A district court judge has heard legal arguments in a case involving Lexmark International that observers said could stifle the market for low-cost, refurbished printer cartridges.

The hearing was to determine whether Lexmark is entitled to a temporary injunction preventing a third-party manufacturer, Static Control Components (SCC), from shipping computer chips that are used to make clones of toner cartridges for two of Lexmark's laser printers.

"As we expected, the judge took the information under advisement and said he'd take a few weeks to decide," executive director of the International Imaging Technology Council (IITC), Tricia Judge, said.

The council is a trade association representing SCC.

Officials at Lexmark couldn't be reached to comment on the outcome of the hearing.

SCC makes chips and other components that are used to make refurbished or "remanufactured" printer cartridges that are sold to customers at prices typically 30 per cent lower than those offered by the major printer vendors. The industry accounts for roughly a quarter of all printer cartridges sold, analysts estimate.

Printer makers - who make much of their profits from cartridges and other printing supplies - view the market with some trepidation. They argue that their printers work best with their own cartridges and in some cases offer incentives to customers to use their own supplies. But for the most part the vendors have permitted remanufacturers to ply their trade.

Last year Lexmark began using a computer chip with some toner cartridges that use software programs to communicate with its printers. Without the software - for which Lexmark filed copyrights - its printers won't function. In the remanufacturing industry the chip is known as a "killer chip" because it prevents remanufacturers from making compatible cartridges.

SCC figured out a way to mimic the software program and began selling chips that allow cartridges to be made for Lexmark's printers. In so doing, according to Lexmark's lawsuit, SCC violated terms of the 1998 Digital Millennium Copyright Act. The act made it illegal to circumvent a protection technology in order to gain access to a "protected work" inside.

Lexmark filed its suit in December, in the US District Court, Eastern District of Kentucky, arguing that SCC's chips contain "unauthorised copies" of its software programs. It wants the court to prevent SCC from selling the components in question.

The significance of the case goes beyond Lexmark and has the potential to affect the whole market for remanufactured cartridges, said Jim Forrest, managing editor of The Hard Copy Supplies Journal, a monthly newsletter that tracks the printing industry

"It's an important case. The final outcome when it goes to trial could impact the whole industry," he said.

If Lexmark was successful in using the DMCA to protect its cartridge business, other printer makers were likely to follow suit, Forrest said. That could deal a severe blow to the market for remanufactured cartridges, depriving businesses of the option of buying cheap cartridges from third-party vendors.

The International Imaging Technology Council, which represents the remanufacturing industry, considered the lawsuit "a potential industry killer," Judge said.