HP Dismisses Datel Suit

Posted Date 02/19/15

Hewlett-Packard has voluntarily dismissed its legal case against British-based Datel, in which it accused the company of stealing trade secrets from it. Since the move came as a surprise to the observers, the biggest question everyone will be asking now is why HP decided to back off after insisting on its allegations for eight months.

The case concerns codes that HP uses in chips in its ink cartridges as a way of protecting its proprietary technology against clones. The allegation against Datel was that it copied the codes and shared them with companies that manufacture clone cartridges. It was possible to do so because the chips for the HP printers are made by ST Microelectronics, which also offers its clients development kits they can use to develop their own software and firmware around the chips. Datel, HP claimed, had obtained one such development kit, and had cracked the codes for the cartridges used on the HP 930 and HP 950 inkjets.

Datel’s stance was that what it did was a classic example of reverse engineering and, unlike stealing trade secrets, reverse engineering is a totally legal activity. The company also questioned HP’s right to claim ownership of the trade secrets in question, since it used technology developed by ST Micro, not HP.

After throwing accusations at each other, at the end of last year the two companies finally agreed to court-mandated mediation. As part of this process, they filed a joint case-management statement in which Datel states that it will consider the legality of HP’s claims in terms of competition and anti-competitive practices and look into the possibility of filing a counterclaim. Now, HP has decided to back down and this could be because it has realized that it doesn’t have a strong enough case, or that the company has better things to do with its money and legal power, given the ongoing separation between its businesses.



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