Coffee With DRM Protection? Keurig Competitor Screams Antitrust
Keurig, a subdivision of Green Mountain Coffee, makes single-cup pod-style coffee makers. Until 2011, they held 100 percent of the legitimate market, as they had a patent on the cups. Until 2011. And late last year, Green Mountain's attempt to use method patents to stop the burgeoning third-party pod market was shot down by the Federal Circuit, putting the company's $2.4 billion cash cow at risk. The Federal Circuit called the strategy an "end-run around exhaustion," dismissing the company's argument that their method patents applied to the brewers, end-users were violating those patents, and that competitors were inducing infringement. That much money is a lot of motivation, so much so, that Keurig plans to replace its current line of coffee makers with Digital Rights Management (DRM)-enabled brewers and pods, ones that will only take first-party and licensed third-party pods. As Slashgear points out, it's a lot like ink jet printer cartridges.
Antitrust ClaimsLast month, TreeHouse Foods, Inc. announced that it was filing an antitrust and unfair competition lawsuit against Green Mountain, under both federal and common law from the states of New York, Wisconsin, and Illinois. The lawsuit first claims that Green Mountain has used its market dominance to force business partners into entering exclusive agremeents. It then turns its attention to the DRM'd coffee pods. Interestingly enough, the Sixth Circuit, in 2012, found that similar claims brought by a third-party ink cartridge manufacturer against Lexmark (also a dispute over DRM), could not be brought due to a lack of standing. It'll be interesting to see if this lawsuit's federal claims meet the same fate.
DRM and DMCAThat case, by the way, became really interesting when the generic manufacturer reverse-engineered the DRM chips. Lexmark's Digital Millennium Copyright Act (DMCA) claims over the chips failed in an earlier Sixth Circuit case. Even if Keurig wins the antitrust battle, and puts the chips in their pods, and consumers actually buy the newer DRM-only machines (instead of third-party knockoffs), the coffee giant may not have a means of protecting the DRM itself.
- TreeHouse v. Green Mountain Coffee (Complaint - Scribd)
- Keurig under fire for use of DRM in new coffee makers (Inside Counsel)
- Trade Secret Theft Accounts For Up To 3 Percent of GDP (FindLaw's In House Blog)