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September 2, 2005

The Latest IP Crime: "Box-Wrap" Patent Infringement

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What's that, you ask? Evidently, it's when you ignore the terms written on the side of Lexmark printer cartridge box, refilling the cartridge with ink even when the company has designated it "single use only." According to the Ninth Circuit ruling [PDF] this week in ACRA v. Lexmark, opening the package means you agree to Lexmark's wishes. And if you break that agreement, you could face claims under contract and patent law.

As Fred von Lohmann explains it, it's sort of like when you buy those fancy Gillette Sensor razors, then purchase cheap replacement razor heads -- except that a court has ruled that if the package says "single use," then by opening it you've agreed you can't have any cheap replacements (but you can buy another Gillette "single use" razor). And that means the company that makes the replacement heads is out of luck, too.

Writes Fred:


[The strategy here is] a variant on the "shrinkwrap license" that used to appear plastered on software. Lexmark is bringing this practice to the world of patented goods. If you step outside the bounds of the "contract" (by giving your spent cartridge to a remanufacturer), you're suddenly a patent infringer. More importantly, Lexmark can sue cartridge remanufacturers for "inducing" patent infringement by making and selling refills.

Yes, Lexmark is the company that already tried and failed to control the printer cartridge after-market using the Digital Millennium Copyright Act (DMCA). Contract and patent law are clearly proving more amenable. The question is, how will the ruling impact the way companies do business in the future? Asks Fred:

Will patent owners exploit this decision as an opportunity to impose over-reaching restrictions on formerly permitted post-sale uses, repairs, modifications, and resale? Will consumers soon confront "single use only, not for resale" notices on more and more products? Will innovators stumble over labels announcing "modifications prohibited"?

Obviously, we can't know yet. But the danger is there.

Via trackbacks to my earlier post on the decision in the case formerly known as Blizzard v. BnetD, here are three more posts offering reactions to the Lexmark ruling:


  • Michael Madison: EULA Developments: "In the contracts arena, consumer advocates won the UCITA battle but are losing the ProCD war. (And they're losing it on the authority of the patent law experts at the Federal Circuit!) What remains of a meaningful 'assent' requirement is slowly, but surely, disappearing altogether."
  • Mark McKenna: Blizzard and Arizona Cartridge: "I'm not sure I agree that, as a general rule, it would be okay to contract away all the protection of copyright law as long as consumers clearly understood that."
  • Lauren Gelman: The Problem of Online Contracts: "But this wouldn't really be an issue except for the fact that companies are purposely making contracts difficult to find and read to bind users to terms they ordinarily would disagree with...What is the appropriate scope of online contracts? Should the fact that we know that users don't read them (or can't understand them) inform the scope of what we allow the contracts to bind?"

Update (Sept. 5): Dennis Crouch weighs in:

Commentary:

1. For me, the interesting part of this opinion is that restrictions on alienation (resale/repair) of consumer goods are generally not enforceable unless the good in question is patented.

2. In the wake of this and other cases, pundits are predicting that we will be seeing more "shrink-wrap" licenses restricting repair and modification attached to products that might need repair or modification.

3. If you plan to take such an action, be sure that your product is patented. (Query — will a design patent be sufficient?)

Comments (75) + TrackBacks (0) | Category: Laws and Regulations


COMMENTS

1. Kate on September 4, 2005 2:07 AM writes...

We have reached Insanity. Everyone off the bus.

Permalink to Comment

2. Doug Dingus on September 4, 2005 5:31 AM writes...

Will other companies try to leverage this ruling? You bet. I'm sure quite a number of them will be watching this play out. Their shareholders will demand no less.

How long before this gets slapped on a new car? Imagine only being able to get service at an authorized dealer... Or, perhaps a camp stove that only accepts fuel from authorized sources. I think this is going to happen quicker than we think. The temptation toward lock-in profits is just too high.

The Lexmark approach is wasteful and nothing more than a profit grab. I'm sure they can just drop the cost of the printers to near zero as they lock users into their supplies.

The more I look at IP, the more I find our world being divided into little fiefdoms. The current political climate opened up a big "land grab" of sorts that benefits nobody but the companies involved.

I've been worried about the growing power of corporations for a while now. Rulings like this, supported by a growing amount of purchased legislation is becoming a nasty problem. Why work to add value and actually compete for dollars when it's possible to just litigate and legislate your way into easy money?

My first reaction is corporate reform, but they are already too powerful for that to happen. Nothing short of a full-scale revolt would help things and even then...

The only real solution, I can see is more accountability in the form of education for citizens. We need a venue that can get the word out on these things in simple terms, or we are never going to see any solid changes.

Companies are using their superior knowledge of our law, plus their greater ability to influence law makers toward their own goals. They are exploiting our inability to organize and inform like they can.

Those of us aware of these things advocate and avoid, but we are not enough.

Permalink to Comment

3. Skipper-John on September 4, 2005 10:45 AM writes...

What an stupid ruling...

If I can't refill the cartridge, does it mean that Lexmark still owns it? Am I renting it?

I can see it now. The car manufacturers buy oil companies and specify that only their own brand of gasoline, oil, and other commodoties can be used in their cars. No refills from another brand.

This ruling could be applied to any item that uses supplies. Houses (any item used in a house for cleaning, painting, repair, etc.), Guns (bullets and cleaning supplies), Thermos's (only the matching brand of coffee or whatever could be used in the thermos). TV's (only the company's accessories - VCR, DVD, TIVO device could be attached to the TV).

For any manufacturer who instigates single use licenses, consumers need to vote with their wallets and buy exactly zero of the items with those type of licenses.

Lots of things are written on merchandise, but because they are there does not make them lawful.

Permalink to Comment

4. Mark on September 4, 2005 10:47 AM writes...

The problem here is that the courts are allowing contract law to skew to the provider side of things. If they want to treat this kind of thing as entering into a contract then they have to provide for -both- parties to make terms and allow the other to accept, reject or renegotiate.

Consumers should be allowed to present terms such as "by agreeing to accept my money the vendor explicitly allows me to refill this cartridge as I see fit". And in the interest of full disclosure Lexmark should be required to include a disclosure in at least 12 point font along the lines of "Notice to consumers: users of this printer must purchase only Lexmark toner/ink supplies under penalty of law. Use of third party substitutes and/or refill kits are explicitly prohibited. If you do not agree to these terms do not purchase this product."

Permalink to Comment

5. pffffft on September 4, 2005 12:26 PM writes...

If someone else opened the package for you then who is bound by the contract? Can they prove that you opened it thereby agreeing to the terms?

How about we put our own contract on the dollar bills we use to pay for those products. If the merchant excepts them than they are bound to the agreement. Like those checks in the mail that if you sign and cash you are now signed up for phone service.

The dollar wrap contract.

Permalink to Comment

6. richus on September 4, 2005 12:51 PM writes...

Are you all fn kidding...?
What's wrong with experimenting on new models of business? These products provide much less initial investment. There'll be models that allow generic cartridges eventually.
People will never buy a car that requires only dealership maintaining, so shut up.

Permalink to Comment

7. richus on September 4, 2005 12:52 PM writes...

Are you all fn kidding...?
What's wrong with experimenting on new models of business? These products provide much less initial investment. There'll be models that allow generic cartridges eventually.
People will never buy a car that requires only dealership maintaining.

Permalink to Comment

8. BigPawz on September 4, 2005 1:36 PM writes...

So, this means that hacking those CVS one-time use camcorders is a punishable offense? This country has to get its collective head out of its A _ _. Things like this get passed *way* too often. This is wrong. And a shame!

Permalink to Comment

9. Steve on September 4, 2005 1:40 PM writes...

Quote: Are you all fn kidding...?
What's wrong with experimenting on new models of business? These products provide much less initial investment. There'll be models that allow generic cartridges eventually.
People will never buy a car that requires only dealership maintaining.


What's wrong with experimenting with new models of business? Nothing is wrong with that, but if the new model of business is evil and hurts the economy, then YES, there IS something wrong with it.
If corporations use money and the law to squelch all competition and innovation, then we have something called a MONOPOLY, which free market economies abhorr. Monopoly drives up prices, stifles innovation, and hurts every single person involoved in a free market system except the corporation involved.
Yes, the startup costs are better, but the harm to society is more. Simple economic gains do not justify action. For example, if your end goals are to make a lot of money, hiring a hacker to disrupt a competitor or lying on your accounting reports have a high gain for little investment, but such actions are clearly not in the best interests of the company or society.

Finally, the argument that "people will never buy it" is a misplaced hope at best. The simple fact of the matter is that people have no idea about these rules, and companies will not begin to enforce them until their system of absolute control is complete. As we can see from DRM and music companies, people will buy products even if all of their rights are gone. Once companies begin to sue, people will be pissed, but what can they do about it? By that point in time, the laws will be passed, the cases will be won. What options will they have? Especially so if this type of behavior is the norm for all product manufacturers. Who can they buy from to 'vote with their wallets' if everyone does it? Competition has been thrashed, free market is gone, and we have one or two megacorporations in every market enforcing a sort of private-sector communism. I for one don't want to let that happen.

Permalink to Comment

10. James on September 4, 2005 2:24 PM writes...

Those of you who are excoriating Lexmark and the Ninth Circuit have apparently NOT read the decision. (Isn't it a prerequisite to informed debate that you actually INFORM yourself before criticizing?)

The Ninth Circuit's opinion concerns Lexmark's "Prebate" program, in which customers are given a $30 discount on their printer cartridge in exchange for their agreement to return the used cartridge to Lexmark when they are done with it. That's an enforceable contract, plain and simple. Customers had the option of paying $30 more for a cartridge, without being obligated to send it back to Lexmark when they were finished with it.

The Ninth Circuit simply held that, in exchange for paying less for the cartridge, customers could be contractually bound to return it to Lexmark.

Now that you understand, tell me: is that so evil?

You folks might want to educate yourself on the concept of "freedom to contract."

Permalink to Comment

11. Skipper-John on September 4, 2005 2:33 PM writes...

"People will never buy a car that requires only dealership maintaining, so shut up."

If all car manufacturers (and there aren't that many left) used this model of business, you wouldn't be able to buy a car that could use products from other companies...

The only reason I could see that will keep this scenario from happening is that there is more profit to be made by not using this model of business.

However, if the courts allow it, the exclusivity license will surely apply to everything we buy in the future (if it will produce higher profits).


Permalink to Comment

12. Mark W. on September 4, 2005 4:46 PM writes...

Sounds like it's time for a Lexmark Boycott....they're printers are crap anyways!!!

Permalink to Comment

13. the screwed consumer on September 4, 2005 4:46 PM writes...

Welcome to the "Corporate States of America." Your already guilty, so goto jail and don't collect your 200.

Permalink to Comment

14. Andy Freeman on September 4, 2005 4:53 PM writes...

I'll take the "prebate" angle seriously when Lexmark tries to get their $30 discount back from someone who doesn't return the cartridge because they stomped it into tiny bits and can prove said stomping.

Permalink to Comment

15. Brad King on September 4, 2005 5:04 PM writes...

Time to re-read "The Space Merchants" by Frederick Pohl and Cyril M. Kornbluth. They predicted this way back in 1953...

Permalink to Comment

16. ttyp on September 4, 2005 5:28 PM writes...

To pffft:

It's beside the point whether they can prove who or not opened the package. The use of this ruling will be in going after refill ink suppliers. They dry up businesses selling to the aftermarket, it won't matter who opened the package.

Permalink to Comment

17. Jay Moore on September 4, 2005 5:30 PM writes...

what's really bad is with the price of fuel and the fact the US's major port is totally obliterated and will be YEARS before that area is inhabitable again...the prices of everything is going to go sky high. This is just a first sign of a collapsing economy. The comapnies are going to take advantage of the consumers now and it's only going to get worse. Pretty soon they'll stamp it on computers prohibiting upgrades.

Someone was right...insanity is here..everyone run for thier life.

Permalink to Comment

18. Abbie Gonzalez on September 4, 2005 5:50 PM writes...

Wow, that is incredibly stupid.
I only buy re-man cartridges. I would still refill if they decided to uphold that rediculous decision. If everyone ignores it, and fights it, they could not do much to restrict you from refilling.

Permalink to Comment

19. Kyle Ward on September 4, 2005 5:54 PM writes...

I'm not so worried about the mechanical things as I am the electronic things. This will never happen to anything mechanical, like cars. Its far too easy to get away with not doing as the contract says. How will they catch you? How will they know!? But electronics on the other hand. Kids are becoming more sophisticated and advanced every day. Im sure it wont be long know when we will see 1 year old completeing full sentences. With this huge increase of knowledge electonics will control us, we will be found out if anything happens at all to the equipment. Its far to easy to track, monitor, and to teach it what to do.
So the economy will collapse within the next 5 years. That means no investment for me, its all going to be put into food and tradeable goods. Splurge while you can. Alright, whats next? Do we just start over? I think its time for a new constition. The people dont change the constitution accordingly- its the corporations. Money changes what should only be changed by the will of the people. It is time to uprise. There are definitly enough of us in the poor bracket to see the corruption. We now have enough power to change things the way they need to be changed. Choose with your will, not what someone else tells you.

Permalink to Comment

20. Carl on September 4, 2005 5:58 PM writes...

I just filled my Aquafina water bottle with water from the faucet... I hope I don't get sued. Anyways, lets generate a little more waste by not allowing refills and reman cartridges. Woo!

Permalink to Comment

21. Kalli on September 4, 2005 6:01 PM writes...

Strange, you really have a interesting law system in the US. Here in Germany such terms that discriminate the user or include things that you normally not expect are not allowed. Lucky us.

Permalink to Comment

22. Jeffrey on September 4, 2005 6:09 PM writes...

Actually a car isn't very mechanical anymore, thousands of dollars of electronics go into them, it's not hard to setup sensors or chips that only work with other GM parts then say breaking their 'copyright protection' is illegal under the DMCA.

Permalink to Comment

23. mojo on September 4, 2005 6:58 PM writes...

the summation corante.com provided of the ruling is terrible, and contradictory to the actual ruling. what these people did was steal money from lexmark. the fact that they're sketchy (and make possibly the worst printers in the world) doesn't enter into the equation- they offered people rebates if they sent the ink cartridges back. the people took the money, and didn't send the cartridges back.

in this case, lexmark is the good guy. taking $30 off the cost of the cartridge brings the price down to a reasonable range, and the're producing less waste by recycling the cartridges. all this crap about patent infringment was posted to get people's attention because the underlying story (people steal from company, company sues) is *far* from compelling.

nobody listens to the left because they make a fuss over the silliest little things, and lack the gumption or wits to affect serious change any more.

Permalink to Comment

24. jack on September 4, 2005 7:03 PM writes...

By this 'decision' the 9th ckt appeals court proves that it is yet another set of idiots that should be fired, and ridden out of town on a rail, Mark Twain style.

These people are no qualified to man the checkout at WalMart, no, the dollar store... and they set PRECEDENTS? Craaazyyyy.

Permalink to Comment

25. Chris Cardinal on September 4, 2005 7:16 PM writes...

I used to laugh at those warnings on Kikkoman to "Fill only with Kikkoman Soy Sauce." Perhaps they'll change the warning to "under penalty of law."

Sigh.

Permalink to Comment

26. Happeh on September 4, 2005 7:25 PM writes...

This is just the beginning. It wasn't hard to see that things of this sort would come to pass if you took a careful look at the shape of the printer cartridge. Also you must consider who is really behind the operation of the printer companies and how they are using the subliminal shapes hidden in the cartridges to affect the unwary.

Permalink to Comment

27. Ben Williams on September 4, 2005 7:39 PM writes...

They arnt stopping us from buying generic cartrages and refilling them. All thats going to happed to Lexmark is going to get even less sales because people wont buy there cartages in the first place

Permalink to Comment

28. Gweidion on September 4, 2005 7:45 PM writes...

The simple answer is become Amish and shun all the idiots who go down this track. Sure, the economy will collapse and your lives might be a little harder but at least it will be fulfilling.

Permalink to Comment

29. BARRY SCRIVNER© on September 4, 2005 7:50 PM writes...

We must get back to common law. These types of contracts do not exist in the real world. If so, who can produce it? Where is the Evidence of a contract with the manufacturer? Where is the evidence of any "meeting of the minds", the signatures of the parties, and the valuable consideration in such a contract? What would a plaintiff's attorney (scumbag) show up in court with?

I don't know about you, but I will ignore all such "contracts", and the Ninth Circuit Court. If necessary I will, within 72 hours, take a red pen and draw a circle slash through the text of any such preposterousness and send it to the manufacturer with a letter stating that I do not accept the terms. I would love to see them repond by telling me that I don't have the right or permission to purchase and use their product anymore.

It is time for all out revolution, just to shake things up if nothing else.

Permalink to Comment

30. gabriel on September 4, 2005 8:09 PM writes...

you're all morons.

just because some companies does this kind of thing, doesn't mean that now you're powerless and will have to bend to them.

grow up, morons. Simply don't buy lexmark *ever* (or ever again). Go for HP or any other brand. when that other brand starts doing this, stop buying from them also.

Will you ever get out of options? wake up again. the companies needs consumers, not the other way around.

Permalink to Comment

31. Jack on September 4, 2005 8:38 PM writes...

How will they find you? Well, the 9th court agent commissar will call back to HQ and report "individual brought Chevy into Firestone under the false pretense of getting tires and tried to get an oil change" or "Lexmark police raided a house in San Francisco overnight. Inside they found Lexmark and other manufacturer ink cartridges, all waiting to be filled illegally. Lexmark authorities are working in close coordination with HP, Xerox, and other manfacurers to build an airtight case. Lexmark judges hope to give the criminals the maximum penalty for the illegal fills, 20 years of punching tractor feed holes in paper".

Permalink to Comment

32. Anthony on September 4, 2005 8:40 PM writes...

What is wrong with these people?. Can you imagine this logic being applied to other products. Is this Corporate greed or Lawyers that need firm guidance?

Permalink to Comment

33. Steve on September 4, 2005 8:57 PM writes...

Thank heaven's at least on person actually read the decision. Bless you James. As far as a "meeting of the minds" goes, consumers could opt to buy the "prebated" cartridge or the normally priced cartridge without single-use restrictions. As for consideration, the court found the terms were clearly displayed on the package. If you think a 20% discount is not "valuable consideration," the next time you are in a restaurant, please consider adding an extra 20% over your normal tip. What you find insignificant will bring immense joy to others.

Ask yourself, was this a suit between a big corporate giant and a consumer upset because she got a discounted printer cartridge and it did not work after she tried to re-use it. Or rather is it a fight of two corporate competitors each looking to enhance their market share of re-manuctured printer cartridges.

BTW: Consumers already decided in favor of Lexmark. In four years after introducing the "prebate," Lexmark estimated its overall cartridge sales were up 100% and returns have increased 300% since implemnting the "prebate" program

Permalink to Comment

34. chydenius on September 4, 2005 9:17 PM writes...

Regardless of the details of the 9th Circuit's decision, the ire that it raises is a further incentive for the open source hardware movement. The tighter the intellecual entitlements monopolists squeeze, the more will slip between their fingers.

We've seen this with Linux and OpenOffice vis-a-vis Microsoft. We are starting to see this with the music, movie, and textbook industries. If other companies follow Lexmark's example, we'll see it in the computer hardware realm.

In a competitive market, price approximates marginal cost; i.e., the cost of producing the next unit of output. A monopolist can charge a premium above production cost; copyright, patent, and trademark are monopoly rights.

However, the existence of monopoly profits creates an incentive to innovate and bring substitutes to market. Monopolists are limited by entrepreneurial opportunism.

Lexmark and all the other printer companies can create all the legal restrictions that they like, irksome as that might be. Don't lose too much sleep over it, though. There will be that one printer manufacturer that takes advantage of the situation, and builds a marketing campaign around the user's freedom to use whatever printer cartridges he or she likes.

Even if no one seized this opportunity, you can be sure that an underground market in open source hardware printers will have come into existence long before talking monkeys start riding horses and the Statue of Liberty gets buried up to her armpits in sand.

Then again, it is fun to rail against stupid government tricks, and argue on the Internet.

Permalink to Comment

35. gradybaines on September 4, 2005 9:20 PM writes...

I think I hear what richus is saying. If I start my own company (or I run an existing company) selling printers, and offer "multiple-use" cartridges, then which one are you going to buy? I'm not saying I like the law, I won't ever buy a Lexmark because of this, but I think that they're guaranteeing their own extinction if they start trying to enforce the new law.

Permalink to Comment

36. Jorgie on September 4, 2005 10:44 PM writes...

Folks need to get all the details...

They were offering a discount if you returned the carts to them undamaged. Much like a core charge on a car battery but you got the discount up front.

They were also selling them without the discount without asking you to return them.

Because of all the fuss, they should just put a rebate coupon in the package and not give it to you until you return the empty undamaged.

Too bad everyone is so damn greedy that we can't allow companies to give us the money up front with some expectation that we will follow through. It is really our loss, not theirs.

Everyone is still trying to get something for nothing.

Jorgie

Permalink to Comment

37. p33r on September 4, 2005 10:54 PM writes...

"Wow, that is incredibly stupid.
I only buy re-man cartridges. I would still refill if they decided to uphold that rediculous decision. If everyone ignores it, and fights it, they could not do much to restrict you from refilling."

Yea, thats what I said about Napster before the Digital Rights Act. Greed is the downfall of our economy yet the biggest group of people on the economic scale are in poverty.

Permalink to Comment

38. p33r on September 4, 2005 10:57 PM writes...

"Wow, that is incredibly stupid.
I only buy re-man cartridges. I would still refill if they decided to uphold that rediculous decision. If everyone ignores it, and fights it, they could not do much to restrict you from refilling."

Yea, thats what I said about Napster before the Digital Rights Act. Greed is the downfall of our economy yet the biggest group of people on the economic scale are in poverty.

Permalink to Comment

39. LOL@BLOG on September 4, 2005 11:18 PM writes...

lol.
a blog linked from slashdot.
retarded.

Permalink to Comment

40. DevNull on September 4, 2005 11:38 PM writes...

So is Lexmark going to pay for my shipping costs to get my used cartrigdes back to them? I assume that they are going to be recycling all of the used Lexmark cartridges in the world. Oh wait, that's not profitable? Tough. You asked for it, you'll get it.

Perhaps the EPA needs to contact Lexmark about the enviromental damage that their used cartridges are doing... If there is no way to legally recycle, then lexmark is creating waste. More than likely toxic waste if you want to get down and dirty with your definitions.

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41. Dave L on September 5, 2005 12:01 AM writes...

Lexmark is an absolutely pathetic company. First, they almost give their printers away, then when you buy the same cartridge that came in the printer, you find it only filled half way. Then you find out that the price of the "High yield" cartridges are more than twice the price, and they're full of ink all the way to the top. Do you really think it costs lexmark over $20.00 to make a cartridge like they want you to think? it probably only costs them about 2 or 3 cents, and the profit is tremendous. I'd personally rather pay more for a printer, and have the cartridges be dirt cheap. Unfortunately, when you use the Gillette business model, you end up paying Lexmark back for part of the cost of the printer, over and over again. Of course, they want to keep earning money selling products that have no real value. Lexmark has recently been putting up the false image of being environmentally friendly. This couldn't be further from the truth. Look at all their patents on "cartridge disabling technology" and you can see the horrible truth behind this dark, shady, pathetic company who probably pays their PR department better than the rest of their employees. Also, while they may recycle cartridges, they purely do it for their own benifit. When they get cartridges back, they can fill them with their crappy overpriced ink, and put them back on store shelves, and do we see any benefit for buying recycled cartridges? Hell no. They sell their cartridges at the same price as the rest of them, resulting in tremendous profit for them, and empty pockets for the rest of us. The only way to get rid of Lexmark is to refill our cartridges to put them out of business. Do you really think you're gonna get arrested for refilling cartridges? Any decent cop on the face of the earth would just turn away. I think it's wrong for companies to write laws like that, because that's basically what they're doing. If later on they decide to add some other condition on their cartridges, and they take someone to court for violating it, they could use this case to set a precident for packaging laws. LETS ALL BOYCOTT LEXMARK.

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42. SE North East on September 5, 2005 12:22 AM writes...

Is there any difference between what Lexmark does and what the cable companies do? Or comperable to what Sony electronics or what any software company does?
When a company makes a product, why would it sound bad if that company wants to isolate their accessories to their products? If company busy a Lexmark printer and has a remanufactured cartrige installed, and the reman cartrige leaks or busts open in the printer, it's the printer company that looks bad. I have seen imitation cartriges leak in a printer and the printer is messed up for the rest of the printers life (even if they switch back to OEM cartriges). I have worked with printers being in IT and the falt of remans and imitation cartrige companies that makes the printers look bad.
It's pretty obvious that the printers have become so cheap that they make up their margins by the sale of ink. If the printer companies can't sell their ink, that will force the prices of printers to go up and the price of cartriges to go up even further across all companies not just Lexmark.
I have read up on the studies on cartriges and OEM cartriges save money in the long run by consistently to their total print pages and consistently printer more clearly and don't leak. I had to replace a fleet of printer due to imitation cartriges and I am very pleased with the OEM's installed now. I will also let you know that if an imitation cartrige leaks in a printer, you void the warranty of the printer because they are not responsible for the fault of other cartriges (that would be unfair in any industry, even cars). I own a car and I know my four year warranty would be void if I pimped out my car and one part messed up.

It's not that I am so much of an advocate of companies like Lexmark, but I do see their side and how unfair it is to have other companies products and take their revenue. I remember when cartriges were so much cheaper before remans and copies. Many products that we use today have and use today have agreements not change, alter or duplicate their products. Lexmark along with all the other printer companies have chip technology and/or RFID technology used in their cartriges that is patentable and often disputed by companies looking to catch a free ride by not being innovative, but try duplicate.
As far as recycling the cartriges, Lexmark and HP have already paid shipping labels in the box. All one has to do is affix the label back on the box and have the shipping company pick it up. There is no cost involved, only the effort to put the cartrige back in the box and seal, which is to laborsome for some lazy or uncaring about the evironment. I feel I acurately as best to my knowledge address all the issues I have read above. I am curious to see what everyone else has to say.

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43. Alex on September 5, 2005 12:25 AM writes...

Here's the situation the way I see it: you log onto the cartridge shop and see the cartridges for your printer - one priced at $150, the other priced at $120. Which do you buy?

So the $120 cartridge arrives at your house and you see the writing stating that it's single use and must be only be remanufactured by Lexmark. What do you do? Did the shop that sold it to you give you the option of posting it back in a prepaid box? No. So you use the cartridge. Then some time down the track when this $150 vs $130 thing is forgotten, you send the cartridge back along with the rest of your cartridges to get remanufactured.

Were you intentionally trying to breach the contract? No - but did Lexmark give you any means to opt out of the contract? Only by spending more money (to post the cartridge back to the online store you bought it from, who probably doesn't have a returns policy).

Lexmark is in the wrong twice in my mind: once for using this stupid "lock out" chip - which to me is an anticompetitive measure beyond all othes - and twice for selling the same cartridge through the same channel for two different prices - why not put a voucher in the box that gives you $30 off the next order, along with an order form that you send back with that voucher and the empty cartridge to get your replacement cartridge at a discounted price?

When contract law becomes simple enough for me to understand, then I'll be happier about schemes such as this "prebate" - in the meantime I'll just avoid using any new Lexmark printers (my Optra S 1855 is still doing wonderful service with remanufactured cartridges), and I suggest that companies like Lexmark should be trying to apply common sense - it seems to me to be bad business sense to give a discount on a product in the hope that the customer will send the empty cartridge back. Reward the customer for sending the cartridge back to you, don't punish them for sending the cartridge back to someone else.

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44. Kerrmudgeon on September 5, 2005 12:26 AM writes...

Does anyone remember the first-sale doctrine, it's scope, and relevance to this matter? Let us read the text of the US Copyright Act, section 109 and the majority opinion of Universal City Studios, Inc. et al. v. Sony Corporation of America Inc. et al. again.

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45. Tom Reynolds on September 5, 2005 12:46 AM writes...

Several have mentioned cars and buying aftermarket parts. The following may help clarify the issue:

The U.S.-based Motor & Equipment Manufacturers Association (MEMA) has some advice for its members and consumers that seems helpful. They point out that under the Magnuson-Moss Warranty Act, and general principles of the Federal Trade Commission Act, a (vehicle) manufacturer may not require the use of any (particular) brand of filter (or any other article) unless the manufacturer provides the item free of charge under the terms of the warranty. (It should be noted there's no like-legislation in Canada, but according to AARO industry sources the vehicle manufacturers have agreed in writing to abide by this regulation.)

So, if for example the consumer is told that only an OEM filter will not void the warranty, he/she should request that it be supplied free of charge, suggests MEMA. An educated consumer may be the best defense against the "erroneous claims" made at dealerships, they seem to suggest.

The giant Honeywell corporation who manufacture FRAM filters, and other highly recognizable aftermarket brands such as Prestone and Autolite, offers clearly-worded product warranty statements to help enlighten confused vehicle owners. Peg Campellton of the company's Mississauga-based Consumer Products Division sends information of particular interest to AARO members carrying the FRAM filter line:

"FRAM filters are warranted against defects in design, materials and workmanship. New vehicle warranties remain in effect when FRAM filters are installed according to directions on FRAM filter packaging and replaced at least as often as vehicle manufacturer's recommended change intervals."

Following is Honeywell's Product Warranty statement:

"Honeywell (FRAM) warrants its commercial customer that its FRAM filter products will be free from defects in material and workmanship under normal use and service, provided said products are changed within intervals recommended by the manufacturer of the engine on which the FRAM filter product is installed, and provided said products are properly installed according to original equipment manufacturer instructions. In the event any FRAM filter product is found, by Honeywell, to be defective within the manufacurer's recommended change intervals, Honeywell's obligation under the warranty shall be to repair any such defective article or engine which is damaged as a direct and sole result of a defective FRAM filter product."

Posted April 25/03 www.aaro.ca

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46. lexmark sucks on September 5, 2005 1:34 AM writes...

just don't buy lexmark printers .. BTW.. lexmark printers sucks .. are piece of crap..

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47. David on September 5, 2005 1:40 AM writes...

Um excuse me, what aisle do I find the NON-Prebated Lexmark cartridges? No where! WHAT? So I can't even buy these...Right. Do they even sell these? If the 9th circuit wants this enforced, then they should enforce Lexmark to SELL BOTH OPTIONS.

LOSERS. BOYCOTT time!

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48. serutan on September 5, 2005 2:44 AM writes...

Their attempt to abuse the DMCA was bad enough, and this latest crap put me right over the edge. I don't care if it holds up in court or not. It's one thing to write an angry letter, but I figure the best thing is to actually turn your back on these jerks and just stop dealing with them. So my Lexmark Z618 is now sitting in the garbage can in a Hefty bag. Tomorrow morning I will head out to pick up a replacement HP printer, and I intend never to buy another Lexmark product for the rest of my life.

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49. Ramsinks.com on September 5, 2005 3:10 AM writes...

As if this is going to stop any of us. As if they will accually come after our "moms" when they do it.
You buy a product - it's yours - do with it as you wish.


Next.

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50. Steve on September 5, 2005 3:19 AM writes...

Did anyone actually look to see what this lawsuit was about. A not-for profit organization representing the interests of for profit remanufacturers sued a remanufacturer with a claim that the second used deceptive and unfair practices. The second remanufacturer is also the maker, Lexmark. The economic reason behind the suit: ACRA's members were losing business to Lexmark. Lexmark provided incentive for consumers to purchase its product (the "prebate") and a means to easily satisfy the conditions, prepaid UPS label for shipping back to Lexmark. Guess what real consumers opted to do?

I am sure Lexmark has a closet somewhere with a couple of non-prebated cartridges at the higher price for those who insist that they must be able to pay their own shipping to have it recycled by the remanufacturer of their own choosing. It seems to be, though, that this program which started in the 90's would have run its course and now Lexmark should only be offering cartridges at a single price. They still include free returns.

For those who would choose to have a voucher instead, note that what you are really asking for is "lock in." That is you must keep buying from the same manufacturer in order to see your savings. I suppose there are people who like that sort of think. I am not one of them


Note: I don't think first sale doctrine applies, perhaps the exhaustion doctrine. The lower court did cite Mallinckrodt v. Medipart which "found that the company could legally enforce the post-sale restriction under a Federal Circuit decision allowing patent holders to limit the use of their products after sale," so there is no new precedent set here. That was nearly a decade and a half ago, and the world has not ended yet

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51. David G Stevens on September 5, 2005 3:31 AM writes...

Crazy American patents.
Personally i thought this computing thing, was about creating a paperless office, as computer manuals are a about the worst form of tree abuse.

Really do we need a printer.
Just threw mine out the window excuse the pun.

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52. Tim on September 5, 2005 5:35 AM writes...

Once again - thanks James for actually reading the decision. Anyone who wants to get angry about this should read his post first.

There some points which are missed by 90% of people posting - which is corante's fault for their rubbish explanation:

The only people Lexmark wants to sue is companies who offer to refill the reduced price cartridges.

I also liked the reference to Kikkomans Soy Sauce bottles with the warning to only refill with Kikkomans Soy Sauce - this relates to an entirely different issue. Kikkomans may indeed wish to increase sales - but if a restaurant refills the bottles with cheap Soy sauce then customers are being decieved! They will end up thinking they got Kikkomans which is unfair to them - they may also think less of Kikkomans if it didn't taste as nice - which is unfair to Kikkomans. That is an example of the tort of Passing Off (at least that's what it would be called in the UK).

Although it seems fair of Lexmark to offer a reduction in price for an agreement to refill via Lexmark. I think that breaks down when Lexmark uses it to dominate the Lexmark refill market - which is what they have apparently succeeded in doing.

Perhaps competition law (antitrust) could step in here on the side of the refillers?

P.S. Check out PatentlyProtected.com for some great new IP content they are fantastic.

Tim

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53. Getut on September 5, 2005 8:51 AM writes...

Isn't this hogwash? It is my understanding that for this type of agreement to be valid, that the agreement must be shown BEFORE purchase. Once I have handed over money, it is mine. If I didn't agree to anything before purchase then they are SOL.

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54. ben on September 5, 2005 9:35 AM writes...

When we buy cartriges, we buy the plastic, the electronics, and the ink. When we recycle the cartridge at Office Depot, it obviously doesn't go back to the manufacturer. It goes directly to the recycler/refiller. Until "PROPERTY OF LEXMARK" is stamped on each printer cartridge and the box includes a service and use agreement requiring the user to return the empty cartridge to Lexmark, the plastic and the electronics belong to the guy who paid the money, and the guy can do what he pleases with his product for the same reason I don't have to buy additional memory for my laptop from Dell.

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55. Random on September 5, 2005 9:40 AM writes...

A couple of late comments:

1) Where I live, they PAY you to take Lexmark printers out of the store ($75 printer, $100 rebate).

2) With respect to cars and lock in, where I live car repair shops who want computer tools and manuals (absolutely necessary now to do anything to a car) have to pay the company a crazy amount of money - tens of thousands of dollars - for access to those tools and manuals. This is a restraint on trade to smaller shops - many don't have the custom tools for most car makes so they send you to the 'dealer.'

3) The point has been made that if we don't like this, don't buy Lexmark. Well, we are irrelevant here, to be honest. The market for Lexmark printers is not aware people who surf and read. It is your mom and sister who get a packaged computer and buy the printer that seems cheapest. So these people are not preying on you, they are preying on the uninformed. Which, at least to me, is a) not surprising and typical and b) worse.

4) As has been pointed out above, if you don't read the details of who sued who and over what this suit seems a lot more like 'us' versus 'them' than it really is. One interest group versus another interest group. We gotta get ourselves a powerful interest group.

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56. Jeanne on September 5, 2005 9:45 AM writes...

Hi

This is a joke, Lexmark lost their case against remanufactures in the states 4 months ago. The thing is Lexmark have been recycling their own cartridges (very badly to add to it) and don't want any compitition. the next time you purchase a "new" cartridge, look at the front pannel, it's been used. You will see where the connectins have been made and sometimes some of the connections have burned out.

very seldom can you buy a lexmark cartridge that can print on normal and most times not even on good without leaving lines as the heads are blocked.

If the law applies to everyone, sas logically it should they are themselves in breach of the law.

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57. dwk on September 5, 2005 10:02 AM writes...

I don't have a problem with this ruling at all -- in fact I welcome it. Lexmark don't have a monopoly on printers, so if lexmark so desparately want to lose their market share, let 'em! lexmark should be allowed to go out of business if they want to. It's a free world, after all.

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58. karl on September 5, 2005 10:40 AM writes...

We live in a disposable world. Throw everything away after one use. What a mentality... Companies should be forced to comply with environmental standards, where things that can be recycled/re-used should be. But America is such a capitalist country, they'd rather be drinking polluted water and breathing toxic air before their bank accounts take a hit.

How about batteries for instance? Why do we even still have disposable batteries when there are rechargeable ones? Chargers are cheap to manufacture, and should be packaged with ni-cads or li-ion batteries.

Same with printer cartridges. We should re-use them. We don't need more plastic and ink garbage in our landfills.

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59. Steve on September 5, 2005 12:20 PM writes...

Lexmark has been a no-go zone for a while. Those things are landfill material and have expensive ink cartridges. This is anti-competetive trading. I doubt they advertise the ink-clause in any obvious location when selling the printers. Spread the word. I buy HP Lasers and Canon inkjets, refill the HP cartridges and buy cheap ink cartridges (25% of new) for the Canon. If either company started this, I'd dump them, and I've bought over 50 printers for various companies.

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60. Bejiin on September 5, 2005 3:12 PM writes...

On a large scale, maybe they could eventually get away with suing the companies that induce copyright infringement, hoever, one should not ignore the versatility of the savy consumer. You can't buy the ink refill kit for your printer cartridge? Buy some other sort of fast drying ink and a syringe. When they ban that? Ink isn't that hard to make... home brew it. If they ban that? Well we're in some serious trouble if they get to banning that, but you have to admit at such a time when simple produce and basic compounds like that were banned we would probably be ridiculously far from reality.

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61. Swift Ink on September 5, 2005 3:34 PM writes...

The average ink cartridge costs $30 and contains about 30 ml of ink, thus causing you to pay $1,000 for a liter of ink that costs the OEM about $4. The simple answer -- don't buy Lexmark.

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62. P W on September 5, 2005 3:41 PM writes...

I think most everyone (except James and one other) has missed a particular point. The case isn't about whether or not you can refill a cartridge. It is about THIS PARTICULAR cartridge. It is because of the particular notice and pricing of the cartridge. The notice states (according to the court document):

Please read before opening. Opening of this package
or using the patented cartridge inside confirms your
acceptance of the following license agreement. The
patented cartridge is sold at a special price subject to
a restriction that it may be used only once. Following
this initial use, you agree to return the empty cartridge
only to Lexmark for remanufacturing and
recycling. If you don’t accept these terms, return the
unopened package to your point of purchase. A regular
price cartridge without these terms is available(1).

It must be noted that the purchaser agrees to return the empty cartridge (once it is used for the first time) to Lexmark because they received it at a discounted price.

It must also be noted that Lexmark stated, its post-sale restriction on reusing the Prebate cartridges does not require consumers to return the cartridge at all; it only precludes giving the cartridge to another remanufacturer. So IMO - NOT TO BE CONSTRUED AS LEGAL ADVICE, refill 'til the cows come home without fear of retribution.

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63. B-man on September 5, 2005 4:53 PM writes...

I think we are all missing the point....which is ALL LEXMARK PRINTERS ARE CRAP!!! and smart consumers wont buy them anyway. So this has very little effect on us.

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64. Mark Hinkle on September 5, 2005 6:09 PM writes...

This will create thousands of additional tons of plastic being added to the landfills (as if we don't have enough!).

Normally I am not a fan of the Sierra Club, Greenpeace, and Earth First, but maybe some environmental lobbying is in order here and can reverse this decision at the corporate level.

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65. Spacegirl on September 5, 2005 8:29 PM writes...

Actually, if this is just applying to the $30 reduction for the return of the cartridge to Lexmark, then didn't Lexmark balls it up? If Lexmark has given the $30 back to the customer AFTER the cartridge was returned, then there would be no argument.
I'd say this happened purely because Lexmark was relying on the Average Joe's Hip-pocket thinking of "save $1 today". This is normal marketing. Did they really think that people were going to return the cartridges AFTER they already got their cheaper price?
If they want their cartridges back, if they want their cartridges back, they should be returned to the place of purchase.

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66. Tracy Eckels on September 6, 2005 12:27 AM writes...

This is a very dumb thing to do. In the end they will learn that all it will get them is the alienation of their customers as some other company steps in from another country and floods the industry with quality replacement cartridges at a very competitive price.
Consumers are the ones with the power when they decide where they want their money to go, and it's allways to the guy who isn't trying to cheat them!

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67. Dave Howe on September 6, 2005 3:03 AM writes...

I suspect the problem here is that lexmark has deliberately went out of its way to set up this situation to attack the remanufacturers. If lexmark actually cared about getting the carts back, they would sell them for the full "cover" price (what is that btw? about $50? :) and include a $30 rebate slip to post off your empty to them for your cash. however, they don't actually want that - as much as they would like to have your money in their bank for however many months it takes for you to empty a cart and send it back, the huge price tag in the stores would be offputting to the average user and it is that "tag price" that lexmark wants to compete with. (plus of course money tomorrow isn't worth money today; you can't buy a sandwich today with money you get tomorrow)

So what it comes down to is this - if lexmark really cared about getting those carts back, they would put more effort into a payment scheme that enforces that (for example - charge the full price , but give a $30 rebate for each cart returned to the store; this *would* work, but would mean everyone paying full price to hold "spare" carts against need). They *don't* care about the carts, but *do* care about keeping you buying from them not remanufacturers. I am occasonally astonished there isn't a law against claiming one thing and doing another, but I suspect such a law would see more abuse than it would be worth.

on a side issue - what is it with razor blades?

I noticed I had been cutting myself a little more often than usual lately, as though the razor blades were blunt enough to need changing even fresh from the packet,(I am not old enough to start blaming myself yet :). so I bought another pack (from a big name supermarket) in case the first had been damaged somehow. same effect. Then I remembered - I had bought *two* of those razors, one for daily use, and one for my travel kit. did the travel kit still have blades in it? yeah, near three year old ones - which cut as smoothly as I remembered they did, from when I made the decision to buy those particular razors. Now, its possible I simply got two "bad" packs in succession, but it made me wonder if the company were deliberately degrading the quality of their older lines - either by cheapening the product or simply by making a worse product - to try and force upgrades to their newer lines (which even with the price hikes the original blades have seen, are still noticably more expensive per blade than the older model).

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68. M. Craig Weaver on September 6, 2005 9:17 AM writes...

Quote: Simply don't buy lexmark *ever* (or ever again). Go for HP or any other brand. when that other brand starts doing this, stop buying from them also.

Yes, don't buy any software that has a EULA... we'll teach those software manufacturers. Oh, all worthwhile software has a EULA? So will all printers if this ploy works at all.

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69. Mike on September 6, 2005 9:33 AM writes...

Pretty soon everyone will need legal representation when purchasing a pack of bubble gum to ensure they do not infringe the patent by re-using the bubble gum wrapper by putting their chewed up wad in it for disposal.

Has anybody seen 4 Horseman riding on the horizon? What the hell is going wrong with the world? Why is insane and psychopathic behaviour winning over freedom and liberty?

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70. Mike on September 6, 2005 9:35 AM writes...

Pretty soon everyone will need legal representation when purchasing a pack of bubble gum to ensure they do not infringe the patent by re-using the bubble gum wrapper by putting their chewed up wad in it for disposal.

Has anybody seen 4 Horsemen riding on the horizon? What the hell is going wrong with the world? Why is insane and psychopathic behaviour winning over freedom and liberty?

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71. Mr Gruff on September 6, 2005 12:01 PM writes...

Can somebody explain how "If you step outside the bounds of the 'contract' [...] you’re suddenly a patent infringer"..?

While I regard this as obnoxious practise on Lexmark's part, I can understand how refilling the cartridge is violating a EULA, or whatever, but don't see how this is a patent issue. Am I missing something?

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72. MaoVador on September 6, 2005 1:46 PM writes...

I am not an advocate to current US corporation laws and rulings. I do NOT think a corp should be considered a person, nor do I think they should be able to patent life or anything they can get their hands on. But they are and can. I think we should spend our time trying to push legislation to stop the patents of organisms, increase penalties for pollution, and make companies accountable for their lies and misrepresentations; instead of yelling about a recycling program.

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73. me on September 6, 2005 10:30 PM writes...

I remember telling my grandaughter that, seems she pulled off the tag that said to be removed by consumer only that, she had to eat the mattress.:)

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74. Mark on September 8, 2005 6:33 PM writes...

The 9th circuit court is a bunch of wako judges that are out of touch with reality and are trying to write their own laws. When are the people of this country going to realize that judges do not write laws. Only Congress can write the laws.

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75. Les Kullenberg on September 11, 2005 1:11 AM writes...

I think this court decision is nuts and Lexmark was foolish to alienate it's customers. I posted the following to Lexmark thru the tech support web-based email:
""I DO NOT HAVE ANY PROBLEMS WITH MY PRINTER, That said, I DO HAVE A PROBLEM WITH LEXMARK AND THEIR DIECISION TO PROSECUTE FOR PATENT INFRINGEMENT REFILLING OF INKJET CARTRIDGES.(ACRA v. Lexmark NINTH CIRC. COURT DECISION)

IF THIS IS "OFFICIAL LEXMARK POLICY" I WILL DESTROY MY 2 LEXMARK PRINTERS BY RUNNING OVER THEM WITH MY 40 TON BIG RIG, AND TELL EVEYONE I KNOW NOT TO BUY LEXMARK PRINTERS BECAUSE OF THIS POLICY AND COURT DECISION.

If the "Big Brass" has any response to this I would like to hear it.
Sincerely Les Kullenberg
dobegillis7@hotmail.com""
I ENCOURAGE EVERY ONE WHO OWNS A LEXMARK PRINTER TO WRITE LEXMARK AND DO THE SAME...
LES K.

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