Fujifilm Corp. v. Benun | |
---|---|
Court | United States Court of Appeals for the Federal Circuit |
Full case name | Fujifilm Corporation, Plaintiff-Appellee, v. Jack C. Benun, and Jazz Products LLC, Polytech Enterprises LTD, and Polytech (Shenzhen) Camera Co. LTD., Defendant-Appellant |
Decided | May 27 2010 |
Citation(s) | 605 F.3d 1366; 95 U.S.P.Q.2d 1985 |
Case history | |
Prior action(s) | Case No. 2:05-CV-1863 (United States District Court for the District of New Jersey 2009) (finding that that defendants infringed patents owned by Fujifilm Corporation) |
Holding | |
The judgment of the United States District Court for the District of New Jersey that the defendants infringed patents owned by Fujifilm Corporation is affirmed. | |
Court membership | |
Judge(s) sitting | Paul Redmond Michel, Haldane Robert Mayer, Richard Linn |
Case opinions | |
Per curiam. |
Fujifilm Corp v. Benun, 605 F.3d 1366 (Fed. Cir. 2010) [1] was a case in which the United States Court of Appeals for the Federal Circuit affirmed the judgment made by the United States District Court for the District of New Jersey that the defendants infringed patents owned by Fujifilm Corporation.
The Federal Reporter is a case law reporter in the United States that is published by West Publishing and a part of the National Reporter System. It begins with cases decided in 1880; pre-1880 cases were later retroactively compiled by West Publishing into a separate reporter, Federal Cases. The third and current Federal Reporter series publishes decisions of the United States courts of appeals and the United States Court of Federal Claims; prior series had varying scopes that covered decisions of other federal courts as well. Though West is a private company that does not have a legal monopoly over the court opinions it publishes, it has so dominated the industry in the United States that legal professionals, including judges, uniformly cite to the Federal Reporter for included decisions. It is estimated that the Fourth Series of the Federal Reporter will begin sometime around 2025. The United States Reports are the official law reports of the rulings, orders, case tables, and other proceedings of the Supreme Court of the United States.
The United States Court of Appeals for the Federal Circuit is a United States court of appeals headquartered in Washington, D.C. The court was created by Congress with passage of the Federal Courts Improvement Act of 1982, which merged the United States Court of Customs and Patent Appeals and the appellate division of the United States Court of Claims, making the judges of the former courts into circuit judges. The Federal Circuit is particularly known for its decisions on patent law, as it is the only appellate-level court with the jurisdiction to hear patent case appeals.
The United States District Court for the District of New Jersey is a federal court in the Third Circuit.
Fujifilm is the owner of patents in the design and production of single-use, disposable cameras, or lens-fitted film packages (LFFPs). After being used, a LFFP is taken by a customer to a film processor who opens the LFFP and processes the film. The empty LFFPs can be refurbished by a company by replacing the film as well as any broken or worn components. Defendant Polytech (Shenzhen) Camera Company (PC), a subsidiary of co-defendant Polytech Enterprises Ltd. (PE), operated a factory in China that refurbished LFFPs originally sold by Fujifilm outside the US. Defendant Jazz Products LLC, owned by defendant Jack C. Benun, purchased refurbished LFFPs from Polytech Camera to be sold in the US. [2]
Fujifilm Holdings Corporation, trading as Fujifilm, or simply Fuji, is a Japanese multinational photography and imaging company headquartered in Tokyo.
A disposable or single-use camera is a simple box camera meant to be used once. Most use fixed-focus lenses. Some are equipped with an integrated flash unit, and there are even waterproof versions for underwater photography. Internally, the cameras use a 135 film or an APS cartridge.
Photographic processing or development is the chemical means by which photographic film or paper is treated after photographic exposure to produce a negative or positive image. Photographic processing transforms the latent image into a visible image, makes this permanent and renders it insensitive to light.
In 2005, Fujifilm successfully sued Jazz Photos, another company owned by Benun, for patent infringement and was awarded $30 million, forcing both Jazz and Benun to file for bankruptcy. Despite the district court's preliminary injunction enjoining the defendants from infringing, Jazz Products purchased about 1.4 million LFFPs made by Polytech and re-imported them into the US. In 2006, the district court found the defendants in contempt of the preliminary injunction, and approved $2 per infringing LFFP running royalty. [3]
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial to constitute patent infringement.
Bankruptcy is a legal status of a person or other entity who cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.
A defendant is a person accused of committing a crime in criminal prosecution or a person against whom some type of civil relief is being sought in a civil case.
The defendants appealed to the Federal Circuit Court of Appeals and the Circuit Court waived one of the four issues presented by the defendants and rejected the other three.
The defendants contended that "the court invoked non-mutual collateral estoppel and precluded Polytech from presenting its permissible repair and first sale defenses on the basis of court proceedings to which Polytech was not a party." However, this argument was waived because it was not raised at the right time during the defendants' 50(a) motion for judgement as a matter of law and 50(b) post-trial motion. [1]
Collateral estoppel (CE), known in modern terminology as issue preclusion, is a common law estoppel doctrine that prevents a person from relitigating an issue. One summary is that, "once a court has decided an issue of fact or law necessary to its judgment, that decision ... preclude[s] relitigation of the issue in a suit on a different cause of action involving a party to the first case". The rationale behind issue preclusion is the prevention of legal harassment and the prevention of overuse or abuse of judicial resources.
The first-sale doctrine is a legal concept playing an important role in U.S. copyright and trademark law by limiting certain rights of a copyright or trademark owner. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder put the products on the market. The doctrine is also referred to as the "right of first sale," "first sale rule," or "exhaustion rule."
In Quanta Computer, Inc. v. LG Electronics, Inc. , [4] the Supreme Court ruled that Intel selling chips to Quanta exhausted LG's patent rights. LG licensed Intel to use its patent, and the patent is practiced when Quanta combined Intel's chips with non-Intel hardware, triggering patent exhaustion. The defendants argued that the Quanta case eliminated the territoriality requirement, hence's Fujifilm's sales of LFFP outside the US exhausted its patent rights as well, allowing the defendants to refurbish and resell them in the US. However, because the Quanta case did not involve foreign sales, the Circuit Court rejected the defendants' argument. [1]
Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), is a decision of the United States Supreme Court in which the Court reaffirmed the validity of the patent exhaustion doctrine, and in doing so made uncertain the continuing precedential value of a line of decisions in the Federal Circuit that had sought to limit Supreme Court exhaustion doctrine decisions to their facts and to require a so-called "rule of reason" analysis of all post-sale restrictions other than tie-ins and price fixes. In the course of restating the patent exhaustion doctrine, the Court held that the exhaustion doctrine is triggered by, among other things, an authorized sale of a component when the only reasonable and intended use of the component is to practice the patent and the component substantially embodies the patented invention by embodying its essential features. The Court also overturned, in passing, the part of decision below that held that the exhaustion doctrine was limited to product claims and did not apply to method claims.
Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California, in the Silicon Valley. It is the world's second largest and second highest valued semiconductor chip manufacturer based on revenue after being overtaken by Samsung, and is the inventor of the x86 series of microprocessors, the processors found in most personal computers (PCs). Intel ranked No. 46 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.
The defendants contended that the running royalty of $2.00 per infringing LFFP and the $2.5 million lump sum are "excessive, punitive, and unsupported by substantial evidence." Based on factors such as the defendants' dependence on a Fujifilm license, Customs excluding infringing LFFPs, and the defendants' inability to separate the infringing LFFPs from the non-infringing ones, Fujifilm demonstrated that the jury could have reached a royalty rate as high as $2.21; and a similar logic applies as well for the lump sum award. [1]
The defendants challenged whether the court properly held them in contempt of a preliminary order enjoining importation of infringing LFFPs. They argued that 1) the contempt was not sufficiently supported by evidence of infringement, 2) the imported LFFPs were redesigned, and 3) Fujifilm's patent rights were terminated during the bankruptcy sale. The first two arguments were rejected based on fact witness reports and a statistical expert, and the third argument was waived because it was not raised in either the 50(a) or 50(b) motions. [1]
In October 2010, Benun and his codefendants filed a petition for certiorari, asking the United States Supreme Court to review the Federal Circuit's holding that the authorized sale abroad of a patented article does not exhaust the patent holder's right to use the patent law to control the subsequent resale or use of the item sold. [5] The Supreme Court denied the petition December 10, 2010. [5]
In re Aimster Copyright Litigation, 334 F.3d 643, was a case in which the United States Court of Appeals for the Seventh Circuit addressed copyright infringement claims brought against Aimster, concluding that a preliminary injunction against the file-sharing service was appropriate, because the copyright owners were likely to prevail on their claims of contributory infringement and the fact that the services was capable of having non-infringing user was not enough reason to reverse the district court's decision. The appellate court also noted that the defendant could have limited the quantity of the infringements if he had eliminated an encryption system feature and if it had monitored the use of its systems. This made it so that the defense did not fall within the safe harbor of 17 U.S.C. § 512(i). and could not be used as an excuse to not know about the infringement. In addition, the court decided that the harm done to the plaintiff was irreparable and outweighed any harm to the defendant created by the injunction.
The exhaustion doctrine, also referred to as the first sale doctrine, is a U.S. common law patent doctrine that limits the extent to which patent holders can control an individual article of a patented product after a so-called authorized sale. Under the doctrine, once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be "exhausted," and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew, unless it is specifically authorized by the patentee to do so.
Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007), was a United States (U.S.) Supreme Court case in which the Supreme Court reversed a previous decision by the Federal Circuit and ruled in favor of Microsoft, holding that Microsoft was not liable for infringement on AT&T's patent under 35 U.S.C. § 271(f).
General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938), was a case that the Supreme Court of the United States decided in 1938. The decision upheld so-called field-of-use limitations in patent licenses: it held that the limitations were enforceable in a patent infringement suit in federal court against the licensee and those acting in concert with it—for example, a customer that knowingly buys a patented product from the licensee that is outside the scope of the license.
Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, is a decision of the United States Court of Appeals for the Federal Circuit, in which the court appeared to overrule or drastically limit many years of U.S. Supreme Court precedent affirming the patent exhaustion doctrine, for example in Bauer & Cie. v. O'Donnell.
A field-of-use limitation is a provision in a patent license that limits the scope of what the patent owner authorizes a manufacturing licensee to do in relation to the patent, by specifying a defined field of use—that is, a defined field of permissible operation by the licensee. In addition to affirmatively specifying the field of use, the license may negatively specify a field or fields, by specifying fields of use from which the licensee is excluded.
The exhausted combination doctrine, also referred to as the doctrine of theLincoln Engineeringcase, is the doctrine of U.S. patent law that when an inventor invents a new, unobvious device and seeks to patent not merely the new device but also the combination of the new device with a known, conventional device with which the new device cooperates in the conventional and predictable way in which devices of those types have previously cooperated, the combination is unpatentable as an "exhausted combination" or "old combination". The doctrine is also termed the doctrine of the Lincoln Engineering case because the United States Supreme Court explained the doctrine in its decision in Lincoln Engineering Co. v. Stewart-Warner Corp.
Jazz Photo Corp. v. United States International Trade Commission, 264 F.3d 1094, was a case in which the United States Court of Appeals for the Federal Circuit clarified the law of repair and reconstruction, holding that it was not a patent infringement for one party to restore another party's patented "one-use" camera to be used a second time.
United States v. General Electric Co., 272 U.S. 476 (1926), is a decision of the United States Supreme Court holding that a patentee who has granted a single license to a competitor to manufacture the patented product may lawfully fix the price at which the licensee may sell the product.
TiVo Inc. v. EchoStar Corp. is a case stretching from 2004 to 2011, which took place in the United States District Court for the Eastern District of Texas and the United States Court of Appeals for the Federal Circuit. TiVo Inc. sued EchoStar Corp. claiming patent infringement of a DVR technology. The issues addressed during litigation included patent infringement, wording of injunctions, infringing product redesign, contempt of court orders, and contempt sanctions. Ultimately, the court held that EchoStar Corp. had indeed infringed TiVo Inc's patent and was in contempt of court for noncompliance of an injunction. The parties reached a settlement wherein EchoStar Corp. paid TiVo Inc. a licensing fee. Further, the court replaced the established contempt test with a single step test. The simplified test makes it more difficult for patent holders to prove contempt as a result of repeat infringement.
Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, was a patent lawsuit originally filed in the U.S. District Court for the District of Rhode Island.
Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197 (2010), was a patent infringement case by the United States Court of Appeals for the Federal Circuit involving "proactive scanning" technology for computer security. The Federal Circuit made a mixed decision after hearing the appeals from both sides. In terms of infringement, the Federal Circuit affirmed Secure Computing's infringement on Finjan's system and storage medium patent claims but reversed the infringement on Finjan's method claim. In terms of damage award, the Federal Circuit not only affirmed the previous $9.18 million award by the United States District Court for the District of Delaware, but also remanded for the district court to assess the extra damages between the post-judgement and pre-injunction period.
Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), is a United States Supreme Court copyright decision in which the Court held, 6-3, that the first-sale doctrine applies to copies of copyrighted works lawfully made abroad.
Bowman v. Monsanto Co., 569 U.S. 278 (2013), was a United States Supreme Court patent decision in which the Court unanimously affirmed the decision of the Federal Circuit that the patent exhaustion doctrine does not permit a farmer to plant and grow saved, patented seeds without the patent owner's permission. The case arose after Vernon Hugh Bowman, an Indiana farmer, bought transgenic soybean crop seeds from a local grain elevator for his second crop of the season. Monsanto originally sold the seed from which these soybeans were grown to farmers under a limited use license that prohibited the farmer-buyer from using the seeds for more than a single season or from saving any seed produced from the crop for replanting. The farmers sold their soybean crops to the local grain elevator, from which Bowman then bought them. After Bowman replanted the crop seeds for his second harvest, Monsanto filed a lawsuit claiming that he infringed on their patents by replanting soybeans without a license. In response, Bowman argued that Monsanto's claims were barred under the doctrine of patent exhaustion, because all future generations of soybeans were embodied in the first generation that was originally sold.
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