Legal Issues

by Mike Masnick


Filed Under:
antitrust, printer ink

Companies:
hp, staples



Staples, HP Sued For Not Selling HP Compatible Ink

from the antitrust? dept

Back in February, we talked about how HP was pressuring retailers not to stock generic brand inkjet printer ink cartridge refills, though it appeared that Staples was the only company who agreed to the deal. This wasn't surprising -- as the margins on printer ink for companies like HP are astronomical, and the company has been doing everything it can possibly think of to stop anyone from selling competitive ink, including filing bogus patent lawsuits. It took some time, but someone is now trying to file a class action lawsuit against HP for the deal it made with Staples, who is also included. The lawsuit claims that the deal is an antitrust violation, but that seems like a huge stretch. While we agree that it's somewhat sleazy, it's hard to see how this is a serious antitrust violation. There are plenty of places, online and off, where you can buy offbrand ink cartridges (or have existing cartridges refilled). If Staples wants to cede all that business to others, that's its (bad) decision. However, no one is forcing people to shop at Staples, and customers should do a little research before realizing that there are much better options than what Staples is stocking on its shelves.

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  • identicon
    KipEsquire, 19 Dec 2007 @ 10:41am

    Plausible Antitrust Case

    The law is simple: ANY agreement in restraint of trade is a potential violation of antitrust laws.

    Tying agreements, in fact, are specifically prohibited by Section 3 of the Clayton Act.

    All it takes is one activist FTC bureaucrat or a sympathetic civil jury.

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 19 Dec 2007 @ 10:58am

      Re: Plausible Antitrust Case

      The law is simple: ANY agreement in restraint of trade is a potential violation of antitrust laws.

      How is this restraint of trade? Who's restrained?

      Tying agreements, in fact, are specifically prohibited by Section 3 of the Clayton Act.

      And, yes, I've discussed tying agreements as well -- and I have a problem with them when they're with *all* retailers. In other words, when it's a case that the manufacturer is also setting the retail price. Then you can make an antitrust argument. But, it seems silly to make an antitrust argument here when the market can decide for itself and recognize that they just shouldn't shop at Staples.

      All it takes is one activist FTC bureaucrat or a sympathetic civil jury.

      Indeed. Doesn't make it right, though.

      reply to this | link to this | view in chronology ]

      • identicon
        KipEsquire, 19 Dec 2007 @ 11:15am

        Re: Re: Plausible Antitrust Case

        "Doesn't make it right, though."

        Where did I say it does?

        reply to this | link to this | view in chronology ]

      • identicon
        St3v3, 19 Dec 2007 @ 11:20am

        Re: Re: Plausible Antitrust Case

        But when you live in city like Missoula, MT and there is only staples and best buy for tech supplies than the antitrust suit comes into play. That is why it was created, to protect those in small markets where there is limited providers. Those providers should provide the maximum selection available.

        reply to this | link to this | view in chronology ]

        • identicon
          Jason Still, 19 Dec 2007 @ 11:54am

          Re: Re: Re: Plausible Antitrust Case

          I grew up in a very, very small town with 2 gas stations. One of them had both a Coke machine and a Pepsi machine outside, the other had only a Coke machine. Should it have been the government's place to mandate that the second location offer Pepsi as well? What if Coke had paid both locations not to allow Pepsi to install a machine on their property? Wouldn't it still seem kind of silly for some government agency to force these stores to allow pepsi to be sold there? If the market wants the excluded product, they will find ways to get it, and the merchants will either follow the market (to their gain) or not (to their detriment). If the manufacturer keeps using their cash to prop up the merchants who continue to ignore market demands and the manufacturer continues to ignore such demands themselves (by not lowering prices, for instance), they will eventually run out of cash and the problem will solve itself.

          reply to this | link to this | view in chronology ]

          • identicon
            Train1, 19 Dec 2007 @ 12:01pm

            Re: Re: Re: Re: Plausible Antitrust Case

            So Microsoft should be able to do the same? Extort their vendors into excluding competing products? US DOJ and the EU disagree with you.

            "If the market wants the excluded product they will find ways to get it..."
            - not if the market has no idea the excluded product even exists, and that's HP's ultimate goal. I'm even surprised by how many people I work with who are unaware of the alternatives to $8000/gal HP-branded ink...

            reply to this | link to this | view in chronology ]

        • identicon
          anonymous jerk, 19 Dec 2007 @ 12:05pm

          Re: Re: Re: Plausible Antitrust Case

          there is no internet in Missoula? last i checked, there were many many places online that sold remanufactured ink cartridges at cheaper prices than the stores.

          p.s. there are 2 Walgreens in missoula. they sell ink and some offer refills. check it out.

          reply to this | link to this | view in chronology ]

          • identicon
            TheDock22, 19 Dec 2007 @ 12:36pm

            Re: Re: Re: Re: Plausible Antitrust Case

            there is no internet in Missoula? last i checked, there were many many places online that sold remanufactured ink cartridges at cheaper prices than the stores.

            Well I'm in Billings, MT and sometimes I would rather go out and buy ink rather than wait for it to arrive by mail. But, we don't have a Staples and have many other stores to choose from.


            p.s. there are 2 Walgreens in missoula. they sell ink and some offer refills. check it out.


            The Walgreens here don't stock ink. It's just a pharmacy and some miscellaneous items. But Walmart does and I know they have in Missoula. And an Office Max, Office Depot, and Cartridge World, so the last guy was being misleading. Missoula is not a small city in MT.

            reply to this | link to this | view in chronology ]

            • identicon
              St3v3, 19 Dec 2007 @ 1:43pm

              Re: Re: Re: Re: Re: Plausible Antitrust Case

              There is no Office Max, or office depot get your facts straight I live in missoula, ok TheDock22

              reply to this | link to this | view in chronology ]

              • identicon
                TheDock22, 19 Dec 2007 @ 1:50pm

                Re: Re: Re: Re: Re: Re: Plausible Antitrust Case

                "There is no Office Max, or office depot get your facts straight I live in missoula, ok TheDock22"

                Did those deals fall through? Office Max was suppose to be going on the other side of the Southgate mall and Office Depot was building a store on Reserve somewhere.

                But you do have a Cartridge World and Walmart which stocks generic inks, so Staples is not the only option. I know Target and Costco stock ink to, but I don't think they do generics.

                reply to this | link to this | view in chronology ]

          • identicon
            St3v3, 19 Dec 2007 @ 1:39pm

            Re: Re: Re: Re: Plausible Antitrust Case

            Only Problem is on the internet after shipping to missoula the price is almost the same as the stores, quality is also an issue. And yes walgreen's, walmart, and target also sell inks but they only sell the branded inks at higher or the same price as staples. There is also refill stores but quality again is the main issue. As a former employee of staples I can tell you that the staples brand inks are filled higher, offer a warrantee and costed 20% less than branded inks. They also have better quality check at the production level.

            Suck on that anonymous jerk

            reply to this | link to this | view in chronology ]

        • identicon
          Taz, 19 Dec 2007 @ 12:43pm

          Re: Re: Re: Plausible Antitrust Case

          No it doesn't. If you have internet access, order it online from Walmart.com or any other of hundreds of sites.

          Every printer I've ever seen gives you plenty of warning before ink runs out. A prudent user will have a cartridge in the desk drawer before the ink runs out.

          reply to this | link to this | view in chronology ]

          • identicon
            TheDock22, 19 Dec 2007 @ 12:51pm

            Re: Re: Re: Re: Plausible Antitrust Case

            No it doesn't. If you have internet access, order it online from Walmart.com or any other of hundreds of sites.

            Every printer I've ever seen gives you plenty of warning before ink runs out. A prudent user will have a cartridge in the desk drawer before the ink runs out.


            Just because you can buy something online doesn't mean stores should force it to be your only option. I run lots of errands and if I'm out and about I would like to pick up what I need. I usually only order gifts online. But I agree with Mike on this one, let Staples do what it will and ruin their own profits. The courts shouldn't be deciding this one.

            reply to this | link to this | view in chronology ]

      • identicon
        Train1, 19 Dec 2007 @ 11:28am

        Re: Re: Plausible Antitrust Case

        "How is this restraint of trade? Who's restrained?"

        Restraint of trade in that consumers aren't able to choose between competing products. One could argue that you don't have to shop at Staples - just go somewhere else. But HP's goal was (is) to remove that competition from all stores. So far only Staples has gone along.

        I'm not a lawyer, so clearly there's a flaw in my common-sense approach :)

        reply to this | link to this | view in chronology ]

  • identicon
    Bob3000, 19 Dec 2007 @ 10:53am

    Interesting discussion about it at Digg

    reply to this | link to this | view in chronology ]

  • identicon
    Anne, 19 Dec 2007 @ 11:41am

    Antitrust? How about just shopping somewhere else

    How difficult is it to find HP generic cartridges and ink? I buy all the time from an Ebay seller. Recently, the prices on HP branded cartridges have been lowered significantly, and it is now possible to buy genuine HP cartridges at places like Target and Walgreen's, although I still get a better deal and more convenience from my favorite Ebay seller.

    reply to this | link to this | view in chronology ]

  • identicon
    Ferin, 19 Dec 2007 @ 12:07pm

    Other places not so useful

    I worked at a cartridge refller for a year, and I can honestly tell you that the printer companies ought to be sued. The amount of ink or toner left in cartridges is ridiculous, and now they make them to instruct the printer never to use that cartridge again, and not to let it use what remains in the tank. Our company (we were a franchise) was sued by HP for violating their yellow ink patent, and threatened with suit for developing and buying devices to bypass the lockout feature on new cartirdges to prevent them from being refilled. It literally costs less to buy a cheap printer than it does to buy a month's supply of ink. All of those companies are shamelessly gouging their customers, and it's time for legisaltors or the courts to step in and remind them that it's wrong.

    reply to this | link to this | view in chronology ]

  • identicon
    Train1, 19 Dec 2007 @ 12:52pm

    important distiinction

    An important distinction needs to be made in this debate. I agree that a store should be able to sell whatever it wants, and not sell whatever it doesn't want.

    The problem, and the anti-trust issue, is that a manufacturer of a product is trying to coerce stores into not selling a competing product.

    This is a no-brainer to me.

    reply to this | link to this | view in chronology ]

    • identicon
      TheDock22, 19 Dec 2007 @ 1:06pm

      Re: important distiinction

      The problem, and the anti-trust issue, is that a manufacturer of a product is trying to coerce stores into not selling a competing product.

      So? That is the stores decision to make (even though it is kind of a dumb move) and the anti-trust issue I think won't go through simply because it is a generic product, not a competing product.

      It is like pharmacies; some refuse to stock generic drugs, but they will stock different kinds of drugs that do the same thing (like Ambien and Lunesta). Should they be sued with an anti-trust for not giving the generic drug companies a chance?

      reply to this | link to this | view in chronology ]

      • identicon
        Train1, 19 Dec 2007 @ 1:29pm

        Re: Re: important distiinction

        Coercion means lack of choice.

        Again, if the store made the decision 100% on their own then they should rightfully suffer.

        But this has been going on for years: HP has tried everything to put the refillers out of business. FUD about lawsuits, patent infringement, etc... just to prevent these competing products from being sold.

        HP sells inkjet printers at a loss. I.E. the printer costs more to make than they sell it for, making up the loss in inflated ink sales. Gillette does the same: give away razor handles but charge astronimically for the replacement blades. Game-console mfgrs also sell their consoles at a loss and expect to make up that revenue from software sales. In those examples, the "consumables" have proprietary and legal aspects that protect them (patented connectors for blades and DMCA/encryption for software). HP tried the lawsuit tactic, and if I remember correctly were moderately successful against clone carts. But since their patents don't protect against using a syringe to refill their carts they tried the firmware lockouts to prevent refills. This was slapped down. Now it's time for the back-room deal with retailers... Anything to protect the cash cow that is $8000 PER GALLON ink. If you filled an Olympic-size swimming pool with ink from HP or Lexmark inkjet cartridges, it would cost $5.9 billion.

        An earlier post mentioned that HP ink has recently come down in price. Why is that? Competition! If they had succeeded in suppressing the competition (as they have at Staples), would those prices have dropped? Odds are, they would have RISEN.

        It might even go deeper. Staples might not have been coerced, but agreed to go along with HP in order to protect margins. That would be collusion to price-fix IMO.

        reply to this | link to this | view in chronology ]

      • identicon
        Train1, 19 Dec 2007 @ 1:31pm

        Re: Re: important distiinction

        "It is like pharmacies; some refuse to stock generic drugs, but they will stock different kinds of drugs that do the same thing (like Ambien and Lunesta). Should they be sued with an anti-trust for not giving the generic drug companies a chance?"

        If they colluded with the drug companies to exclude generics in order to maintain artificial profits, then ABSOLUTELY YES.

        reply to this | link to this | view in chronology ]

        • identicon
          TheDock22, 19 Dec 2007 @ 1:44pm

          Re: Re: Re: important distiinction

          If they colluded with the drug companies to exclude generics in order to maintain artificial profits, then ABSOLUTELY YES.

          You really have no idea how pharmacies work. Of COURSE the drug reps offer deals and promotions to convince the pharmacies to only sell their drugs and not generics. It is not against the law for vendors to make deals with sellers and demand that only their products are available to customers (go to any restaurant or sports arena, they serve coke or pepsi products but rarely both). Walmart makes these sorts of deals all the time.

          HP is not doing anything illegal by offering companies compensation in return for being their exclusive dealer, which is why I bet this lawsuit gets thrown out by the courts. What about the Apple/AT&T deal? No one is suing them for antitrust violations. I just want to be clear though, Staples is making a stupid move (unless of course they get major compensation for doing so).

          reply to this | link to this | view in chronology ]

  • identicon
    Lucretious, 19 Dec 2007 @ 3:34pm

    my god you have to be a world class idiot to buy anything PC related from a Brick-snd-Mortar place unless its an emergency purchase.

    reply to this | link to this | view in chronology ]

  • identicon
    inc, 20 Dec 2007 @ 1:34am

    just boycott; hit 'em the pocket book... then they will listen.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Dec 2007 @ 11:58am

    simple for hp

    HP should just add a lil switch to their printers that flips when nongenuine cartridges are used, and that way they can refuse warranties when people send in these printers for issues. The printers already can tell when "genuine" HP cartridges are used so this should be easy. Refill cartridges are a huge mistake to use, HP cartridges espectially come with the printheads built into them(this is why they're more expensive) and they only last so long, so eventually they start causing issues, so yes consumers should do lil research before they buy.

    reply to this | link to this | view in chronology ]

  • identicon
    John, 20 Dec 2007 @ 2:03pm

    Cost of a printer

    Going off-topic...

    It literally costs less to buy a cheap printer than it does to buy a month's supply of ink.

    Think about this for a minute.
    How many people would just throw out their printer and buy a new one, rather then spend more money on cartridges?
    How did our society get to the point where it's more economical to just buy a new piece of hardware instead of repairing the old one?

    And what happens to all these printers that are thrown out? Do people donate them to Goodwill? Does Goodwill know to simply replace the cartridges or do people drop off the printer saying "It don't print no more"?
    Do people throw the printers in the trash? Are landfills filling up with perfectly good printers that simply need new ink?

    It's kind of like Microsoft's attitude with each Windows upgrade: if your peripherals don't work with the latest version, just throw it out and get a new one that's "certified" to work.
    It's not their fault that your "old" printer doesn't work with Vista: you shouldn't be using a printer made in 2006 anyway.

    reply to this | link to this | view in chronology ]

  • identicon
    John Parr, 27 May 2008 @ 11:10pm

    the bottom line is that if the cheap printer costs less than branded cartridges, then why a buyer would insist on getting the branded cartridges. one the company sells the printer there should be an option for the buyer to whatever and whichever accessories he wants to use. so what if the company has paid for patent. it ultimately the buyer who is paying for the printer and the ink. JWP ---------- Great printer toner and ink cartridge deals, discounts and coupons. Also, check out the latest printer reviews and technology news. http://blog.concordsupplies.com

    reply to this | link to this | view in chronology ]

  • identicon
    William H. Heino Sr., 18 Apr 2010 @ 1:51pm

    HP is at it again! HP is again setting up a policy of shutting down, at a predetermined time, to limit a consumers use of their HP printer. For my HP OfficeJet 5600 All-In-Series, I purchased from Kroger Food store a refill on 2/23/2010. As indicated it replaces the HP 27 Cartridge. Cartridge City brand. It is now April 17, 2010, and my printer has shut down from further use. With my previous HP printer, after a predetermined period the HP printer displayed a message informing me that my ink was low, and then shut down my printer from further use. Because of HP greed, this same procedure is being used, but with a different message. Now, after using my cartridge for 54 days HP came up with a different message, “printer cartridge not compatible…“, ending further use of my printer. HP now avoids using the word ink. Although ink is low but copies still at quality level, this was no reason for low ink to stop the printer from working, after pressing O.K. on the control panel.

    To prove my point, I just replaced my cartridge with the same exact store bought Cartridge City brand #27. Now the printer works again. If the cartridge #27 is the same, but is not compatible, why then does my printer now print? This is the same trick they pulled with the low ink message.

    The HP OfficeJet 5600 All-In-Series user guide describes the extent of the limited warranty. Hewlett-Packard (HP) warrants to the end-user customer that the HP warranty does not cover (3) “any other problems, including those that arise as a result of….
    b. “…or supplies not provided or supported by HP”
    c. “..operation outside of the products specification”
    d. “….unauthorized modification or misuse.”
    (9) tells me HP products may contain remanufactured parts, components, or materials equivalent to new in performance.

    The preceding warranty gives HP the right to shut down my printer and infringe on my right to the free use and choice in my preference of using a remanufactured cartridge. To close down Cartridge City 100% satisfaction guarantee of their product, and to discourage and destroy competition. What gives HP the right, after 54 days of cartridge use, to then tell me my “printer cartridge not compatible…” It’s not a low ink issue? You see it’s not the cartridge, but it is, continues, and will always be,… the INK! You saw what the warranty does not cover. But shutting down my computer, because the use of outside sources of remanufactured cartridges, are ink supplies “..not provided or supported by HP.”

    What is being said is, all other sources of recycled ink cartridges are not of HP standards, and will not allow their printers to operate, or give the consumer the free choice, to decide the ink quality choices in the use by a purchaser of an HP printer. In a 6/22/2006 Chicago Tribune article, “HP warns, Walgreens, Office Max on ink sales.” HP senior vice-president Pradeep Jotwani Stated, “They are using an ink that has specific chemicals or certain chemicals at certain levels that violate our formula for ink.” In other words, the world should run on only ink formulated on HP principals of what ink should be. That warning was to suppress, monopolize, or attempt to monopolize, and control the use of ink. To avoid the anti-trust issue, after a printer programmed predetermined time, you’ll receive a message, in order to shut down your printer, “printer cartridge not compatible…”

    From the HP cartridge informational inserts, “HP recycling program. HP offers an increasing number of product return and recycling programs in many countries/regions, as well as partnering with some of the largest electronic recycling centers throughout the world. HP also conserves resources by refurbishing and reselling some of it’s most popular products. It also states, “HP limited warranty… warranty does not cover empty or refilled products, or products that have been misused or tampered with.”

    O.K., I understand that. HP does not cover refilled products. So that I also understand, the warranty is on the HP ink cartridge, as noted by the warranty date. I can understand a cartridge being defective. But I don’t understand the refilled statement? If I purchased, or refilled an HP cartridge, I understand there is no warranty. But again why, after using my refilled remanufactured cartridge, under what specific technical conditions has HP determined after 54 days my printer cartridge not compatible?

    Previously, I received a HP Newsgram. They were telling me how I should only use HP ink cartridges. “With a 98% reliability rate, you’ll enjoy a hassle-free, worry-free, experience you won’t get from refurbished or refilled ink cartridges.” In other words, suggesting to me, and others, refurbished or refilled cartridges being available, can be used on HP printers. This of course is not entirely true, and intended only to fool the unsuspecting, and naïve, from finding out the HP printers will become inoperative after a predetermined use, even when ink supply and copy quality is not the issue.

    reply to this | link to this | view in chronology ]

  • identicon
    Mark Grimes, 19 Aug 2010 @ 11:53am

    This is definitely awesome! It's a

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    reply to this | link to this | view in chronology ]

  • identicon
    Hal Gutterman, 7 Nov 2011 @ 9:56pm

    HP - restraint of trade or interference with equipment via software sabotage

    I have an HP 6180 printer and they have put software in the system to block all recycled cartridges thus negating the ability to refill at COSTCO. It has been a nightmare. This is either restraint of trade or a company who damages other peoples devices through the use of software. I was told that they read the serial numbes on the cartridges and then shut down the system when you insert the same serial number. The Chinese couldn't do it any better; this is commercial hacking.

    reply to this | link to this | view in chronology ]


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