Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 1 of 51
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`MORGAN & MORGAN
`COMPLEX LITIGATION GROUP
`Michael F. Ram (SBN 104805)
`mram@forthepeople.com
`Marie N. Appel (SBN 187483)
`mappel@forthepeople.com
`711 Van Ness Avenue, Suite 500
`San Francisco, CA 94102
`Telephone: (415) 358-6913
`Facsimile: (415) 358-6293
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`Counsel for Plaintiff and the Proposed Classes
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`HENRY SO, individually and on behalf of all
`other similarly situated individuals,
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`Plaintiff,
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`v.
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`HP, INC. d/b/a HP COMPUTING AND
`PRINTING INC., a Delaware Corporation
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`Defendant.
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`Case No.:
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`CLASS ACTION COMPLAINT FOR
`1) Violations of the Computer Fraud and
`Abuse Act, 18 U.S.C. § 1030(a)(5)(A), §
`1030(a)(2)(C), and § 1030(a)(4)
` 2) Violation of the California Comprehensive
`Computer Data Access and Fraud Act, Cal.
`Penal Code § 502, et seq.
` 3) Violations of the Unfair Competition Law –
`Unlawful Prong, Cal. Bus. & Prof. Code §
`17200, et seq. (“UCL”)
` 4) Violations of the Unfair Competition Law –
`Unfair Prong, Cal. Bus. & Prof. Code §
`17200, et seq. (“UCL”)
` 5) Violations of the Unfair Competition Law –
`Fraudulent Prong, Cal. Bus. & Prof. Code §
`17200, et seq. (“UCL”)
` 6) California False Advertising Law
`Cal. Bus. & Prof. Code § 17500
` 7) Fraud By Omission
`8) Violation of the California Consumers Legal
`Remedies Act (“CLRA”), Cal. Civ. Code §
`1770(a)(5), et seq.
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`JURY TRIAL DEMANDED
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`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 2 of 51
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`Plaintiff, Henry So, individually and on behalf of all others similarly situated, brings this Class
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`Action Complaint against Defendant HP, Inc., d/b/a HP Printing and Computing Inc., (“HP”) and makes
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`the following allegations based on personal knowledge as to facts pertaining to his own experiences and
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`on information and belief as to all others, and alleges as follows against Defendant:
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`NATURE OF THE ACTION
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`1.
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`HP wrongfully compels users of its printers to buy and use only HP ink and toner
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`supplies (“HP Original Supplies”) by transmitting firmware updates without authorization to HP printers
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`over the Internet that lock out its competitors’ refilled, new build, or remanufactured ink and toner
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`supply cartridges (“third-party cartridges”).1 HP’s firmware “updates” act as malware—adding, deleting
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`or altering code, diminishing the capabilities of HP printers, and rendering third-party cartridges
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`incompatible with HP printers (“malicious firmware updates”). As a result, and by HP’s design, Plaintiff
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`and Class Members who reasonably and lawfully buy competitors’ much less costly and equally
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`effective supplies are left with useless printers and supply cartridges.
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`2.
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`HP has marketed and sold its standard HP printers as capable of printing using HP
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`Original Supplies as well as refilled or third-party cartridges.
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`3.
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`HP consistently markets its HP Original Supplies as superior to competing third-party
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`cartridges. HP states that using HP Original Supplies “provides the best print quality.”2 HP also
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`represents that HP Original Supplies are the “most reliable” and thus require “less service.”3 HP’s public
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`statements and advertisements imply that customers have a choice whether to use HP Original Supplies.
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` 1
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` Third-party cartridges are produced and sold by a variety of HP’s competitors. Third-party compatible cartridges can be
`categorized as: remanufactured, refilled, or new build compatibles.
`Remanufactured and refilled cartridges are HP Original cartridges that are used and subsequently collected, inspected,
`cleaned, fit with new or reconditioned parts, refilled with ink or toner, and quality tested so that its capability to print has
`been restored. Some customers choose to refill their HP Original cartridges themselves.
`New build compatible cartridges are new replacement cartridges that are made by a third-party in imitation of an Original
`cartridge with a shell, internal components and ink or toner that is not manufactured or distributed by the Original printer
`manufacturer.
`2 See e.g. Exhibit 1 (HP, INC., Brief, Original HP Toner Cartridges dated December 2019) (detailing HP’s messaging
`surrounding the benefits of choosing HP Original Supplies for HP’s internal use and use with HP Partners.).
`3 Id.
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 3 of 51
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`4.
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`HP consistently asserts that its printers provide HP’s customers with a “flexible choice”
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`between: (a) using the “standard printing model” – wherein a consumer purchases an HP Printer and
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`may choose whatever supplies that consumer desires when resupplying that printer’s ink, or (b) agreeing
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`to use only HP Original Supplies by signing up for Instant Ink or HP+ programs and thus entering the
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`“End to End System.”
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`5.
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`When purchasing HP printers, Plaintiff and Class Members reasonably believed that
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`choosing the standard printing model would allow for the free exercise of a “flexible choice” – i.e.,
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`choosing whether to purchase HP Original Supplies or third-party compatible cartridges.
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`6.
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`Even though HP sells ink and toner at substantial premiums over its competitors, HP is
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`able to maintain and increase its market share in the aftermarket for HP compatible ink supplies (“HP
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`InkJet Cartridges”) only because HP’s base class of printers contain microchips designed to cause
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`printer malfunctions if third-party cartridges are installed once the printers receive a malware
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`transmission via a malicious firmware update.
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`7.
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`HP’s malware transmission is unannounced, automatic (on the part of printer owners),
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`and unsolicited. The firmware update, or the portion of the firmware update that renders third-party ink
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`and toner incompatible with HP printers, serves no legitimate business purpose. Even if other portions
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`of the transmission had some arguable security or quality benefit, the secretive, automatic, and
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`misleading manner in which the firmware updates are carried out unlawfully deprives Plaintiff and Class
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`Members of the fully informed choice of either choosing to accept the firmware update and the
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`represented benefits accompanying it, or to decline the update and receive the benefits of using the ink
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`cartridges of their choice.
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`8.
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`As a result of HP’s malware, HP printer owners who lawfully use significantly less
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`expensive ink purchased from third parties are forced to buy HP Original cartridges, which HP sells at
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`substantial premiums, or are deprived of the use of their printers until third parties can develop work
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`arounds to again offer products in competition with HP. HP harms competition because it deprives its
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`printer users of the choice whether to purchase more expensive HP Original Supplies or the less
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`expensive supplies of lawful competitors.
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`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 4 of 51
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`9.
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`In furtherance of the unlawful scheme, HP falsely represents and omits material facts
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`regarding the reason for the sudden inability of its printers to function without HP Original cartridges.
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`HP printers using third-party or refilled cartridges display error messages falsely stating that that the
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`printer has a “supply problem” or “cartridge problem” or that the cartridges were not “communicating
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`properly with the printer” and needed to be reinstalled or replaced. In fact, no such problem existed until
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`HP intentionally caused one by sending malware to its printers to render third-party cartridges
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`incompatible with its products.
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`10.
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`The incompatibility was not an unintended consequence of HP pursuing or implementing
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`its legitimate business interests or conducting lawful quality assurance, security updates, or product
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`improvements. The incompatibility was the point of the firmware updates, or the portion of the firmware
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`updates that caused the incompatibility to prevent its printers from working with competitors’ products.
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`Third-party supplies are not collateral damage; they are the target.
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`11.
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`Due to the transmission and by HP’s design, Plaintiff’s and Class Members’ Class
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`Printers and ink cartridges were rendered incompatible and inoperable. Plaintiff would not have
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`purchased an HP printer had he known HP was engaged in and would engage in such conduct. Had
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`Plaintiff and Class Members known that HP would surreptitiously render third-party cartridges
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`incompatible, Plaintiff and Class Members would not have purchased an HP Printer or would have paid
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`less for their printers. As a direct and proximate result of HP’s misconduct, Plaintiff and Class Members
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`sustained damages, including but not limited to the loss of the value of the InkJet cartridges they
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`purchased that are no longer compatible with their printers, loss of time and effort to diagnose the
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`damage to their printers and to determine what remedial measures to take, the need to purchase
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`expensive HP Original cartridges, uncertainty in the functioning of their printers and supply cartridges,
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`12.
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`HP’s malware transmission and false statements injured and will continue to injure its
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`customers. HP’s conduct is unlawful under federal and state laws prohibiting hacking and other
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`computer crimes, as well as state statutory prohibitions against deceptive and unfair trade practices.
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`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 5 of 51
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`13.
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`Plaintiff therefore seeks actual, statutory, and exemplary damages, restitution, and an
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`injunction requiring HP to reverse the effects of its malware transmissions insofar as they render once-
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`compatible ink cartridges obsolete and prohibiting HP from sending such transmissions in the future
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`without obtaining the fully informed consent of each printer owner.
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`JURISDICTION AND VENUE
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`14.
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`This Court has federal subject matter jurisdiction over Plaintiff’s federal claims pursuant
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`to 28 U.S.C. § 1331 as well as pursuant to the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §
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`1332(d), as the amount in controversy exceeds the sum of $5,000,000, exclusive of interest and costs,
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`there are more than 100 putative class members, and minimal diversity exists because many putative
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`class members are citizens of a different state than Defendant.
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`15.
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`Additionally, the Court has original federal subject matter jurisdiction over this matter
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`pursuant to 28 U.S.C. §1331 because it arises, at least in part, out of a question of federal law, the
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`Computer Fraud and Abuse Act, 18 U.S.C. § 1030, et seq.
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`16.
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`Venue is proper in this District pursuant to 18 U.S.C. § 1965(a) and 28 U.S.C. §
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`1391(b)(2) because Defendant conducts its affairs in this District and a substantial part of the events
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`giving rise to Plaintiff’s claims occurred in this District.
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`17.
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`This Court has personal jurisdiction over Defendant because its principal place of
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`business is in California. Additionally, Defendant is subject to specific personal jurisdiction in this State
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`because a substantial part of the events and conduct giving rise to Plaintiff’s and the Class claims
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`occurred in this State.
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`PARTIES
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`18.
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`Plaintiff Henry So is a California citizen. Plaintiff So owns three Class Printers. Plaintiff
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`purchased these printers new in California from Best Buy and Amazon.
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`19.
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`Defendant HP is a California corporation with a principal place of business at Defendant
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`HP, INC. d/b/a HP Computing and Printing Inc. is a Delaware corporation with its principal place of
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`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 6 of 51
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`business located at 1501 Page Mill Road, Palo Alto, California, 94304. HP regularly conducts business
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`throughout California and in this judicial district.
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`COMMON FACTUAL ALLEGATIONS
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`20.
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`HP is the “market leader” in the printing industry and is the number one seller of home
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`and office, and graphics printers in the United States.4
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`21.
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`HP also sells associated HP-branded ink and toner cartridges for use in HP printers (“HP
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`Original Supplies”).
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`22.
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`Printing is one of the largest and most profitable of HP’s business segments. In 2021,
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`HP’s total net revenue was $63,487,000,000.5 HP’s net revenue from Printing was $20,128,000,000 in
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`2021.6 HP’s operating profit margins on Printing means that Printing revenue accounts for 50-60% of
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`HP’s operating profit, year over year. 7 Sales of HP Original Supplies, such as toner and ink, make up a
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`large portion of HP’s net revenue – in 2021, HP’s revenue from Supplies alone was $12,632,000,000.8
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`23.
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`HP’s Printing segment generates this massive amount of revenue through sales in two
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`separate markets: the Consumer and Commercial Hardware (“printer”) foremarket and the HP InkJet
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`Cartridge aftermarket.
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` 4
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` See page 10, Strategic & Financial Plan for Value Creation (Feb. 24, 2020), attached as Ex. 99-2 to HP Inc. Form 8-K,
`submitted to Securities and Exchange Commission on Feb. 24, 2020, available at
`https://s2.q4cdn.com/602190090/files/doc_financials/2020/q1/Value-Creation-for-web-posting-(1).pdf (last visited Mar. 23,
`2022) (“2020 Strategic Plan”).
`5 HP earned $22,447,000,000 of that revenue in the United States. See HP INC. and Subsidiaries, Form 10-K - For the Fiscal
`Year ended October 31, 2021 https://s2.q4cdn.com/602190090/files/doc_financials/2021/q4/0302cd18-964e-4bee-b427-
`d313202a7dd9.pdf (last visited Mar. 22, 2022) (“2021 10-K”).
`6 2021 10-K at 69;
`7 2021 10-K at 69. See 2020 Q4 Earnings Presentation at 8, available at
`https://s2.q4cdn.com/602190090/files/doc_events/2020/Q42020/Q420-HP-Inc.-Earnings-Presentation-FINAL.pdf (last
`visited Jan. 31, 2022).
`8 2021 10-K at 69. HP’s net revenue from supplies (e.g., toner and ink) alone in 2019 was $12.9 billion. Consistent with its
`razor and blades model, its net revenues from hardware (e.g., printers, among others) came to $7.1 billion in 2019.
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 7 of 51
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`24.
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`In the foremarket, HP’s offers dozens of models of InkJet Printers, Copiers and All-in-
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`Ones (“printers”). Each model of printer is only compatible with the associated model of ink or toner
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`cartridge.
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`25.
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`For a cartridge to be compatible with a printer, both the hardware – i.e., the physical form
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`of the cartridge – and the software – i.e., the code written onto the chips embedded in both devices –
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`must align. For example, the OfficeJet 6978 will only print if a compatible cartridge model – the Model
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`902 or 902XL cartridges – is installed.
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`26.
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`Unlike the fixed and upfront cost of a printer, the ink and toner cartridges used in printers
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`are consumable and thus must be replenished periodically. Once a consumer purchases a printer,9 that
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`consumer must also purchase compatible cartridges to continue using that printer. Thus, the final price
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`of a printer is difficult to estimate at the point of sale.
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`27.
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`The consumer purchases those compatible cartridges in the aftermarket for ink and toner.
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`There, the consumer can choose whether to purchase new cartridges from the printer manufacturer or to
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`purchase a compatible cartridge from a third-party.
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`28.
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`Thus, once a customer purchases an InkJet HP printer in the printer foremarket, that
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`customer must purchase the affiliated cartridge models of HP InkJet Cartridges in the aftermarket.
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`A.
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`HP’s Standard Business Model
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`29. Within its Printing segment, HP has traditionally employed a “razor and blades” business
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`model, where the bulk of its profit is derived from its sales of consumable supplies (like ink and toner)
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`instead of from the sales of HP printers themselves.10
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`30.
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`For companies employing a “razor and blades” business model for printers, most
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`revenues and profits come from consumers repeatedly returning to purchase the necessary cartridges.
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` 9
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` Most printers come with an initial “Startup” supply cartridges, typically with reduced printing capacity, that enable the
`customer to setup the printer and print a limited number of pages before a resupply is needed.
`10 Anirudh Dhebar, “Innovating Around the Classic Razor-And-Blades Pricing Model” Babson College, April 2017.
`https://www.babson.edu/academics/executive-education/babson-insight/strategy-and-innovation/razor-and-blades-pricing-
`model/# (last visited Mar. 22, 2022).
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 8 of 51
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`31.
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`HP printers were traditionally sold at a substantial discount with the intent on profiting on
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`the sales of consumable supplies like toner and ink over the lifetime of the printer.11 Because HP’s profit
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`margin on the initial printer sale is much lower than that of its subsequent ink sales, HP depended on
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`recurring sales of its extremely high-priced HP Original Supplies as the lifeblood of its business 12
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`32.
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`HP’s Original Supplies are so excessively priced that commentators have remarked that
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`the price per ounce of HP’s ink and toner range between the prices of silver and gold (at $4,731 per
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`gallon).13
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`33.
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`The critical component of a successful razor and blades business model is that the market
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`for the replacement consumable(s) must be closed to competitors.14 If consumers can purchase “blades”
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`from anyone else, the model fails, as it cuts off the revenue stream generated from the exclusive sale of
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`replacement consumables, or, at the very least, renders the aftermarket for replacement consumables
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`substantially more competitive, driving prices down.15
`34.
`HP acknowledges that for some consumers, non-original inkjet cartridges (“third-party
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`cartridges”) are sufficient to meet its customers’ printing needs. Third-party cartridges are between
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`twenty-five to seventy-five percent (25-75%) less expensive than HP Original cartridges.16
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`11 See, e.g., HP Investor Tech Talk Transcript, SEEKING ALPHA (Dec. 3, 2020), https://seekingalpha.com/article/4392889-hp-
`inc-hpq-hp-investor-tech-talk-continuing-prints-evolution-launch-of-hp-transcript (“2020 Investor Tech Talk”); id. (“[W]e
`lose money about 25% of our customers. This is due to the fact that we invest money upfront in placing hardware, and we
`don't make that money back over the life of the product.”).
`12 See 2019 10K, HP INC., at 7,
`https://s2.q4cdn.com/602190090/files/doc_financials/2019/ar/hp-inc_10-ka-(1).pdf (last visited Feb. 7, 2022) (“2019 Annual
`Report”).
`13 See Eduardo Porter, “Why Printer Ink Is the Other ‘Black Gold.’” ALL THINGS CONSIDERED, NPR, May 24, 2012,
`https://www.npr.org/2012/05/24/153634897/why-printer-ink-is-the-other-black-gold (last visited Mar. 7, 2020).
`14 See Dhebar, Razor-and-Blades, supra note 10.
`15 Id.
`16 See, e.g., Complaint at 4, Hewlett-Packard Co. v. LD Products, Inc., No. 5-cv-00494 (N.D. Cal. filed Feb. 4, 2013)
`(describing the aftermarket for HP InkJet Cartridges and stating that third-party cartridges offered by HP’s competitors in that
`aftermarket are twenty-five to seventy-five percent less expensive than HP Original cartridges.).
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 9 of 51
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`35.
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`HP competes with sellers of third-party cartridges in the aftermarket for HP InkJet
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`Cartridges.17 Customers in that market substitute between HP Original cartridges and third-party
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`cartridges for use in their HP Printer.
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`36.
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`As a result, HP fears competition in its “Printing Supply Business” – the HP InkJet
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`Cartridge aftermarket – from what it refers to as “independent suppliers” who offer “non-original
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`supplies (including imitation, refill or remanufactured alternatives)” that are “often available for lower
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`prices.”18
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`37.
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`These competitors present a risk to HP’s critical Supplies revenue, and HP’s “[n]et
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`revenue for Supplies [in 2019] decreased 4.8% as compared to the prior-year period, primarily due to
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`demand weakness.”19
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`38.
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`HP’s public filings and internal investor presentations further indicate that competitors in
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`the HP InkJet Cartridge aftermarket have continually eaten into HP’s market share for HP InkJet
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`Cartridges. HP previously warned investors that “[f]inancial performance could also decline due to
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`increased competition from … non-original supplies”20 and “our supplies business has recently
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`experienced declining revenues due to declines in market share, installed base and usage, and increased
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`customer pricing sensitivity.”21
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`B.
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`HP’s New Strategy to Monopolize the HP InkJet Cartridge Aftermarket
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`39.
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`In recent years, HP has “modernized” its business strategy in Print – HP charges a higher
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`upfront price for the printer hardware if a customer chooses the flexibility of the “standard printing
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`model” and offers lower prices for customers who agree to use the “End to End” system.s.22
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`17 See, e.g., id.; ex. 1 (describing HP’s advertising that touts HP Original Supplies’ superiority over its competitors’
`supplies.).
`18 See 2019 Annual Report at 7.
`19 2019 Annual Report at 42.
`20 Id. at 12.
`21 Id. at 13.
`22 2020 Investor Tech Talk, (“Modernizing print is also about evolving our business model from one that's highly reliant on
`supplies to a more balanced model[. . .] Our standard system[’s] higher price reflects the fact that we want to actually make
`money on the hardware when we place the hardware in our standard systems, not counting on the annuity supplies.”).
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 10 of 51
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`40.
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`Intending to address HP’s declining market share in HP InkJet Cartridges, HP developed
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`a new strategy to bolster its critical revenue in Supplies (the “Playbook”); indeed, one of the Playbook’s
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`stated goals is to reduce HP’s mix of “unprofitable” customers.23
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`41.
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`Plaintiff is informed and believes that HP also intended to use the Playbook to
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`increase its market share in HP InkJet Cartridges by suppressing competition for HP InkJet
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`Cartridges and limiting consumer choice in the aftermarket for HP Inkjet Cartridges.24
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`42.
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`HP categorizes the users of its printers in relation to the users’ consumption of HP
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`Original cartridges; customers are categorized as: (1) “loyal” (customers who regularly use HP Original
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`cartridges), (2) “disloyal” (customers who occasionally use third-party cartridges), or (3) “non-loyal” or
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`“non-HP” (customers who purchase an HP Printer but do not use or purchase HP Inkjet Cartridges from
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`HP).25
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`43.
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`Plaintiff is informed and believes that HP developed the Playbook to reduce the number
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`of “disloyal” and “non-HP” customers and increase the number of “loyal customers” to increase HP’s
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`market share in the aftermarket for HP InkJet Cartridges and bolster the critical Supplies revenue stream.
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`23 See 2020 Strategic Plan at 10.
`24 See 2020 Strategic Plan at 10.
`25 ITALIAN COMPETITION AUTHORITY, Document P28451 at ¶¶ 75-76, available at https://em.agcm.it/en/media/press-
`releases/2020/12/PS11144 (last visited Feb. 10, 2022) (translation provided by Google).
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 11 of 51
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`44.
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`To those ends, HP now repeatedly states that it offers customers two choices at the point
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`of sale.26 Potential HP printer purchasers may choose between: (a) using the “standard printing model” –
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`wherein a consumer purchases an HP Printer and may choose whatever supplies that consumer desires
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`in the aftermarket for HP Inkjet Cartridges, or (b) using the “End to End System” – wherein a customer
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`agrees to use only HP Original Supplies by signing up for HP’s subscription programs such as Instant
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`Ink or HP+ programs.27
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`28
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`Under the “End to End System,” the customer purchases an HP printer that functions only with
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`supplies manufactured by HP – thus guaranteeing HP can derive profits from the consumer over
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`the entire lifespan of the printer. HP’s stated preference is for consumers to move to the “End to
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`End System” wherein the customer is both technologically and contractually obligated to
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`26 See Paul Kunert, HP to hike upfront price of printer hardware as ink biz growth runs dry, THE REGISTER (Oct. 9, 2019),
`https://www.theregister.com/2019/10/09/hp_supplies/.
`27 See 2020 Investor Tech Talk.
`28 2020 Strategic Plan at 10; see also Tuan Tran, 2019 SAM Presentation, at 10, 15-17, INVESTORS - HP,
`https://s2.q4cdn.com/602190090/files/doc_downloads/2019/SAM-2019-Tuan-Print-FINAL.pdf (last visited Feb. 10, 2022).
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 12 of 51
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`purchase and use only HP Original cartridges.29 HP confirmed that, if the desired mix of
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`customers moved to the “End-to-End System” HP would achieve a “100% aftermarket share.”30
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`45.
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`However, HP represents that customers who “want choice of Supplies” can use the
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`“Flexible System.”31 Under this standard printer model the customer can, according to HP, choose
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`between resupplying with HP Original cartridges or resupplying with third-party cartridges.
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`46.
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`Speaking for HP, the HP President of Imaging & Printing, Tuan Tran, stated at a 2019
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`Securities Analyst Meeting “that customers can pay for the full value of HP printers upfront, gaining the
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`flexibility for supplies.”32 Mr. Tran stated choosing the standard printing model “is like buying an
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`unlocked cellphone, and then choosing your own wireless carrier.” 33
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`47.
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`HP markets its own ink as the superior choice and states that, with the standard printing
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`model, “customers can enjoy HP’s superior printing hardware but obviously take risk if they choose
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`alternative supplies.”34
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`48.
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`Plaintiff and Class Members are among those customers who initially “want[ed] choice”
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`and thus purchased a Class Printer, believing that their Class Printer purchases provided a “flexible
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`choice.” Plaintiff and Class Members paid a higher upfront cost for their Class Printers, as HP
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`represented that the “standard printing model” allowed customers flexibility when choosing which
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`supplies to use in their printers.
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`49.
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`In reality, HP’s Playbook included tactics that HP knew would preclude customers from
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`realizing that purchasing flexibility in the HP InkJet Cartridge aftermarket. HP does not reveal before,
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`at, or after the point of sale that the “risk” in choosing third-party supplies is that HP will, at its
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`discretion, send malicious firmware updates that disable third-party cartridges.
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`29 See 2020 Investor Tech Talk.
`30 See id.
`31See Paul Kunert, HP to hike upfront price of printer hardware as ink biz growth runs dry, THE REGISTER (Oct. 9, 2019),
`https://www.theregister.com/2019/10/09/hp_supplies/.
`32 Id.
`33 Id.
`34 Id.
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 13 of 51
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`C.
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`HP’s Unlawful “Playbook”
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`50.
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`According to HP’s 2020 Strategic Plan, HP’s Playbook includes, among other tactics,
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`“authentication” procedures, “technology refreshes,” IP enforcement,35 and “driv[ing] preference for HP
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`supplies.” 36
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`37
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`51.
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`Plaintiff is informed and believes that the Playbook uses two independently unlawful
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`methods at issue in this case: (1) installing technology within its products that covertly records and
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`transmits data about customers’ printing habits – including number of pages printed, amount of ink used,
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`and type of cartridge installed (specifically, whether the cartridge is HP Original or third-party); and (2)
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`sending malware to its customers’ printers that causes printers equipped with competitors’ supply
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`cartridges to malfunction and/or disables those printers completely.
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`35 HP has, for years, systematically removed competing cartridges from the aftermarket using the legal system. For example,
`in the Northern District of California, HP brought and voluntarily dismissed a lawsuit against Datel for allegedly
`misappropriating trade secrets concerning key codes. Hewlett-Packard Co. v. Datel Holdings Ltd., No. 14-cv-02891-EJD
`(N.D. Cal. filed June 23, 2014) (voluntarily dismissed on Feb. 6, 2015). HP also brought and voluntarily dismissed a suit
`against Ninestar and Apex for making ink cartridge chips that allegedly infringed three HP patents. Hewlett-Packard Co. v.
`Ninestar, No. 14-cv- 04473-HSG (N.D. Cal. filed Oct. 6, 2014) (voluntarily dismissed on May 6, 2015).
`36 See 2020 Strategic Plan at 26. HP has acknowledged the effects that its so-called supplies “authentication” procedures
`can have on its market share in supplies (+5% market share).
`37 2020 Strategic Plan at 26.
`CLASS ACTION COMPLAINT
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`Case 5:22-cv-02327-BLF Document 1 Filed 04/14/22 Page 14 of 51
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`1.
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`HP’s covertly records and transmits data from each of its printers without the
`consent or knowledge of its consumers.
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`52.
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`HP openly maligns its customers that choose to use non-Original or third-party cartridges
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`as “unprofitable.” 38
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`39
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`53. Mr. Tran, speaking for HP at an “Investor Tech Talk,” stated that 25% of HP’s customers
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`act unprofitably by purchasing third-party cartridges and that third-party cartridges are “bad for
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`business.”40
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`54.
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`HP is aware of the exact number of customers using third-party cartridges because,
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`unbeknown