Customs Blocks Imports of Ninestar Cartridges That Infringe HP GEO
U.S. Customs and Border Protection (CBP) recently stopped Ninestar Technology from importing certain inkjet cartridges into the United States.
The products that Ninestar Technology was attempting to import violated a general exclusion order (GEO) that the U.S. International Trade Commission (ITC) awarded to HP in the 337-TA-691 investigation in 2011 (see “HP Reveals the Breadth of the ITC’s General Exclusion Order for Ink Tanks”). Because its duties include regulating international trade by inspecting cargo at various ports of entry into the United States, CBP is the federal law enforcement agency charged with enforcing GEOs issued by the ITC. Periodically, CBP catches infringing goods that violate GEOs, and then the ITC takes the step of issuing a seizure and forfeiture order, warning the importer that products imported in violation of the GEO will be seized and forfeited to the United States. In January, for example, the ITC issued a seizure and forfeiture order to another importer that tried to import products that infringed patents protected by the same GEO awarded to HP (see “U.S. Customs Starts the Year by Turning Back More Imports of Cartridges Barred by ITC Orders”).
We see this latest seizure and forfeiture order as a more significant a story for a couple of reasons. First of all, this time it was a member of the giant Ninestar and Seine group of global aftermarket supplies manufacturers and distributors that was nabbed violating the GEO. Second, HP currently has a patent-infringement lawsuit against Ninestar underway in U.S. federal district court for infringing some of the same patents protected by the GEO issued in the 337-TA-691 investigation (see “HP Sues Ninestar and Apex Micro for Patent Infringement”).
The seizure and forfeiture order itself consists of the boilerplate language that we always see from the ITC. The firm that was caught importing products in violation of the GEO is identified as Ninestar Technology; two addresses are provided for this firm, one in Chino, CA, and one in City of Industry, CA. It appears that the port where CBP caught the infringing goods was Long Beach, CA, as the port director at Long Beach was copied on the order.
The seizure and forfeiture order states that CBP informed the ITC that Ninestar attempted to import inkjet cartridges covered by a GEO, CBP denied entry of the articles, and CBP provided the “owner, importer, or consignee “ with written notice of the GEO and the fact that any further attempts to import the inkjet cartridges would result in seizure and forfeiture. The ITC then decided to issue a seizure and forfeiture order concerning the articles pertaining to Ninestar and any affiliates or related entities. The ITC declares that any goods that Ninestar imports in violation of the GEO will be seized and forfeited to the United States.
This Is Where It Gets Interesting
The GEO awarded to HP back in 2011 excludes from importation into the United States products that infringe claims 6 and 9 of U.S. patent number 6,089,687 (‘687), “Method and apparatus for specifying ink volume in an ink container,” and claims 1, 5, and 6 of U.S. patent 6,264,301 (‘301), “Method and apparatus for identifying parameters in a replaceable printing component” (see “HP Reveals the Breadth of the ITC’s General Exclusion Order for Ink Tanks”). These two patents relate to the chipsets used in various HP ink tanks.
HP has a long history of asserting these patents in various ITC investigations and district court complaints, including in actions directed against Ninestar. In 2006, HP filed patent-infringement complaints in district court and before the U.S. International Trade Commission (ITC), alleging that Ninestar and various distributors infringed seven patents, including the ‘687 and ‘301 patents. That complaint was eventually settled in March 2007, and Ninestar agreed to acknowledge the validity of the patents-in-suit and pull infringing compatible inkjet cartridges from the market.
HP filed suit alleging infringement of the ‘687 and ‘301 patents, among others, once again in 2009, although Ninestar and Apex Microelectronics were not named as defendants in this set of suits. HP’s 2009 complaints before the ITC ultimately resulted in two general exclusion orders being issued in 2011: one in the 337-TA-691 investigation related to ‘687 and ‘301 patents and one on the 337- TA-730 investigation related to two other HP patents (see “HP Obtains Another General Exclusion Order on Ink Tanks”).
Most recently, on October 6, 2014, HP filed a patent-infringement lawsuit against Ninestar entities in China and the United States, as well as Ninestar chip supplier Apex Microelectronics, in the U.S. District Court for the Northern District of California. HPclaims that the defendants manufacture and sell finished inkjet cartridges (in Ninestar’s case) and chips (in Apex’s case) that infringe three of HP’s U.S. patents: the ‘687 and ‘301 patents noted above, along with 6,454,381 (‘381), “Method and apparatus for providing ink container extraction characteristics to a printing system.”
The cartridges and chips that are alleged to infringe in the 2014 lawsuit include those that are compatible with the HP 564, 920, 932/933, 950/951, and 970 series ink tanks, as well as “similar cartridges.” Unfortunately, HP’s district court complaint does not explain which specific claims of these patents are infringed; it could be the same patent claims protected under the 2011 GEO or it could be different ones.
HP Gets Some More Leverage
As we reported in January, Ninestar and Apex have not yet officially answered HP’s latest patent-infringement complaint due to a deadline extension (see “Deadline for Defendants’ Response Pushed Back in HP v. Ninestar and Apex”). Ninestar did issue a public statement vowing its respect for intellectual property rights and its confidence in its products and technology soon after news of the HP lawsuit broke (see “Ninestar Issues Statement on HP Lawsuit, Static Chimes In”). The deadline for the defendants to respond to the HP lawsuit has pushed back a few times now: from November 5, 2014, to February 3, 2015, to April 6, 2015. The reason for the two most recent shifts in the schedule is that the parties are discussing an “amicable resolution of this matter.”
settlement negotiations. However, it seems likely that HP’s negotiating position is strengthened and Ninestar’s and Apex’s is weakened by this latest development.
After all, this is not the first time Ninestar has been caught importing products in violation of remedial orders issued by the ITC. After the ITC awarded Epson a GEO in the 337-TA-565 investigation in 2007, the commission in 2009 imposed fines against various companies that ignored its orders, including a fine of over $20 million against Ninestar. That fine was later reduced to $11.1 million, but Ninestar fought the fine all the way to the U.S. Supreme Court, which declined to hear Ninestar’s appeal, thus letting the fine issued by the ITC and affirmed by the U.S. Court of Appeals for the Federal Circuit stand (see “Fat Lady Has Sung for Ninestar: Supreme Court Won’t Review Appeals Court Decision on ITC Fine”).
We are sure that HP’s attorneys are reminding Ninestar of this painful saga and the fact that the Federal Circuit has upheld the ITC’s rights to levy fines against firms that flout its orders (see “Appeals Court Says Ninestar Must Pay the $11.1 Million ITC Fine”). Representing Ninestar throughout much of its years-long battle with Epson was attorney Edward F. O’Connor of The Eclipse Group. Mr. O’Connor is representing Ninestar and Apex in the current HP suit as well.
We will be eagerly following HP’s lawsuit before the Northern District of California to see if the parties settle or if Ninestar and Apex answer HP’s complaint and the lawsuit proceeds. Of course, even if HP and the defendants don’t settle right away, that doesn’t mean they won’t come to terms later on. So few of these lawsuits actually proceed to a trial phase. As settlement talks continue, we suspect that given its new ammunition, HP may be stepping up what it seeks from Ninestar and Apex in terms of financial compensation and guarantees that intellectual property will be respected moving forward.