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Static Control Components Inc. said it has won a round in its fight over whether the company can sell computer chips that match remanufactured toner cartridges to Lexmark International printers. Static Control said the U.S. Copyright Office ruled late Tuesday that its chip sales are not barred by the Digital Millennium Copyright Act. Lexmark International Inc. cited the federal law as a basis for a lawsuit seeking to stop Sanford, N.C.-based Static Control from competing for its remanufactured cartridge business. In March, a federal judge in Kentucky issued a preliminary injunction against Static Control that barred it from making or selling computer chips that match remanufactured toner cartridges to Lexmark printers. The injunction remains in effect, Static Control spokesman Charles Taylor said. Still, the “somewhat ambiguous ruling” might be a setback for Static Control depending on how it developed its competing product, Merrill Lynch analyst Steven Milunovich said. Lexmark, based in Lexington, Ky., did not return calls Wednesday seeking comment. Printer makers tend to make most of their profits selling replacement ink or toner cartridges for their machines. Lexmark tried to stop other companies from supplying cartridges for its printers by installing tiny computer chips in its cartridges. Without the chip, the printer usually won’t work. In response, Static Control designed a chip that enables replacement cartridges to work in the Lexmark printers. Lexmark then sued to stop Static Control from manufacturing the chips. Static Control countersued, accusing Lexmark of monopolizing the toner cartridge market and falsely representing their products. The Digital Millennium Copyright Act allows for the copyright office to review new technologies that would allow access to a copyrighted work. “They have provided the means to force Lexmark to discontinue these practices that are against the public interest and costing consumers a great deal of money,” Static Control chief executive Ed Swartz said. But the copyright office did not grant Static Control the exemption from the law it sought, Milunovich said in a research report Wednesday. Instead, the ruling could be a setback for Static Control if it developed its chip by copying Lexmark’s technology, Milunovich said. The ruling acknowledged that Static Control can challenge Lexmark if it developed its competing product by reverse engineering, the process of working backward from a finished product and figuring out how it was built. Skip London, Static Control’s general counsel, said the company reverse-engineered the chip. Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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