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Suit Alleges Ink Cartridge Espionage

If you think the ink for your printer is too expensive, you’re not alone.

One consumer magazine estimated recently that drop-for-drop, printer ink is seven times more expensive than vintage champagne. And with such prices, it’s not surprising printer companies spend a lot of time clamping-down on cheaper ink cartridge knock-offs.

As Kristian Foden-Vencil reports, one such legal battle in Oregon is generating some nasty allegations of corporate espionage.

Do you remember what you paid the last time you bought an ink refill for your printer? $30, $50, $70 And how many pages did you print before you had to get another refill?

For years, companies like Epson, Hewlett-Packard and Canon, have relied on the sale of replacement ink cartridges to bolster profits. But as Clackamas Town Center shoppers Scott Davis, Allissa Gail and Angle Hide illustrate, it’s a business model that ticks some people off.

Scott Davis: “Computer cartridges the ink. It’s just way too expensive. It’s ridiculous.”

Allissa Gail: “Every time I go to buy a new cartridge it’s $40, $50.”

Kristian: “Does that seem like a good deal to you?”

Allisa Gail: “No, it’s very expensive.”

Angel Hide: “I’m very often out of ink, at least every six months, and I run it out to where it’s almost dead and then my business stops and the world ends until I can afford 64 more dollars for more ink. I mean that’s a lot of money when you’re on a tight budget.”

With such large sums involved, dozens of companies have sprung up to muscle in and provide cheaper cartridges.

In April, Epson, which operates one of its large ink carteridge factories here in Oregon, fought back against those companies.  It filed suit in federal court in Portland, saying several of them are violating import rules.

One company Green Project, collects old Epson cartridges, takes them to China, cracks-off their tops, and refills them with ink.  Then it brings them back to sell.

Company president, Joseph Wu, says Green Project is  doing nothing wrong – quite the opposite in fact.

Joseph Wu:“These cartridges are being discarded every year in the 100’s of millions. So our goal is to collect these cartridges and do something good with them.”

Central to Epson’s case is whether Green Project  and others collect empties outside the U.S.  Epson says that’s unlawful.

It's  against this legally fraught back ground that Green Project has now countersued against Epson, claiming corporate espionage.

Wu says last year, a man turned up a Green Project's trade show booth asking some very specific questions – beyond those he would expect from a regular customer.

Joseph Wu:“From that day I sort of remembered his face, put it in the back of my mindand youknow went on with business.”

Then this year, a month after Epson filed its lawsuit, Wu says a man identifying himself as KC Wells phoned, saying he was from a supply company and needed a sales packet and price list. A few days later Wells  turned up – but not at the front door.

Joseph Wu: “The way that we found out that he was at our business was one of the warehouse guys came up and said to the sales rep: ‘oh, your customer is here.’ He had snuck through the backdoor of our warehouse and into our warehouse.”

Wu didn't know how long the man was there, or what he was doing.

Joseph Wu: “As soon as I see KC. His face is the same person from who I met at the trade show, who I thought was suspicious.”

Wu escorted him into a conference room.

Joseph Wu: “So I introduce myself and we start talking for a little bit. And a few minutes into the conversation, because I have this feeling that he might be a spy for Epson. I ask him, I say, KC I believe you work for Epson. Do you work for Epson? And of course he would deny it. He said: No I don’t work for Epson, I just want to buy from you guys and run my business.”

Wu  says when the man left, he  searched the internet in vain for his name and business. 

But the world of replacement printer cartridges is small,  and word on the street was that Epson had hired an investigator by the name of Herbert Seitz.  

Wu decided to search that name online. He found it on  a flyer from a conference.

Joseph Wu: “So I go ahead and open the pdf and start reading through it and there’s a caption of this person and it says, Herbert Seitz, Epson investigator shows us how to spot counterfeit Epson cartridges. And in that picture is a picture of KC Wells. And at that point, honestly it just hit me. I was like wow. Number one, I can’t believe that Epson sent a spy into our business and number two, I can’t believe I was able to tie this together to find out who he is.”

OPB’s attempts to contact Herbert Seitz have not been successful. But he told the Wall Street Journal recently that he’s is unfamiliar with the allegations, then added quote: "I have nothing to say."

When asked to respond to Wu's allegations, Epson declined a taped interview. But in a written statement, the company says quote “as is common to protect intellectual propertyrights, Epson conducted a reasonable investigation using legally acceptable measures.”

Epson added that claims like Green Project’s are frequently asserted in countersuits to patent infringement cases.

Green Project’s attorney, Thomas Chan, says in California, where the  alleged espionage took place, licensed private detectives are supposed to carry ID cards and identify themselves.

Thomas Chan:“You’re not allowed to commit trespass. You’re not allowed to walk into somebody’s business. Retail that is different. That’s open to everybody. But this is wholesale this is not open to everybody. Especially not walk into the warehouse. You’re not allowed to use fake names, you’re not supposed to use fake company. I mean you can get permission from the licensing board to give you that power. But I don’t believe he has got that power.”

Chan and Green Project are trying to move the case from a Portland court closer to their base of operations in Southern California. 

Epson has filed to dismiss the trespass and espionage claims.

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