Jazz Photo Corp. v. United States

353 F. Supp. 2d 1327, 28 Ct. Int'l Trade 1954, 28 C.I.T. 1954, 27 I.T.R.D. (BNA) 1112, 2004 Ct. Intl. Trade LEXIS 149
CourtUnited States Court of International Trade
DecidedNovember 17, 2004
DocketSlip Op. 04-146; Court 04-00494
StatusPublished
Cited by8 cases

This text of 353 F. Supp. 2d 1327 (Jazz Photo Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of International Trade primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jazz Photo Corp. v. United States, 353 F. Supp. 2d 1327, 28 Ct. Int'l Trade 1954, 28 C.I.T. 1954, 27 I.T.R.D. (BNA) 1112, 2004 Ct. Intl. Trade LEXIS 149 (cit 2004).

Opinion

OPINION

STANCEU, Judge.

Plaintiff Jazz Photo Corporation (“Jazz”) is an importer of “lens-fitted film packages” (“LFFPs”), more commonly known as “disposable cameras,” “single use cameras,” or “one-time use cameras.” In this case, Jazz contests the denial by U.S. Customs and Border Protection (“Customs”) of its administrative protest, in which it challenged decisions made by Customs on September 24 and' 26, 2004, to exclude from entry two shipments of Jazz’s LFFPs that were entered at the Port of Los Ange-les/Long Beach on August 26 and 27, 2004, respectively. Customs acted on its conclusion that Jazz had failed to prove its imported cameras were outside the scope of a general exclusion order issued in 1999 by the U.S. International Trade Commission (“ITC”) under Section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (2000) (“Section 337”). See In the Matter of Certain Lens-Fitted Film Packages, USITC Inv. No. 337-TA-406, Pub. No. 3219 (1999). The ITC’s general exclusion order applies to LFFPs produced and imported by 26 parties, including Jazz, who participated as respondents in Section 337 proceedings initiated by Fuji Photo Film Co., Ltd. (“Fuji”), the holder of various patents used in manufacturing LFFPs. 1 In those proceedings and an enforcement proceeding conducted earlier this year, the ITC determined that disposable cameras imported by Jazz infringed patents held by Fuji.

All of the Jazz cameras at issue are “reloaded” cameras (also known as “refurbished” cameras), i.e., the cameras initially were manufactured by Fuji or one of its licensees (Kodak, Concord, or Konica) and, after being used by consumers and collected following photo processing, were fitted with new film and, in some instances, new flash batteries. Jazz obtained the reloaded cameras from Polytech Enterprise Limited (“Polytech”), which processed the subject cameras at its facility in China. That processing, the nature of which is one of the issues in contention in this case, consisted of various operations which, in addition to film and battery replacement, were required to produce a functional and mar *1330 ketable camera. The processing included repair to the camera case to exclude light following the film reloading operation, repackaging, and relabeling under Jazz’s trademark. Also at issue in this case are the circumstances under which spent disposable cameras, known in the trade as “shells,” were collected for use in Poly-tech’s reloading operations.

Under Section 337, Customs is charged with enforcing the ITC’s general exclusion order with respect to imported disposable cameras offered for admission into the United States. To demonstrate that the cameras in the two entries at bar are entitled to admission under the ITC’s general exclusion order, Jazz must establish that the shells used by Polytech to produce the reloaded cameras resulted from disposable cameras that had undergone a patent-exhausting “first sale” in the United States. To be “patent-exhausting,” the sale in the United States must be made under the authority of Fuji or one of its licensees. Jazz also must demonstrate that the processing Polytech performed to reload the cameras was a “permissible repair” of the original camera as opposed to a “prohibited reconstruction.” Both of these requirements stem from the decision of the U.S. Court of Appeals for the Federal Circuit in Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094 (Fed.Cir.2001), ce rt. denied, 536 U.S. 950, 122 S.Ct. 2644, 153 L.Ed.2d 823 (2002). There, the Court of Appeals, in reviewing the underlying general exclusion order, reversed the ITC’s judgment of patent infringement regarding LFFPs for which the patent rights were exhausted by first sale in the United States, and that were permissibly repaired. Id. at 1110.

The court exercises jurisdiction over this matter pursuant to 28 U.S.C. § 1581(a) (2000). The court set an expedited trial schedule with the consent of both parties. 2 At a four-day bench trial held October 12-14 and October 18, 2004, plaintiff produced evidence establishing permissible repair for all of the cameras in the two entries. Plaintiff produced evidence sufficient to establish “first sale” for only some of the subject cameras, as identified further in this opinion. Defendant United States presented no case in chief and instead relied principally on its cross-examination of the two witnesses called by Jazz at trial, and on its interpretation of the “first sale” requirement as addressed by the Court of Appeals for the Federal Circuit, to support its contention that Jazz failed to meet its burden of proof as to any camera offered for admission.

The court concludes, based on the record made in these proceedings, that only the aforementioned cameras for which plaintiff produced evidence sufficient to establish “first sale” in the United States qualify for admission, and only to the extent that the court has identified those specific cameras as capable of being segregated from the remaining cameras in the two shipments. The court concludes that those remaining cameras are required to be exported or otherwise disposed of according to applicable customs laws.

I. BACKGROUND

This litigation did not arise in isolation. Its roots are in other proceedings in which *1331 Fuji claimed that Jazz’s business activities involving single use cameras infringed its patent rights.

In the 1999 Section 337 action mentioned above, Fuji charged that 27 respondents, including Jazz, were infringing fifteen of Fuji’s patents. The ITC found infringement on the part of 26 respondents, including Jazz, and on June 2, 1999 issued its General Exclusion Order and Order to Cease and Desist (“Exclusion Order”) that, inter alia, prohibited the importation into the United States of “Certain Lens-Fitted Film Packages.” The Court of Appeals for the Federal Circuit stayed the Exclusion Order pending appeal. See Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d at 1098. The Court of Appeals affirmed the Commission’s orders; however, it provided for one exception to the Exclusion Order, holding that “[t]he [ITC’s] judgment of patent infringement is reversed with respect to LFFPs for which the patent right was exhausted by first sale in the United States, and that were permissibly repaired.” Id. at 1110.

In addressing the questions of first sale and permissible repair, the Court of Appeals for the Federal Circuit stated the general rule that “patented articles when sold ‘become the private individual property of the purchasers, and are no longer specifically protected by the patent laws.’ ” Id. at 1102 (quoting Mitchell v. Hawley, 83 U.S. (16 Wall) 544, 548, 21 L.Ed. 322 (1872)). “The purchaser of a patented article has the rights of any owner of personal property, including the right to use it, repair it, modify it, discard it, or resell it, subject only to overriding conditions of the sale.” Id.

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Bluebook (online)
353 F. Supp. 2d 1327, 28 Ct. Int'l Trade 1954, 28 C.I.T. 1954, 27 I.T.R.D. (BNA) 1112, 2004 Ct. Intl. Trade LEXIS 149, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jazz-photo-corp-v-united-states-cit-2004.