Jazz Photo Corp v. International Trade Commission, s. 99-1431

Citation59 USPQ2d 1907,264 F.3d 1094
Decision Date21 August 2001
Docket NumberNos. 99-1431,99-1596,99-1601,99-1504,99-1595,s. 99-1431
Parties(Fed. Cir. 2001) JAZZ PHOTO CORPORATION, Appellant, and DYNATEC INTERNATIONAL, INC., Appellant, and OPTICOLOR, INC., Appellant, v. INTERNATIONAL TRADE COMMISSION, Appellee, and FUJI PHOTO FILM CO., LTD., Intervenor
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1094

264 F.3d 1094 (Fed. Cir. 2001)
JAZZ PHOTO CORPORATION, Appellant,
and
DYNATEC INTERNATIONAL, INC., Appellant,
and
OPTICOLOR, INC., Appellant,
v.
INTERNATIONAL TRADE COMMISSION, Appellee,
and
FUJI PHOTO FILM CO., LTD., Intervenor.
Nos. 99-1431, 99-1504, 99-1595, 99-1596, 99-1601
United States Court of Appeals for the Federal Circuit
August 21, 2001

Appealed from: United States International Trade Commission

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Copyrighted Material Omitted

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Copyrighted Material Omitted

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Jeffrey I. Kaplan, Kaplan & Gilman, L.L.P., of Woodbridge, New Jersey, argued for appellant Jazz Photo Corporation.

L. David Griffin, Workman, Nydegger & Seeley, of Salt Lake City, Utah, argued for appellant Dynatec International, Inc. With him on the brief were Larry R. Laycock, and David R. Wright.

Richard L. Goff, Heller Ehrman White & McAuliffe, of Seattle, Washington, for appellant Opticolor, Inc.

Jean H. Jackson, Attorney, Office of General Counsel, U.S. International Trade Commission, of Washington, DC, argued for appellee United States International Trade Commission. With her on the brief were Lyn M. Schlitt, General Counsel; and James A. Toupin, Deputy General Counsel. Of counsel were Andrea C. Casson, Attorney; and Shara L. Aranoff, Attorney.

Lawrence Rosenthal, Stroock & Stroock & Lavan LLP, of New York, New York, argued for intervenor Fuji Photo Film Co., Ltd. With him on the brief were Mattthew W. Siegel, James J. DeCarlo, and Lisa A. Jakob. Of counsel on the brief were Will E. Leonard, Jr., and F. David Foster,

Page 1098

Ablondi, Foster, Sobin & Davidow, P.C., of Washington, DC.

Before NEWMAN, MICHEL, and GAJARSA, Circuit Judges.

NEWMAN, Circuit Judge.

In an action brought under section 337 of the Tariff Act of 1930 as amended, 19 U.S.C. 1337, Fuji Photo Film Co. charged twenty-seven respondents, including the appellants Jazz Photo Corporation, Dynatec International, Inc., and Opticolor, Inc., with infringement of fifteen patents owned by Fuji. The charge was based on the respondents' importation of used "single-use" cameras called "lens-fitted film packages" (LFFP's), which had been refurbished1 for reuse in various overseas facilities. Section 337 makes unlawful "[t]he importation into the United States . . . of articles that . . . infringe a valid and enforceable United States patent . . . [or that] are made, produced, processed, . . . under, or by means of, a process covered by the claims of a valid and enforceable United States patent." 19 U.S.C. 1337(a)(1)(B). Eight respondents did not respond to the Commission's complaint, ten more failed to appear before the Commission, and one was dismissed. Eight respondents participated in the hearing, and three have taken this appeal.

The Commission determined that twenty-six respondents, including the appellants, had infringed all or most of the claims in suit of fourteen Fuji United States patents,2 and issued a General Exclusion Order and Order to Cease and Desist. In the Matter of Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int'l Trade Comm'n June 28, 1999). This court stayed the Commission's orders during this appeal. Dynatec Int'l, Inc. v. Int'l Trade Comm'n, No. 99-1504 (Fed. Cir. Sept. 24, 1999) (unpublished).

The Commission's decision rests on its ruling that the refurbishment of the used cameras is prohibited "reconstruction," as opposed to permissible "repair." On review of the law and its application, we conclude that precedent does not support the Commission's application of the law to the facts that were found. We conclude that for used cameras whose first sale was in the United States with the patentee's authorization, and for which the respondents permitted verification of their representations that their activities were limited to the steps of (1) removing the cardboard cover, (2) cutting open the plastic casing, (3) inserting new film and a container to receive the film, (4) replacing the winding wheel for certain cameras, (5) replacing the battery for flash cameras, (6) resetting the counter, (7) resealing the outer case, and (8) adding a new cardboard cover, the totality of these procedures does not satisfy the standards required by precedent for prohibited reconstruction; precedent requires, as we shall discuss, that the described

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activities be deemed to be permissible repair.

For those cameras that meet the criteria outlined above, the Commission's ruling of patent infringement is reversed and the Commission's exclusion and cease and desist orders are vacated. For all other cameras, the Commission's orders are affirmed.

DISCUSSION

Commission factual findings are reviewed in accordance with the standards of the Administrative Procedure Act, and are sustained when they are supported by substantial evidence. 5 U.S.C. 706(2)(E); Tandon Corp. v. United States Int'l Trade Comm'n, 831 F.2d 1017, 1019, 4 USPQ2d 1283, 1284-85 (Fed. Cir. 1987). The Commission's legal determinations receive plenary review. Checkpoint Sys., Inc. v. United States Int'l Trade Comm'n, 54 F.3d 756, 759-60, 35 USPQ2d 1042, 1045 (Fed. Cir. 1995). The application of the law of repair and reconstruction to fact is treated in precedent as a legal determination, and is reviewed without deference. Sandvik Aktiebolag v. E.J. Co., 121 F.3d 669, 672, 43 USPQ2d 1620, 1622 (Fed. Cir. 1997).

I

The Patented Inventions

The LFFP is a relatively simple camera, whose major elements are an outer plastic casing that holds a shutter, a shutter release button, a lens, a viewfinder, a film advance mechanism, a film counting display, and for some models a flash assembly and battery. The casing also contains a holder for a roll of film, and a container into which the exposed film is wound. At the factory a roll of film is loaded into the camera. The casing is then sealed by ultrasonic welding or light-tight latching, and a cardboard cover is applied to encase the camera.

LFFPs are intended by the patentee to be used only once. Afer the film is exposed the photo-processor removes the film container by breaking open a pre-weakened portion of the plastic casing which is accessed by removal of the cardboard cover. Discarded LFFPs, subsequently purchased and refurbished by the respondents, are the subject of this action.

The parts of an LFFP are illustrated in Figure 8 of the '087 patent:

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Claim 1 of the '087 patent is representative of claims directed to the entire LFFP:

1. A lens-fitted photographic film package having an externally operable member for effecting an exposure, comprising:

a light-tight film casing which must be destroyed to open the same, having an opening through which said exposure is made when said externally operable member is operated;

an unexposed rolled film disposed on one side of said opening in said light-tight casing;

a removable light-tight film container having a film winding spool therein disposed on the opposite side of said opening in said light-tight casing from said rolled film, one end of said rolled film being attached to said film winding spool;

means for winding said rolled film into said light-tight film container and around said film winding spool;

and winding control means responsive to operation of said externally operable member for allowing said film winding spool to rotate so as to enable said rolled film to be advanced by only one frame after every exposure; said winding control means including: a sprocket wheel driven by movement of said rolled film;

and a frame counter driven by said sprocket wheel, said frame counter being provided with indications designating a series of frame numbers and means for disabling said winding control means responsive to said frame counter indicating there remains on said unexposed film no film frame capable of being exposed.

Other patents are directed to various components of the LFFP. The '857 patent is directed to a specific film winding mechanism. The '495 patent is directed to a mechanism whereby the film in the LFFP is advanced smoothly without being scratched or gouged, and which prevents the film roll from becoming loose. The '774 patent is directed to the film chambers and film path. The '364 patent claims the LFFP with a flash unit comprising a circuit board, a capacitor, a discharge (flash) tube, and a battery. The '111 patent is directed to the pushbutton that trips the shutter and has a protective

Page 1101

structure that prevents the pushbutton from accidentally being depressed. The '200 patent is directed to the shutter mechanism, including the shutter mount, shutter opening, and shutter blade. The '288 patent claims an LFFP in which the winding wheel and film cassette are positively linked through a gear and shaft mechanism requiring the two to rotate relative to each other, avoiding the loss of usable film. The '685 patent is directed to an LFFP assembly that allows easier recycling of used plastic and metal, in which the plastic casing including the film path and film chambers is easily separable from the photo-taking unit containing metal parts including the shutter mechanism and the winding and stop mechanisms.

It is not disputed that the imported refurbished cameras contain all of the elements of all or most of the claims in suit.

The Accused Activities

The appellants import used LFFPs that have been refurbished by various overseas entities (called "remanufacturers" in the ITC proceeding). Some of the remanufacturers refused discovery entirely or in part, and some presented evidence that the ALJ found incomplete or not credible. The Commission explains: "Since so little was known about the accused infringing processes, the ALJ considered the common steps that each participating respondent admitted during the hearing were part of their processes." ITC Brief at 15-16. The ALJ summarized these common steps as follows:

removing the cardboard cover;

opening the LFFP body (usually...

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