HP Sues Datel for $30 Million in Ink-Cartridge Trade-Secrets Lawsuit

Law360 reports that Hewlett-Packard filed a $30 million trade-secrets suit on June 23rd in California federal court that accuses Datel Holdings Ltd. of misappropriating HP master-key security codes in microchips used in HP ink cartridges.

HP alleges that Datel, whose subsidiaries design and develop microchips for use in printer cartridges, cracked the security used by HP’s ink-cartridge microchips, and then shared the codes with other ink-cartridge clone manufacturers.

HP is seeking $30 million in damages from Datel, alleging that Datel “cracked the security used on its ink cartridge microchips” before allegedly “shar[ing] the chips’ design and configuration with other companies” that make and sell cartridge chips, including some that use the chips in “clones” of HP’s 930 and 950 ink cartridges. HP has also accused Datel of “selling ink cartridges compatible with HP printers.”

HP states that it uses confidential technology, such as the master-key codes used in the chips in both inkjet printers and ink cartridges. The master-key codes enable the ink cartridge and the HP printer to communicate with each other in order to authenticate that the ink cartridge is an original HP cartridge, thereby preventing use of unauthorized clone ink cartridges.

According to HP’s lawsuit, it sources development kits to “develop software and generate firmware” for chips from STMicro. The STMicro kit enables developers to access chip’s operation, including “commands that enable or disable security features.” STMicro gives the kits only under “very strict confidentiality terms” that include “prohibitions on reverse-engineering and on providing the development kit to others.”

HP states that it “hasn’t disclosed its key codes outside HP,” with the codes being a “trade secret” that help “reduce proliferation of counterfeit printer cartridges, and protect HP from improper warranty claims based on non-HP cartridges,” as well as protecting HP “investment of time and resources…by ensuring that competitors do not simply ‘copy’ HP’s technology.”

HP alleges that Datel employees obtained an STMicro kit in 2012 “without permission” after being refused one by STMicro. Datel employees then “allegedly used the kit to crack the security” on the chips, and were able to get master-key codes for HP’s 930 and 950 ink-cartridge chips.

HP is seeking “preliminary and permanent injunctive relief, blocking Datel and its subsidiaries from further manufacturing or selling chips for printer cartridges that work in HP printers”.

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