Lexmark Explained

Lexmark International, Inc.
Type:	Private
Predecessor:	IBM Information Products Corporation
Location:	Lexington, Kentucky, United States
Area Served:	Worldwide
Key People:	Phillip Cassou (Chairman) Allen Waugerman (President & CEO)
Revenue:	^[1]
Num Employees:	9,000

Lexmark International, Inc. is a privately held American company^[2] that manufactures laser printers and imaging products. The company is headquartered in Lexington, Kentucky. Since 2016 it has been jointly owned by a consortium of three multinational companies: Apex Technology, PAG Asia Capital, and Legend Capital.^[3]

History

Lexmark was formed on March 27, 1991, when investment firm Clayton & Dubilier completed a leveraged buyout of IBM Information Products Corporation, the printer, typewriter, and keyboard operations of IBM.^{[4] [5] [6] [7] [8]} Lexmark became a publicly traded company on the New York Stock Exchange on November 15, 1995 (under NYSE:LXK).^[9]

By 2016, the company struggled to keep corporate clients that are cutting costs and the consumers who are shifting to mobile devices from personal computers. It was reported in April 2016 that Lexmark would be acquired by Apex Technology and PAG Asia Capital for US$3.6 billion.^[10] Lexmark was set to be acquired at $40.50 per share in the transaction.^[11] Initial talks for the acquisition were begun at the Remax World Expo in 2015.^[12] The deal was closed on November 29, 2016. Lexmark stated that its headquarters would remain in Lexington, and that its enterprise software line of business would be spun off and "rebranded" to Kofax.^[13] As part of the sale, the Perceptive Business Unit portion of Lexmark's Enterprise Software Services division (e.g., their non-Kofax-branded document management products) was sold to the Thoma Bravo management group who agreed to in-turn sell the Perceptive Business Unit to the Hyland Corporation.^[14] The Kofax-branded applications remained as part of Lexmark, but other document management systems like Perceptive Content and NolijWeb and products like Intelligent Capture (formerly "Brainware") and Enterprise Search (formerly "ISYS") were absorbed by Hyland.^[15]

Operations

The firm's corporate headquarters is located in Lexington and R&D offices are distributed globally with additional R&D facilities located in Boulder, Colorado, US; Lenexa, Kansas, US; Cebu, Philippines; Kolkata, West Bengal, India; Berlin, Germany; Stockholm, Sweden^[16] and Irvine, California, US.^[17] Lexmark has offices throughout North and South America, Asia, Africa and Europe. As of July 2018, the company had approximately 9,000 employees worldwide.^[18]

Acquisitions

• In May 2010, Lexmark acquired Perceptive Software for $280 million to build upon its software offerings.^[19] Perceptive Software was a software firm that developed enterprise content management ("Perceptive Content", ″ImageNow") and document output management applications.
• In 2011, Lexmark International purchased Netherlands-based Pallas Athena in a cash transaction valued at approximately $50.2 million.^[20] The purchase of Pallas Athena added business process management, document output management and process mining software capabilities to Lexmark's services.
• In March 2012, Lexmark announced the acquisition of Luxembourg-based BDGB Enterprise, including its U.S. subsidiary Brainware, Inc., for a cash purchase price of approximately $148 million.^[21] Brainware's intelligent data capture platform extracted critical information from paper and electronic documents, validated the extracted data and passed it to customers' data management systems, enterprise resource planning (ERP) and/or financial management systems.
• In March 2012, Lexmark acquired Australia-based ISYS Search Software and U.S.-based Nolij Corporation, both for $32 million.^[22] ISYS built enterprise search solutions and Nolij developed Web-based document imaging and workflow software.
• In January 2013, Lexmark acquired Minnesota-based Acuo Technologies for $45 million. Acuo Technologies developed medical imaging document management software.^[23]
• In March 2013, Lexmark announced acquisitions of AccessVia and Twistage for a combined purchase price of approximately $31.5 million.^[24]
• In late August 2013, Lexmark signed an agreement to acquire Germany-based Saperion AG. Saperion was a developer and provider of enterprise content management and business process management (BPM) software in Europe. The company was purchased for $72 million.^[25]
• In early October 2013, Lexmark acquired PACSGEAR, a provider of connectivity solutions for medical image management and electronic health records. The company was purchased for approximately $54 million.^[26]
• In September 2014, Lexmark acquired Stockholm, Sweden-based ReadSoft for $251 million.^[27] ReadSoft was a financial process automation solutions company that specialized in software solutions for document process automation on-premises or in the cloud.^[28]
• In May 2015, Lexmark announced that it had acquired Kofax for roughly $1 billion.^[29] Kofax, headquartered in Irvine, California, US was a provider of smart process applications. They combined capture, process management, analytics and mobile capabilities to organizations. This line of business was, in turn, spun off from Lexmark when it was acquired by Apex Technology in November 2016.

Divestitures

• In August 2012, Lexmark announced that it would stop production of its inkjet printer line.^{[30] [31]} In April 2013, Funai Electric Company, Ltd. announced that it had signed an agreement to acquire Lexmark's inkjet technology and assets for approximately $100 million (approximately ¥9.5 billion). Funai acquired more than 1,500 inkjet patents, Lexmark's inkjet-related research and development assets and tools, all outstanding shares and the manufacturing facility of Lexmark International (Philippines), Inc., and other inkjet-related technologies and assets.^[32]
• In 1996, Lexmark International was prepared to shut their Lexington keyboard factory where they produced Model M buckling-spring keyboards. IBM, their principal customer—and the Model M's original designer and patent holder—had decided to remove the Model M from its product line in favor of cheaper Asian-made rubber-dome keyboards. Rather than seeing its production come to an end, a group of former Lexmark and IBM employees purchased the factory and, in April 1996, reestablished the business as Unicomp, making their own modernized versions of the Model M keyboard.

Legal cases

Lexmark pioneered the use of profits from ink cartridges as a business model, with the result of modifying the legal models of product ownership and patent exhaustion over several years.^[33]

Arizona Cartridge Remanufacturers Ass'n Inc. v. Lexmark International Inc., also referred to as ACRA v. Lexmark, was a 2005 decision by the United States Court of Appeals for the Ninth Circuit, which ruled that an End User License Agreement on a physical box can be binding on consumers who signal their acceptance of the agreement simply by opening the box. The decision holds that Lexmark can enforce the "single use only" policy written on the side of Lexmark printer cartridge boxes sold to large customers at a discount, with the understanding that the customers will return the cartridges to Lexmark after using them (so that the cartridges would not be diverted, refilled, and then resold), or else face legal liability for not returning them to the company as agreed.

Lexmark had introduced various authentication mechanisms into their printers that rejected third-party cartridges and resisted any attempt to refill spent ones. ACRA, a consumer group representing manufacturers of third-party authentication microchips and third-party ink and toner cartridges, had challenged this policy as deceptive and unenforceable. The Ninth Circuit disagreed, allowing Lexmark to prevent the use of third-party cartridges and the re-use of empty ones. These restrictions are achieved with a combination of encryption hardware within the cartridges and printer firmware that attempts to verify their authenticity as being first-party (i.e. manufactured or distributed by Lexmark). The firmware tracks cartridge ink levels, and will permanently disable any cartridge that it has determined to have been refilled, regardless of whether it actually has been.

Subsequent challenges to the "single use only" policy were more successful. Lexmark lost the Supreme Court case Impression Products, Inc. v. Lexmark International, Inc., in a 7–1 ruling that partially reversed and remanded the Ninth Circuit decision in ACRA v. Lexmark on May 30, 2017:

The decision holds that Lexmark cannot sue third-party manufacturers or resellers for patent infringement; notably, it does not mean that Lexmark cannot use firmware to detect, reject or disable third-party ink cartridges or attempted refills. As of 2024, the company continues to do so.

See also

• List of Lexmark products

External links

• • EFF: Lexmark v. Static Control Components Inc.

Notes and References

1. Web site: 2014 Form 10-K, Lexmark International, Inc.. United States Securities and Exchange Commission.
2. Web site: Two Years After Chinese Buyout, Lexmark Bonds Show Junk Risk . Natarajan . Sridhar . Ronalds-Hannon . Eliza . Chan . Cathy . Bloomberg . April 3, 2018 . November 15, 2018.
3. Web site: Lexmark announces completion of acquisition by Apex Technology and PAG Asia Capital . Lexmark . November 29, 2016 . November 15, 2018.
4. News: Lexmark celebrates history of excellence, innovation at 20-year anniversary. PR Newswire. March 27, 2011.
5. Web site: Customs Ruling HQ 544887. U.S. Customs and Border Protection. October 2, 1992. October 12, 2014. https://web.archive.org/web/20160321192516/http://rulings.cbp.gov/detail.asp?ru=544887&ac=pr. March 21, 2016. dead.
6. Web site: Lexmark International Group 1996 annual report, SEC Form 10-K. Advameg. March 24, 1997.
7. Web site: IBM Archives: 1991. . January 23, 2003 .
8. News: The Executive Computer; Can I.B.M. Learn From a Unit It Freed?. The New York Times. Peter H.. Lewis. December 22, 1991.
9. Web site: LXK stock quote - Lexmark International, Inc. stock price . NASDAQ.com . April 22, 2013.
10. Book: Sullivan, Lawrence R. . Historical Dictionary of the Chinese Economy . Rowman & Littlefield . 2017 . 978-1-5381-0853-6 . Lanham, MD . 379 . en.
11. News: Details Disclosed for Lexmark Acquisition Deal . RT Recycling Times . April 21, 2016 . June 12, 2016.
12. Web site: Former Lexmark Executive Reveals Deal with Ninestar-Apex. RT Recycling Times . April 20, 2016. August 15, 2016.
13. News: Truman. Cheryl. Lexmark acquisition completed: Rooke out, company exits software business. January 28, 2017. Lexington Herald-Leader. November 29, 2016.
14. Web site: Hyland Software agrees to acquire Lexmark's Perceptive portfolio . Cleveland.com . May 3, 2017 .
15. Web site: Hyland, creator of OnBase, has entered definitive agreement to acquire the Perceptive portfolio . May 3, 2017. Hein. Jen. December 12, 2020.
16. Web site: Lexmark 2014 Annual Report . Lexmark International, Inc. . January 19, 2016.
17. Web site: About Us - Kofax. January 19, 2016.
18. News: Printer company Lexmark plans about 1,000 layoffs . August 3, 2018 . SFGate . July 18, 2018.
19. Web site: Lexmark Newsroom - News Releases . Newsroom.lexmark.com . May 21, 2010 . April 22, 2013.
20. Web site: Lexmark acquires Pallas Athena - LEXINGTON, Ky., Oct. 18, 2011 /PRNewswire/ . Prnewswire.com . April 22, 2013.
21. Web site: Lexmark acquires Brainware - Mar 5, 2012 . Newsroom.lexmark.com . April 22, 2013.
22. Web site: Lexmark acquires ISYS Search Software and Nolij - Mar 19, 2012 . Newsroom.lexmark.com . April 22, 2013.
23. Web site: Lexmark acquires Acuo Technologies - Jan 2, 2013 . Newsroom.lexmark.com . January 2, 2013 . April 22, 2013.
24. Web site: Lexmark acquires Twistage and AccessVia . Newsroom.lexmark.com . March 5, 2013 . September 21, 2013.
25. Web site: Lexmark announces agreement to acquire Saperion. January 19, 2016.
26. Web site: Lexmark acquires PACSGEAR. January 19, 2016.
27. http://www.bizjournals.com/kansascity/news/2014/09/19/big-acquisition-brings-perceptive-software.html?page=all Big acquisition brings Perceptive Software opportunity and layoffs
28. Web site: Even Better Invoice Processing. ReadSoft is now Lexmark.. January 19, 2016.
29. Web site: Lexmark completes acquisition of Kofax, announces Enterprise Software leadership change. January 19, 2016.
30. Web site: Lexmark announces restructuring. August 28, 2012. Lexmark . August 28, 2012.
31. News: Lexmark to exit inkjet printer market. August 28, 2012. pcpro.co.uk. August 28, 2012.
32. Web site: Funai acquiring Lexmark's inkjet-related technology and assets . Newsroom.lexmark.com . April 1, 2013 . September 21, 2013.
33. News: Duan. Charles. How a Printer Company Redefined Ownership; Lexmark's strategy has changed the rules about what you can do with something you 'bought.'. October 22, 2016. Slate. October 21, 2016.