Printer Cartriage Reseller Accuses Epson of Illegal Spying and Trade Secret Misappropriation

Green Project Inc. alleges in a lawsuit filed July 27 in U.S. District Court in Oregon that Epson America Inc. and its parent, Japan-based Seiko Epson Corp., sent a company spy into the facility to gain access to trade secrets.

The company also claims that Epson punished it and firms like it for reselling recycled Epson cartridges.

Epson - which first filed a lawsuit against Green Project and several other firms in April over alleged patent infringement - denies all charges.

"My reaction (to the allegations) is they are B.S. and designed to create a posture for Green Project ... and that there's no substance to them," said David W. Axelrod, a lead attorney for Epson.

But in its counter lawsuit, Green Project says Epson's infringement claims don't stand up against the "first sale doctrine," a legal approach that says a patent owner's rights to intellectual property end once a particular product has been sold to the public. Green Project, a company of 13 employees, does business by "re-manufacturing" ink and toner cartridges for use on major manufacturers' printers, including Epson's.

The year-old company touts the service as good for the environment, since it takes discarded cartridges and puts them to new use.

"It's not that we are looking for p.r.," said Green Project President Joseph Wu. "Our goal is to recycle Epson's cartridges. If we don't, they go to landfills. We are recycling and looking to reduce e-waste, but also to make a business."

The company thought it was doing business when Herbert W. Seitz allegedly called - using another name - looking to buy cartridges from Green Project and ultimately sell them at his Huntington Beach firm, Wu said. As part of that business, Green Project sent price lists and other secret information to Seitz, who turned out to be an Epson employee, Wu alleged, adding that within a couple of days, Seitz showed up in the company warehouse without permission.

"The issue is that when Epson did come to us, they came under false pretenses," Wu said.
Green Project accuses Epson - one of the largest manufacturers of printers - of trade secret misappropriation and trespassing, and denies Epson's claims of patent infringement.

But Epson's lawyers maintained they have a case against Green Project.
Axelrod pointed to the "first sale" doctrine, adding that the doctrine of first sale does not apply in this case, because there is evidence the used cartridges were collected out of the U.S. Wu said his firm works with brokers who document that cartridges were collected in the U.S.

Wu's company is seeking to be dropped from Epson's original suit, and for Epson to pay damages and legal fees. It's also looking to stop Epson from using any secrets that Seitz allegedly obtained.
Epson wants the firms named in the lawsuit to pay damages and for its patents to be enforced.