Jazz Photo Corp. v. U.S.

• Decision Date: 28 February 2006
• Docket Number: No. 05-1096.,No. 05-1175.,No. 05-1109.,05-1096.,05-1109.,05-1175.
• Citation: 439 F.3d 1344
• Parties: JAZZ PHOTO CORPORATION, Plaintiff-Cross-Appellant, v. UNITED STATES, Defendant-Appellant. and Fuji Photo Film Co., Ltd., Movant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

439 F.3d 1344

JAZZ PHOTO CORPORATION, Plaintiff-Cross-Appellant, v. UNITED STATES, Defendant-Appellant. and Fuji Photo Film Co., Ltd., Movant-Appellant.

No. 05-1096.

No. 05-1109.

No. 05-1175.

United States Court of Appeals, Federal Circuit.

February 28, 2006.

COPYRIGHT MATERIAL OMITTED

John M. Peterson, Neville Peterson LLP, of New York, New York, argued for plaintiff-cross appellant. With him on the brief were Curtis W. Knauss and Maria E. Celis, of New York, New York; and, George W. Thompson and Catherine Chess Chen, of Washington, DC.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant. With her on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; and David S. Silverbrand, Attorney. Of counsel on the brief were Karen P. Binder, Assistant Chief Counsel, and Beth C. Brotman, Senior Attorney, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, New York.

Lawrence Rosenthal, Stroock & Stroock & Lavan LLP, of New York, New York, argued for movant-appellant. With him on the brief were Matthew W. Siegal and Kevin C. Ecker. Of counsel was Angie M. Hankins. Also of counsel were Will E. Leonard and Harvey B. Fox, Adduci, Mastriani & Schaumberg, LLP, of Washington, DC.

Before NEWMAN, LOURIE, and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

The United States and Fuji Photo Film Co., Ltd. ("Fuji") appeal from the final decision of the Court of International Trade ordering the United States Bureau of Customs and Border Protection ("Customs") to release for entry certain Jazz Photo Corporation ("Jazz") lens-fitted film packages ("LFFPs") from two shipments that were denied entry by Customs on August 25 and 26, 2004, and ordering Customs to allow Jazz to complete the process of segregating the two shipments of LFFPs under the supervision of Customs. Jazz Photo Corp. v. United States, No. 04-00494 (Ct. Int'l Trade Nov. 17, 2004) ("Final Judgment"). Customs excluded the two shipments of Jazz's LFFPs based on a General Exclusion Order and Order to Cease and Desist ("Exclusion Order") of the United States International Trade Commission (the "Commission") issued June 2, 1999, under Section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (2000) ("Section 337"). Because the Court of International Trade did not err in holding that Jazz proved the affirmative defense of first sale and permissible repair for the LFFPs released for importation, did not err in ordering Customs to allow Jazz to complete the process of segregating the two shipments of Jazz's LFFPs under Customs' supervision, did not err in denying Fuji leave to intervene, did not err in not joining Fuji as a necessary party, and did not abuse its discretion in denying Fuji the ability to attend the entire trial and access the trial record, we affirm.

BACKGROUND

This is the fourth case to come before this court involving Jazz's importation of LFFPs, also known as "disposable cameras," "single use cameras," or "one-time use cameras." The initial proceeding began in 1998, when Fuji filed a complaint at the Commission, alleging that 27 respondents, including Jazz, were violating Section 337 by importing into the United States articles that infringed fifteen patents owned by Fuji or by importing articles that were produced by means of a process covered by the claims of Fuji's patents. Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094, 1098 (Fed.Cir. 2001) ("Jazz I"). The Commission held that 26 respondents, including Jazz, infringed all or most of the claims in suit of fourteen of Fuji's patents and it issued an Exclusion Order on June 2, 1999, prohibiting the importation into the United States of certain LFFPs. We stayed the Commission's order pending appeal. On August 21, 2001, we reversed the Commission's judgment of patent infringement "with respect to LFFPs for which the patent right was exhausted by first sale in the United States, and that were permissibly repaired," and affirmed the Commission's order for all other cameras. Id. at 1110.

Fuji also filed a second action at the Commission in June 2001 seeking institution of a formal enforcement proceeding to enforce the Exclusion Order and to impose civil penalties. Fuji Photo Film Co., Ltd. v. Int'l Trade Comm'n, 386 F.3d 1095, 1097-98 (Fed.Cir.2004) ("Jazz II"). In May 2002, the administrative law judge found that Jazz had violated the Exclusion Order with respect to some LFFPs imported by Jazz from August 21, 2001, through December 12, 2003; that determination became the final determination of the Commission on July 27, 2004. Subsequently, on January 14, 2005, the Commission imposed a $13,675,000 civil penalty against Jazz.

In addition to the two actions before the Commission, Fuji filed suit against Jazz for patent infringement in the United States District Court for the District of New Jersey on June 23, 1999, seeking damages and injunctive relief for direct and indirect infringement of its LFFP patents between 1995 and August 21, 2001. Fuji Photo Film Co. Ltd. v. Jazz Photo Corp., 394 F.3d 1368, 1371 (Fed.Cir.2005) ("Jazz III"). After a jury trial, the court entered judgment on March 18, 2003, that Jazz was liable for willful infringement of Fuji's patents and awarded damages of $29,765,280.60. Id. at 1372. We affirmed that court's judgment on January 14, 2005.

The present appeal arises from Customs' decision to exclude from entry two shipments of LFFPs that Jazz imported at the Port of Los Angeles/Long Beach on August 25 and 26, 2004. All the subject LFFPs were "reloaded" cameras, also known as "refurbished" cameras, that were initially manufactured by Fuji or one of its licensees (Kodak, Concord, or Konica) and, after being used by consumers and collected following photo processing, were processed by Polytech Enterprise Limited ("Polytech") in China. Jazz Photo Corp. v. United States, 353 F.Supp.2d, 1327, 1329 (Ct. Int'l Trade 2004) ("Decision"). That processing included fitting the camera with new film, and in some instances with new flash batteries, repairing the camera case to exclude light following the film reloading operation, repackaging, and relabeling under Jazz's trademark. Id. at 1329-30. Some of the subject LFFPs were processed using spent disposable cameras or "shells" that Polytech obtained from a collector of shells, Photo Recycling Enterprise, Inc. ("Photo Recycling"). Id. at 1341. The remaining subject LFFPs were processed using shells that Jazz acquired from a company known as Seven Buck's, Inc. ("Seven Buck's") and provided to Polytech. Id. Jazz's inventory control system identified the reloaded cameras processed using Photo Recycling's shells separately from the reloaded cameras processed using Seven Buck's shells. Id.

Customs concluded that Jazz had failed to prove that the subject LFFPs were outside the scope of the Exclusion Order and excluded the two shipments from entry on September 24 and 26, 2004. Id. at 1329. Jazz then filed a protest to Customs' decision under 19 U.S.C. § 1514(a), and Customs denied Jazz's protest on September 29, 2004. Id. On October 4, 2004, Jazz challenged Customs' denial of its administrative protest in the Court of International Trade under 28 U.S.C. § 1581(a), seeking an order that the subject LFFPs were admissible into the United States and an order directing Customs to release the subject LFFPs.

After a bench trial, the Court of International Trade held on November 17, 2004, that Jazz established by a preponderance of the evidence that the subject LFFPs processed using Photo Recycling's shells were first sold in the United States and permissibly repaired, and thus that those LFFPs should be released by Customs for entry. Id. at 1363. The court also held that Jazz did not establish by a preponderance of the evidence that the subject LFFPs processed using Seven Buck's shells were first sold in the United States, and thus that those LFFPs were properly excluded from entry by Customs. Id. at 1364.

The court made factual findings supporting its conclusions on three issues: permissible repair, first sale, and segregation. First, the court relied on the testimony of Michal Zawodny, the Quality Assurance Manager for Jazz, in concluding that Polytech refurbished all of the subject LFFPs in a process that constituted permissible repair. Id. at 1347-48. Second, the court credited the testimony of Leon Silvera, the President of Photo Recycling, in holding that the subject LFFPs processed using Photo Recycling's shells were first sold in the United States. Id. at 1348-49. The court relied in part on a "presumption of regularity," reasoning that any "new single use cameras identified by the Exclusion Order that are commercially imported by anyone other than Fuji or one of its licensees would be unlawful imports and presumed to be excluded from the U.S. market." Id. at 1334. The court also observed that while this presumption does not extend to the LFFPs called "tourist" cameras because the Exclusion Order contains an exception allowing noncommercial importations, there was "no record evidence from which the court may conclude that the subject merchandise actually includes cameras refurbished from tourist shells." Id. at 1338. At the same time, the court found that the subject LFFPs processed using Seven Buck's shells were not first sold in the United States. Finally, the court found that the subject LFFPs processed using Seven Buck's shells were located in Master Lot Number 463, and thus could be segregated from the subject LFFPs made using Photo Recycling's shells that were not included in Master Lot Number 463. Id. at 1354.

On November 17, 2004, the court entered final judgment in favor of Jazz as to the subject LFFPs processed using Photo Recycling's shells, and in favor of the government as to the...