The company released a security update that blocks the use of third-party print cartridges, which usually cost much less than the original ones.
The class-action lawsuit filed against HP on January 5th accuses the company of a monopoly and demands that illegal blocking of printers be prohibited. Among the plaintiffs are 11 people, who also demand monetary damages in the amount of $5 million and a jury trial.
HP printer firmware updates released in late 2022 and early 2023 blocked printing with third-party cartridges with the message:
“These cartridges are blocked by the printer’s firmware because they contain a non-HP chip. This printer is only intended for cartridges with a new or reused HP chip.’
The lawsuit alleges that HP failed to warn users that the microupdate would affect the functionality of the printers, and emphasizes that the use of third-party cartridges does not void HP’s printer warranty.
Meanwhile, HP seems proud of its strategy of blocking customers’ printers. Last month, the company’s chief financial officer, Marie Myers, praised the company’s move from transactional models to pushing customers into continuous purchases with offerings like Instant Ink, HP’s monthly ink subscription program.
The plaintiffs also say that HP effectively forces customers to buy its own ink, which costs far more than its competitors.
HP effectively monopolized the replacement ink cartridge aftermarket in violation of federal and state antitrust laws, forcing HP printer owners to buy only HP branded ink at high prices and lose money, said Peggy Wedgeworth, a senior partner at the Milberg law firm and one of the lawyers who represent the interests of the plaintiffs in this case.
At the time the updates arrived, HP raised the prices of its own cartridges, according to the complaint, creating a monopoly in the market — because it could change prices without fear that competitors would sell cartridges at lower prices.
HP’s decision to use firmware updates for printers that use third-party inks has repeatedly led to lawsuits since Dynamic Security debuted in 2016. In 2020, the company reached a $1.5 million settlement with U.S. customers in a class-action lawsuit that alleged the company’s firmware acted as “malware by adding, removing, or modifying code that reduces the capabilities of HP printers.” . The company has also paid out millions to customers affected by Dynamic Security policies in the EU and Australia.
HP is also fighting a lawsuit that accuses the company that some of its printers refuse to scan and/or fax without HP ink loaded into the device, even though the ink is not needed to scan or fax the document. (Other printer manufacturers are also accused of this).
Cartridges are an important business for HP, which faces declining printing needs in an increasingly digital world. In its fiscal 2023 earnings report, the company said its printing business accounted for 32% of net revenue and 57% of operating profit of $1.5 billion. HP’s printing division’s operating margin increased from 14% in fiscal 2016 to 18.9 % in fiscal year 2023.
Source: Ars Technica
