Fuji Xerox wins court battle against Seven Sydney

The finding by Justice McDougall brings to an end a long-drawn out and expensive court case that has fixated the local industry. Seven Sydney sued Fuji Xerox for breach of warranty and misrepresentation in relation to the capacities and performance of, and technical and other support, for the presses. Fuji Xerox cross sued to get payment for its presses. The judge has called for submissions on costs within 14 days.

The dispute centred on the installation of a DocuColor 70 and subsequently a DocuColor 100 in 1999 at Seven Sydney's premises. Agreeing with the report of the referee who heard months of technical argument, the judge found that the Fuji Xerox digital press, a re-badged version of the Xeikon printing engine, was able to deliver short-run digital printing. He said there was no misrepresentations made as its capacity and that a 90% to 95% uptime, "should have been an acceptable level for viable commercial operation of the press."

He made the point that such a level of availability would only be insufficient for viable commercial operation if, for the press to be commercially viable, Seven Sydney required a higher level of availability. There was no evidence that this was so; and, indeed, there was evidence that if Seven Sydney had the necessary volume of work (which it did not at any point have), then the machine could have been commercially viable at a much lower level of availability.

He also dismissed objections that Fuji Xerox was supposed to have promised that the DC 70 was able to deliver variable data printing, finding that in its original presentation the company had truthfully stated that such capability was still some time off. Seven Sydney operators admitted that when pre-flighting software was supplied it was often not used to prevent jobs crashing the machine. The referee also found failure to perform basic maintenance by the Seven Sydney operators, and adjustments made to the cutter by the operator - at first denied in court - contributed to the difficulties with the machine.

One of the puzzling aspects of the case to the court was the failure of Seven Sydney to involve its expert witnesses in subsequent re-commissioned operations of the DC100 first at the original premises and later at Trendsetting, the well-known Canberra prepress company. Treferee found that the D100 performed reliably under commercial operating conditions whilst at Trendsetting in Canberra. The Seven Sydney side maintained that the limited type of commercial work performed at Trendsetting made the operations meaningless.

The judge found, Seven Sydney's complaint on the adoption hearing sits ill with the circumstance that its experts did not see fit to attend the testing at Trendsetting and that, as a result, it scarcely cross-examined the witnesses who gave evidence in relation to that testing. I see no reason to interfere with the referee's reliance on the testing.

The unusual case brought into the open the difficulties of early adoption of new technology. It brought many high-profile industry identities into the witness box, notably Roger Morgan for Fuji Xerox, who was fired up at the suggestion that he and his team had made any misrepresentations about the capability of the press, or that the company had not provided sufficient backup. On the other said Peter O'Hanlon, who originally bought the press, engaged Phil Lawrence and Garry Muratore as expert witness for Seven Sydney.

The case pivoted on the industry's expectation that digital printing, especially variable data output, would take off much faster than proved to be the case. While many operators crashed and burned in those early days, few attempted to load all the blame back onto the digital press manufacturers. While many of the machines went back to the companies, most buyers accepted that building the digital printing market had proved to be a more difficult task than first imagined. The case reinforces that when it comes to inaugurating new technology the best business model is a partnership between customer and supplier.