Advanced Copyright Issues on the Internet - Fenwick & West LLP

authentication sequence required the printer and the microchip on the cartridge to calculate aMessage Authentication Code (MAC) using a hashing algorithm, to communicate the MAC fromthe microchip to the printer, and the printer to compare the MAC it calculated with the MAC itreceived from the microchip. If the MAC calculated by the microchip matched that calculatedby the printer, the cartridge was authenticated and authorized for use by the printer, which inturn enabled the Printer Engine Program to allow the printer to print and the Toner LoadingProgram to monitor the toner status of the authenticated cartridge. 819The defendant Static Control Components (SCC) manufactured and sold a “SMARTEK”microchip that was used to replace the microchip found in Lexmark’s toner cartridges. SCCadmitted that it copied verbatim Lexmark’s Toner Loading Program into its SMARTEKmicrochips and that its SMARTEK microchips were designed to circumvent Lexmark’sauthentication sequence by mimicking the sequence performed by an original microchip onLexmark’s cartridges and the printer. 820 Lexmark sued SCC for violation of the anticircumventionprovisions of the DMCA as well as copyright infringement.The District Court’s Ruling. On a motion for a preliminary injunction, the district courtruled that SCC had violated the anti-circumvention provisions of the DMCA and committedcopyright infringement. With respect to the issue of infringement, although SCC admittedcopying the Toner Loading Program, SCC argued that the program was not copyrightablebecause it was a functional “lock-out code” whose exact content was required as part of theauthentication sequence. The court rejected this argument, because the binary content of theToner Loading Program was not used as an input to the hashing algorithm of the authenticationsequence, and copying of the Toner Loading Program was therefore not necessary for a validauthentication sequence to occur. 821 The court also rejected SCC’s arguments that its copyingwas a fair use, noting that “[w]here the accused infringer’s copying is part of the ordinaryoperation of the accused product, fair use does not apply,” 822 and that the Toner LoadingProgram was an uncopyrightable formula or constant, noting that there were a number of waysthe Toner Loading Program could have been written to approximate toner level. 823 Because SCChad engaged in verbatim copying of the Toner Loading Program, it had committed copyrightinfringement. The court also rejected a copyright misuse defense, ruling that “Lexmark’s effortsto enforce the rights conferred to it under the DMCA cannot be considered an unlawful actundertaken to stifle competition.” 824Turning to the DMCA claim, the court found that the SMARTEK microchips violated theanti-circumvention provision of Section 1201(a)(2) in that its primary purpose was to circumvent819820821822823824Id. at 952-53.Id. at 955-56.Id. at 950, 958-59.Id. at 960.Id. at 962.Id. at 966. The court further noted that an “antitrust claim cannot succeed under an after-market antitrust theorywhen the accused party has not changed its policy and has been otherwise forthcoming about its policies.” Id.at 966 n.3.- 187 -