SANFORD,In a David-and-Goliath like case, the U.S. Copyright Office ruled has ruled in favor of little Static Control Components (SCC) in its fight against international giant Lexmark International.

The ruling gives SCC a major victory, the company said, and validates its stance that the Digital Millennium Copyright Act (DMCA) allows the firm to sell a chip that enables cartridges to be remanufactured.

This decision, announced late Tuesday, also supports the position of SCC of Sanford, NC, that it is entitled to sell replacement chips for use in used Lexmark toner cartridges. called the decision “a stunning end to a case that threatened the very foundation of the Digital Millennium Copyright Act …”

Lexmark had won a federal court restraining order against SCC in Feburary in Kentucky, where Lexmark is based. SCC then appealed directly to the Copyright Office.

“The Lexmark lawsuit shows how far copyright law has strayed from its original foundations,” said Wendy Seltzer, staff attorney for the Electronic Frontier Foundation, a high-tech civil liberties group, in the Boston Globe.

For SCC, it is the second consecutive victory in its battle with Lexmark, the number two printer manufacturer in the world. Earlier in August, the N.C. Legislature approved a measure as a means of public policy that made the Lexmark Return Program, formerly the Prebate program, void and unenforceable in North Carolina.

The prebate program granted buyers of Lexmark products a discount in exchange for an agreement to return used cartridges directly to Lexmark for remanufacturing. A federal court in Arizona upheld Lexmark’s program earlier this month. According to Lexmark, it is one of the largest remanufacturers of cartridges in the world becuase of its prebate program.

“We are pleased that the U.S. Copyright Office agreed with our position that the Lexmark contentions on the DMCA were without merit,” said Ed Swartz, chief executive officer at SCC. “We are examining the documents and devoting a large amount of time with our economists and attorneys to calculate the damages that we feel we are entitled to from Lexmark because of their serious misdeeds.”

The DMCA allows for review of new types of works that require an exemption for being able to circumvent a technology measure that would control access to a copyrighted work. Congress passed the act in 1998.

“We are very gratified that the NC Legislature and the Copyright Office have both agreed with our position and have put obstacles in Lexmark’s path as they continue to gouge the public,” Swartz added in a statement. “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. We have spent a small fortune fighting a multinational company but these two consecutive victories make our expenditure of time, money and talent worthwhile. We feel that we have not only won another victory for Static Control but also for the consuming public.”

In a statement quoted by The Boston Globe, Lexmark General Counsel Vincent Cole disputed the interpretation of the decision as a victory that would end the case. The Globe said Cole contended that the injunction against Static Control was based on illegal copying of Lexmark software rather than reverse-engineering.

“It is inconceivable to us how anyone could consider this ruling a victory for Static Control,” Cole said.

Earlier this year, Lexmark vowed to aggressively defend its position.

“We invest hundreds of millions of dollars annually in research and development to help ensure that we are providing the very best technologies and the finest services and support to our valued customers,” Cole said, according to “We believe that our printing solutions and services make us unique, and we intend to vigorously protect the intellectual property that helps to set us apart from our competition.”

Lexmark of Lexington, KY, filed suit against SCC in late December of 2002 invoking the DMCA as its grounds to shield itself from competition from the remanufacturing industry.

SCC, which employs some 1,200 people, manufactures components sold to a broad customer base that recovers empty printer cartridges, refurbishes the cartridges and resells them at a significant savings. The company missed the cutoff date for filing a petition to request an exemption, but SCC was able to file late and the petition was accepted because the petition raised serious questions under the DMCA, according to SCC’s statement.

William London, general counsel at SCC, said the Copyright Office’s ruling will have a significant impact on the company’s fight with Lexmark.

“The Copyright Office found that — the DMCA allows aftermarket companies to develop software for the purpose of allowing the functional interoperability of remanufactured toner cartridges and printers,” London said.