The suit filed Monday in the Western District of New York alleges deliberate breach of contract. It claims that after a 10-year relationship in which Collins leveraged Kodak's proprietary know-how and exclusive distributor relationship to, in effect, control 90% of the Versamark ink market, Collins turned around and tried to use that position to extract concessions from Kodak in regards to its Prosper equipment and ink business.

When that effort failed, the suit claims Collins announced that, effective immediately, it would no longer honor its existing supply and distribution contract with Kodak. The suit noted that is in clear violation of the contract, which called for Collins to provide 180 days' notice if it was ending the deal without cause, and 30 days' notice to end the agreement with cause. 

In addition to unspecified damages, Kodak is asking the court to rule that Collins may not treat the agreement between the two companies as terminated: that it has to continue to supply Kodak with all ink Collins produces for Kodak print engines and they must not sell any of that ink to any company but Kodak.

The law suit came only days after Collins issued a press release saying it was ending its Versamark deal with Kodak. "Effective immediately, customers with high-speed Kodak Versamark printers can purchase their fluids directly from Collins Ink at recently announced prices," the release stated. "Collins will continue to offer inks for all models of Kodak Versamark CIJ inkjet printers and continue to offer a range of both standard and custom inks."

The release adds that Collins has produced ink for Versamark printers for over 20 years, which includes the period when the Versamark brand was owned by Scitex prior to its acquisition by Kodak.  Collins founder/president Lawrence Gamblin did not respond to an interview request from PrintWeek, but has publicly suggested going from Kodak supplier to Kodak competitor was the right move for his company.

In an interview with PrintWeek, Michael Marsh, general manager of Kodak Digital Imaging Systems and Customer Growth, said Kodak is already ramping up its own internal ink production at its Dayton, Ohio facility.

"Our goal is to make sure our customers are not interrupted and they have a sure supply of ink," he added. "There are a few customers that use spot color ink and custom inks and their supply may be affected for a short period of time. Our legal action is designed to help as a bridge for those customers. If we can compel Collins through the court injunction that's one way. In the end though if those customers need ink - and Collins is the only way to get it - then those customers should buy from Collins."

The lawsuit alleged that among the specialty inks provided by Collins for Versamark digital printing are ones used in scratch-off lottery tickets. 

Though it currently produces only 10% of the Versamark ink supply, Marsh said Kodak is not looking for a new outside ink supplier to replace Collins. "We have all the capacity we need internally and the only reason there's some sort of gap with these spot color and custom inks is the particular formulas that these customers have can be hard to duplicate," he said. "But we've made ink all along and we have more than enough capacity to meet the demand."

Marsh noted that ink production for Versamark has been profitable venture for Kodak, but stressed, "We view ink as just one component of a writing system in the case of both Versamark and Prosper."

For that reason, Marsh said he doesn't necessarily fear getting into a price war with Collins over Versamark ink, adding that Kodak is currently reaching out to every Versamark customer individually to make sure there's a plan in place so they have a steady supply of ink.

"I'm not sure how Collins is going to approach this, but from our point of view, ink is only one part of the customer service we can bring," Marsh said. "We not only manufacture the ink, but we also manufacture the print heads, the service - Collins may want to try to compete on price, but we'd much rather compete on value because there's so many other things we bring to the table, of which price is only one component."

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Kodak faces bondholder pressure over patent sale