Locking in Users/Customers
Cryptography Research, Inc. hopes to end the evil plague of unscrupulous users who steal music illegally threaten national security save a few bucks by buying off-brand cartridges.
Although solid figures on counterfeiting are impossible to determine, it's estimated to cost the industry at least $3 billion a year, according to the Image Supplies Coalition, a lobbying group formed to fight piracy and cloning in the ink and toner industry. [...]
CRI takes a different tack with its protection scheme: its chip generates a separate, random code for each ink cartridge, thus requiring a would-be hacker to break every successive cartridge's code to make use of the cartridge.
As Ars Technica notes, a similar lawsuit by Lexmark against third-party cartridge manufacturer Static Control was denied. The real issue isn't "piracy" (or reverse engineering), but the need to lock users into purchasing a steady stream of inkjet cartridges from the same company that manufactured their printer.
Companies like Cryptography Research attempt an end-run around the legal issue, sort of like a defacto shrinkwrap agreement that locks users the printer manufacturer's income stream. Inkjet printers have dropped fast in price over the last five years—partially because printer manufacturers have realized that the real money is in the cartridges. This has long been the dream of tech companies: open a long-term revenue stream. It's why credit card companies make so much money: hook customers on the front end and get them to pay forever. People complain about the high cost of software upgrades, but the cost of inkjet cartridges over time is a huge and more-or-less hidden expense, especially for average users who don't run professional applications like CS3 or Final Cut Pro (let alone real vertical apps). I know I've spent far, far more money on HP inkjet catridges over the last two or three years than I've spent on upgrades to OS X.