to reconsider its Order dismissingSCC’s antitrust, Lanham Act, and state law claimsupon finding that SCC lacked the prudential standingnecessary to maintain those claims. [R. 392].

II.

DISCUSSION

A. Standard of Review

Motions to reconsider fall within the framework ofFederal Rule of Civil Procedure 59 and may be justifiedupon three circumstances, namely when: “1) there hasbeen as intervening change in the controlling law, 2)there is new evidence which has become available, and3) there is a need to correct clear legal error or toprevent manifest injustice.” Gesler v. Ford Motor Co.,185 F. Supp.2d 724, 729 (W.D. Ky. 2001) (citingPlaskon Elec. Materials v. Allied Signal, 904 F. Supp.644, 669 (N.D. Ohio 1995)). SCC currently argues thethird basis—correction of legal error—as grounds forits Motion. Generally, however, motions to reconsiderare “extraordinary in nature,” “discouraged,” and are

considered SCC’s motion and that it would be denied, pending thisinstant opinion and order.

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granted “very sparingly,” because the motions “‘runcontrary to notions of finality and repose.’” PlaskonElec. Materials, 904 F. Supp. at 669 (citations omitted).Courts consistently emphasize that a motion toreconsider is not a vehicle for a party to merely reargueor rehash its position after an unfavorable ruling. See,e.g., Gesler, 185 F. Supp.2d at 729 (citation omitted);Frederick v. Southeastern Pa. Transp. Auth., 926 F.Supp. 63, 64 (E.D. Pa. 1996); All W. Pet Supply Co. v.Hill’s Pet Prods. Div., 847 F. Supp. 858, 860 (D. Kan.1994) (citing National Metal Finishing Co., Inc. v.Barclays American/Commercial, Inc., 899 F.2d 119,123 (1st Cir. 1990)).

Regarding the standard of review for motions forleave to amend a complaint, leave to amend a pleadingshall be “freely given when justice so requires.” Fed. R.Civ. P. 15(a). However, the grant or denial of a motionto amend is within the sound discretion of the Court.General Elec. Co. v. Sargent & Lundy, 916 F.2d 1119,1130 (6th Cir. 1990). Specifically, a district courtshould consider the following factors in deciding on aplaintiff’s motion to amend the complaint: (1) unduedelay in filing the motion; (2) lack of notice to adverseparties; (3) whether the movant is acting in bad faith,or with a dilatory motive; (4) failure to cure deficienciesby previous amendments; (5) the possibility of undueprejudice to adverse parties; and (6) whether theamendment is futile. Foman v. Davis, 371 U.S. 178,182 (1962); Robinson v. Michigan Consol. Gas Co., 918F.2d 579, 591 (6th Cir. 1990).

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B. Analysis

SCC’s own Counterclaim, and tendered amendedCounterclaim, demonstrates in a selfcontained mannerthat SCC lacks antitrust standing. Taking variousexemplar SCC arguments in turn, it is evident to theCourt that SCC is merely attempting to reargue themerits of this closed issue and that the Courtcommitted no “clear legal error” in this matter. Meredisagreement with the Court’s previous conclusion isnot a basis for seeking reconsideration.

First, SCC argues that “the Court incorrectlyrequired SCC to provide evidence in opposingLexmark’s Rule 12(b)(6) motion so that the Court coulddetermine the sufficiency of SCC’s allegations . . . .” [R.407 at 13 (emphasis in original)]. SCC thereafterquotes the Court: “‘No evidence suggests that SCC wasutilized by Lexmark as a conduit or market force toinjure the remanufacturers of Lexmark’s cartridges.’”Id. (quoting the Court, R. 392 at 10). This argumentdemonstrates the tenuous nature of SCC’s Motion. Theonly error the Court made here, if any, is using theword “evidence” in a colloquial sense. A fair reading ofthe Court’s Order demonstrates that the Court reliedon SCC’s own factual allegations throughout.Predominantly, the Court accepted as true thatLexmark has indeed caused injury in fact to SCC withregard to Lexmark’s Prebate program, and SCC’sparsing of individual words for supposed error beliesthe need for reconsideration.

Next, SCC attempts to reargue an antitrust injuryby overlying the Court’s analysis of antitrust standingwith regard to Lexmark’s Prebate program in general

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with the Court’s disposition of the issues with regard tomicrochips specifically. [R. 392 at 7-8]. The Court iswell aware that it is no defense to antitrust suit toargue that the antitrust violator created the restrainedmarket in the first place. Therefore, the fact thatLexmark created the cartridges that are the subject ofthis suit is not a defense on the merits to antitrust.However, with regard to microchips, SCC alleges notmerely that Lexmark created a microchip market, butthat the very existence of these chips, incorporated intoPrebate cartridges, is “anticompetitive.” [See R. 392 at3]. Therefore, with regard to these microchips,substitutes for which SCC sells, SCC has no antitrustinjury, because it is profiting from Lexmark’s allegedantitrust activity. “[I]n order to survive a motion todismiss for failure to allege antitrust injury, a plaintiffmust allege either: (1) that the antitrust violation was‘a necessary predicate’ to their injury; or (2) that thedefendant could injure plaintiffs only by engaging inthe antitrust violation.” In re Cardizem CD AntitrustLitigation, 332 F.3d 896, 912 (6th Cir. 2003) (emphasisin original) (citing Hodges v. WSM, Inc., 26 F.3d 36, 39(6th Cir. 1994)). In the current case, with regard to themicrochips, SCC turns In re Cardizem on its head,because rather than the antitrust violation being anecessary predicate to SCC’s injury, the antitrustviolation, pursuant to SCC’s allegations, is a necessarypredicate of SCC’s profit.

SCC also argues that the Court committedreversible clear error by not considering one of the fivefactors under Associated General Contractors ofCalifornia, Inc. v. California State Council ofCarpenters, 459 U.S. 519 (1983). [R. 407 at 1]. Thatfactor is “the potential for duplicative recovery or

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complex apportionment of damages.” Southhaven LandCo., Inc. v. Malone & Hyde, Inc., 715 F.2d 1079, 1083,1085 (6th Cir. 1983). SCC incorrectly suggests that theCourt must fruitlessly go through the motions ofaddressing this factor. Associated General merely setsforth a balancing test, the factors of which were laterenumerated with precision by the Sixth Circuit. Id. TheCourt was not unaware of factor four, but other factorsweigh so heavily in Lexmark’s favor that factor four inno event could tip the balance in SCC’s favor. Thefactor is at best a wash.

Finally, SCC’s proposed amended Counterclaimdoes no better of alleging facts that would demonstratethat SCC has antitrust standing in this matter and isaccordingly futile. Simply stating, inter alia, “Lexmarktargeted SCC specifically” as an afterthought in lightof the Court’s Order of dismissal is insufficient in lightof SCC’s other allegations, and Lexmark’s citation onthis point is well taken. R. 422 at 10; Peck v. GeneralMotors Corp., 894 F.2d 844, 846-47 (6th Cir. 1990). TheCourt will also deny SCC’s request to amend as futile.

II.

CONCLUSION

For the reasons set forth herein, it is herebyORDERED that SCC’s Motion for Reconsideration ofthe Court’s Order Dismissing SCC’s Claims or, In theAlternative, to Amend Its Pleading [R. 407] isDENIED.

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This the 1st day of June, 2007.

Signed By:Gregory F. Van TatenhoveUnited States District Judge

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CIVIL MINUTES-TRIAL

CASE NO. 5:04-cv-M-GFVT AT: Frankfort

DATE: June 19, 2007

STYLE: LEXMARK INTERNATIONAL,. INC.. v. STATICCONTROL COMPONENTS. ET AL.

DOCKET ENTRY: Lexmark’s Motion for Judgment asa Matter of Law regarding the Statute of Limitations[R. 12971 is GRANTED IN PART AND DENIED INPART, as set forth in the record. For reasons stated onthe record, Static Control Component’s Motion forSummary Judgment [R. 1251] and Motions to amendPleadings to Add Fraud Claim and ReinstateCounterclaims [R. 1317 and 1318] are DENIED. StaticControl Components Motion to Exclude evidence,Argument & Jury Instruction re “good faith” patentmisuse rebuttal [R. 1351] is DENIED IN PART andTAKEN UNDER ADVISEMENT in part. The Motion isdenied to mark may present evidence in its rebuttalcase regarding good faith.

PRESENT:

HON. s/ Gregory F. Van Tatenhove , JUDGEGREGORY F. VAN TATENHOVE

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M. Younce Rhonda SansomDeputy Clerk Court Reporter

ATTORNEYS PRESENT:

For Lexmark: Steven Brian LoyAndrew CopenhaverMark T. BannerTed MeeceHada HaulseeHanly A. IngramJason ShullMatthew P. BeckerJason Hicks

For Static Control Components: Joseph C. Smith, Jr.Stanley AmbergAllison FreedmanWilliam H. BarrettW. Craig RobertsonSeth GreensteinMickey T. WebsterStefan Meisner

PROCEEDINGS: JURY TRIAL

____ COURT TRIAL X JURY TRIAL

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The jury present as follows.

(1) Juror No.114

(5) Juror No. (9) Juror No.126

(2) Juror No.124

(6) Juror No. 86

(10) Juror No. 127

(3) Juror No. 58

(7) Juror No. 87

(4) Juror No. 145

(8) Juror No. 120

X Introduction of evidence for defendant resumedand concluded.

X Rebuttal evidence began but not concluded.___ Sur-rebuttal evidence

X Continued to Wednesday, June 20, 2007, at thehour of 8:30 A.M. for further trial.

Jury retires to deliberate at __________;Jury returns at __________.

JUDGMENT BY COURT _____JURY VERDICT.SEE VERDICT OR ANSWERS TOINTERROGATORIES.

Jury polled.

Proposed Findings of Fact, Conclusions of Law &Judgment to be prepared by ____ plaintiff

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____ defendant.

BRIEFS to be filed________ __________ ________Plaintiff Defendant Reply

within _____ days following the filing of thetranscript.

This the 19th day of June, 2007.

cc: CORTIC: 6/20 Initials of Deputy Clerk MJY

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CONSOLIDATED CIVIL ACTION NOS.5:02-571 AND 5:04-84

[Filed October 27, 2009]_________________________________________STATIC CONTROL COMPONENTS, )INC., )

)Plaintiff/Counterclaim Defendant, )

)V. )

)LEXMARK INTERNATIONAL, INC., )

)Defendant/Counterclaim Plaintiff. )

_________________________________________ )

AMENDED FINAL JUDGMENT

*** *** *** ***

These consolidated civil actions came on for trialbefore the Court and a jury, Honorable Gregory F. VanTatenhove, District Judge, presiding. Further, certainother issues in these consolidated civil actions weredecided by the Court, as a matter of law.

It is ORDERED AND ADJUDGED that:

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LEXMARK’S CLAIMS IN ITS COMPLAINT INTHE 02-CV-571-GFVT ACTION

(1) On Count I (Copyright Infringement) ofLexmark’s Complaint in Case No. 02-CV-571-GFVT,Lexmark shall recover nothing, and that Count I bedismissed on the merits. [R. 975];

(2) On Count II (DMCA Violations Relating toLexmark’s Toner Loading Programs) of Lexmark’sComplaint in Case No. 02-CV-571-GFVT, Lexmarkshall recover nothing, and that Count II be dismissedon the merits. [R. 216]; and

(3) On Count III (DMCA Violations Relating toLexmark’s Printer Engine Programs) of Lexmark’sComplaint in Case No. 02-CV-571-GFVT, Lexmarkshall recover nothing, and that Count III be dismissedon the merits. [R. 216.]

STATIC CONTROL’S COUNTERCLAIMS INTHE 02-CV-571-GFVT ACTION

(4) On the First Claim for Relief (Violation ofSherman Act § 1 – Restraint of Interstate Commerce)of Static Control’s Counterclaims in Case No. 02-CV-571-GFVT, Static Control shall recover nothing, andthat the First Claim for Relief be dismissed on themerits. [R. 392 & 1259];

(5) On the Second Claim for Relief (Violation ofSherman Act § 2 – Conspiracy to Monopolize,Attempted Monopolization, and Monopolization) ofStatic Control’s Counterclaims in Case No. 02-CV-571-GFVT, Static Control shall recover nothing, and that

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the Second Claim for Relief be dismissed on the merits.[R. 392 & 1259];

(6) On the Third Claim for Relief (Violation ofLanham Act § 43(A) – False Advertising, Product Libel,and Unfair Competition) of Static Control’sCounterclaims in Case No. 02-CV-571-GFVT, StaticControl shall recover nothing, and that the Third Claimfor Relief be dismissed on the merits. [R. 392 & 1259];

(7) On the Fourth Claim for Relief (Violation ofN.C. Gen. Stat. § 75-1 – Restraint of North CarolinaCommerce) of Static Control’s Counterclaims in CaseNo. 02-CV-571-GFVT, Static Control shall recovernothing, and that the Fourth Claim for Relief bedismissed on the merits. [R. 392 & 1259];

(8) On the Fifth Claim for Relief (Violation ofN.C. Gen. Stat. § 75-1.1 – Unfair and Deceptive TradePractices) of Static Control’s Counterclaims in Case No.02-CV-571-GFVT, Static Control shall recover nothing,and that the Fifth Claim for Relief be dismissed on themerits. [R. 392 & 1259];

(9) On the Sixth Claim for Relief (Violation ofN.C. Gen. Stat. § 75-2.1 – Conspiracy to Monopolize,Attempted Monopolization, Monopolization) of StaticControl’s Counterclaims in Case No. 02-CV-571-GFVT,Static Control shall recover nothing, and that the SixthClaim for Relief be dismissed on the merits. [R. 392 &1259]; and

(10) On the Seventh Claim for Relief (CivilConspiracy) of Static Control’s Counterclaims in CaseNo. 02-CV-571-GFVT, Static Control shall recover

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nothing, and that the Seventh Claim for Relief bedismissed on the merits. [R. 392 & 1259.]

LEXMARK’S CLAIMS IN ITS AMENDEDREPLY AND COUNTERCLAIMS IN THE

02-CV-571-GFVT ACTION

(11) On Count I (DMCA Violations Relating toPEP for Optra Se and T Series Printers) of Lexmark’sAmended Reply and Counterclaims in Case No. 02-CV-571-GFVT, Lexmark shall recover nothing, and thatCount I be dismissed on the merits. [R. 216];

(12) On Count V (Interference with ContractualRelations) of Lexmark’s Amended Reply andCounterclaims in Case No. 02-CV-571-GFVT, Lexmarkshall recover nothing, and that Count V be dismissedon the merits. [R. 1020];

(13) On Count VI (Interference with ProspectiveEconomic Advantage) of Lexmark’s Amended Replyand Counterclaims in Case No. 02-CV-571-GFVT,Lexmark shall recover nothing, and that Count VI bedismissed on the merits. [R. 1020]; and

(14) On Count VII (Civil Conspiracy) of Lexmark’sAmended Reply and Counterclaims in Case No. 02-CV-571-GFVT, Lexmark shall recover nothing, and thatCount VII be dismissed on the merits. [R. 1020.]

STATIC CONTROL’S CLAIMS IN ITSCOMPLAINT IN THE 04-CV-84-GFVT ACTION

(15) Count I (Declaratory Judgment of Non-Infringement of Copyright) of Static Control’s

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Complaint in Case No. 04-CV-84-GFVT is adjudged infavor of Static Control, and this Court declares that thecomputer software code on Static Control’sreengineered replacement microchips for use withLexmark’s T420, T520/522, T620/622, T630/632/634,E320/322, E321/323, E220, Optra Se, Optra T610,Optra T612, Optra T614, and Optra T616, sold afterFebruary 24, 2004, does not infringe any Lexmarkcopyright. [R. 1061];

(16) Count II (Declaratory Judgment of NoViolation of 17 U.S.C. § 1201(a)(2)) of Static Control’sComplaint in Case No. 04-CV-84-GFVT is adjudged infavor of Static Control, and this Court declares thatStatic Control’s manufacture, distribution, and sale ofits microchips for use with Lexmark’s T420, T520/522,T620/622, T630/632/634, E320/322, E321/323, E220,Optra Se, Optra T610, Optra T612, Optra T614, andOptra T616 printers do not violate 17 U.S.C.§ 1201(a)(2) of the DMCA. [R. 216]; and

(17) Count III (Declaratory Judgment of NoViolation of 17 U.S.C. § 1201(a)(2)) of Static Control’sComplaint in Case No. 04-CV-84-GFVT is herebydismissed without prejudice as moot.

LEXMARK’S COUNTERCLAIMS IN THE 04-CV-84-GFVT ACTION

(18) On Count I (Static Control’s DMCAViolations relating to Lexmark’s Printer EnginePrograms) of Lexmark’s Counterclaims in Case No. 04-CV-84-GFVT, Lexmark shall recover nothing, and thatCount I be dismissed on the merits. [R. 216];

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(19) On Count II (Static Control’s PatentInfringement) of Lexmark’s Counterclaims in Case No.04-CV-84-GFVT, Lexmark shall recover nothing, andthat Count II be dismissed on the merits [R. 1012,1366, 1443, & 1448], except solely with regard toLexmark’s claim in Paragraph 91 of Count II againstStatic Control for direct infringement of Lexmark’sU.S. Patent No. 6,397,015, said claim being adjudged infavor of Lexmark [R. 1362 & 1376 (6/20/07 TrialTranscript, p. A-20, line 3-4)], but with no remedybeing entered on said claim. [R. 1012, 1430, & 1448];

(20) On Count V (Interference with ContractualRelations) of Lexmark’s Counterclaims in Case No. 04-CV-84-GFVT, Lexmark shall recover nothing, and thatCount V be dismissed on the merits. [R. 1020];

(21) On Count VI (Interference with ProspectiveEconomic Advantage) of Lexmark’s Counterclaims inCase No. 04-CV-84-GFVT, Lexmark shall recovernothing, and that Count VI be dismissed on the merits.[R. 1020]; and

(22) On Count VII (Civil Conspiracy) of Lexmark’sCounterclaims in Case No. 04- CV-84-GFVT, Lexmarkshall recover nothing, and that Count VII be dismissedon the merits. [R. 1020.]

OTHER MATTERS

(23) All pending motions in these consolidatedactions not previously disposed of are hereby denied asmoot.

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(24) The Court’s prior rulings and orders(including but not limited to rulings and orders onmotions for summary judgment and motions forjudgment as a matter of law) in these consolidatedactions are merged herein, including but not limited toprior rulings and orders (including but not limited torulings and orders on motions for summary judgmentand motions for judgment as a matter of law) thatdispose of claims and counterclaims asserted by andagainst Wazana Brothers International, Inc., d/b/aMicro Solutions Enterprises, Pendl Companies, Inc.,Image Productions West, Inc., and/or NER DataProducts, Inc.

(25) By tendering a proposed judgment, neitherLexmark nor Static Control waives any appeal or otherrights, and all such rights, including but not limited tothe right to appeal from this judgment and appealrights previously preserved by prior stipulations, areexpressly preserved.

(26) All claims in these consolidated actions nototherwise expressly disposed of by this or prior ordersor rulings (including but not limited to rulings andorders on motions for summary judgment and motionsfor judgment as a matter of law) merged herein arehereby dismissed on the merits.

(27) Judgment is ENTERED with respect to allissues raised herein.

(28) This is a FINAL and APPEALABLEJudgment and there is no just cause for delay.

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(29) This matter is STRICKEN from the Court’sactive docket.

(30) The parties will submit any motions for billsof costs and attorneys’ fees, including under 17 U.S.C.§ 505, within thirty (30) days of entry of this Judgment.The parties are reminded that, in the Sixth Circuit, thelanguage of Federal Rule of Civil Procedure 54(d)“creates a presumption in favor of awarding costs [tothe prevailing party], but allows denial of costs at thediscretion of the trial court.” White & White, Inc. v.American Hospital Supply Corp., 786 F.2d 728, 730 (6Cir. 1986). Where cases are “close and difficult,” thedenial of costs “is a proper exercise of discretion underthe rule.” Id. And “[t]he closeness of a case is judgednot by whether one party clearly prevails over another,but by the refinement of perception required torecognize, sift through and organize relevant evidence,and by the difficulty of discerning the law of the case.”Id. at 732-33. The parties are further reminded that“attorney’s fees are not ordinarily recoverable in theabsence of a statute or enforceable contract providingtherefor.” Incarcerated Men of Allen County Jail v.Fair, 507 F.2d 281, 284 (6th Cir. 1974).

This the 27th day of October, 2009.

Signed By:s/Gregory F. Van TatenhoveUnited States District Judge

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