Fujifilm Corp. v. Benun

Last updated
Fujifilm Corp. v. Benun
US-CourtOfAppeals-FederalCircuit-Seal.svg
Court United States Court of Appeals for the Federal Circuit
Full case nameFujifilm Corporation, Plaintiff-Appellee, v. Jack C. Benun, and Jazz Products LLC, Polytech Enterprises LTD, and Polytech (Shenzhen) Camera Co. LTD., Defendant-Appellant
DecidedMay 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.

United States Court of Appeals for the Federal Circuit

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.

United States District Court for the District of New Jersey

The United States District Court for the District of New Jersey is a federal court in the Third Circuit.

Contents

Factual background

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 Japanese multinational photography and imaging company

Fujifilm Holdings Corporation, trading as Fujifilm, or simply Fuji, is a Japanese multinational photography and imaging company headquartered in Tokyo.

Disposable camera simple box camera

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 legal status of a person or other entity that cannot repay the debts it owes to creditors

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.

Defendant accused person

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.

Circuit Court Opinion

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.

Estoppel

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."

Territoriality Requirement

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 American semiconductor company

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.

Damage Unwarranted

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]

Contempt of Preliminary Order

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]

Supreme Court Petition for Certiorari

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]

See also

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References

  1. 1 2 3 4 5 Fujifilm Corp v. Benun, 605F.3d1366 (Fed. Cir.2010).
  2. Weil, Gotshal, & Manges LLP. Patent Law Update: Fujifim Corp v. Benun, Federal Circuit Rejects Foreign Sales as Triggering Patent Exhaustion. Weil Briefing: Patent Ligation and Licensing. (June 3, 2010).
  3. Siegal, Matthew W. and Hansen, Kristopher M. "Free and Clear" Bankruptcy Sales Do Not Extinguish Claims of Patent Infringement. Bloomberg Law Reports. Vol. 2, No. 35.
  4. Quanta Computer, Inc. v. LG Electronics, Inc. , 553 U.S. 617 (2008).
  5. 1 2 Benun v. Fujifilm Corp., no. 10-486, U.S. Supreme Court, docket entry.