''Fujifilm Corp v. Benun'', 605

F.3d 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 We ...

1366 (Fed. Cir. 2010) was a case in which the

United States Court of Appeals for the Federal Circuit The United States Court of Appeals for the Federal Circuit (in case citations, Fed. Cir. or C.A.F.C.) is a United States court of appeals that has special appellate jurisdiction over certain types of specialized cases in the U.S. federal court ...

affirmed the judgment made by the

United States District Court for the District of New Jersey The United States District Court for the District of New Jersey (in case citations, D.N.J.) is a federal court in the Third Circuit (except for patent claims and claims against the U.S. government under the Tucker Act, which are appealed to the ...

that the defendants infringed patents owned by Fujifilm Corporation.

Factual background

Fujifilm , trading as Fujifilm, or simply Fuji, is a Japanese multinational conglomerate headquartered in Tokyo, Japan, operating in the realms of photography, optics, office and medical electronics, biotechnology, and chemicals. The offerings from the ...

is the owner of patents in the design and production of single-use,

disposable 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 cam ...

s, 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.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). 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.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.

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 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 ...

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 A motion for judgment as a matter of law (JMOL) is a motion made by a party, during trial, claiming the opposing party has insufficient evidence to reasonably support its case. JMOL is also known as a directed verdict, which it has replaced in ...

and 50(b) post-trial

motion In physics, motion is the phenomenon in which an object changes its position with respect to time. Motion is mathematically described in terms of displacement, distance, velocity, acceleration, speed and frame of reference to an observer and m ...

Territoriality Requirement

In '' Quanta Computer, Inc. v. LG Electronics, Inc.'',. the Supreme Court ruled that

Intel Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California. It is the world's largest semiconductor chip manufacturer by revenue, and is one of the developers of the x86 seri ...

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.

Damage Unwarranted

The defendants contended that the running

royalty Royalty may refer to: * Any individual monarch, such as a king, queen, emperor, empress, etc. * Royal family, the immediate family of a king or queen regnant, and sometimes his or her extended family * Royalty payment for use of such things as int ...

of $2.00 per infringing LFFP and the $2.5 million

lump sum A lump sum is a single payment of money, as opposed to a series of payments made over time (such as an annuity). The United States Department of Housing and Urban Development distinguishes between " price analysis" and "cost analysis" by whether ...

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.

Contempt of Preliminary Order

The defendants challenged whether the court properly held them in contempt of a preliminary order enjoining

importation An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. In international trade, the importation and exportation of goods are limited ...

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.

Supreme Court Petition for Certiorari

In October 2010, Benun and his codefendants filed a petition for certiorari, asking the

United States Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

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.''Benun v. Fujifilm Corp.'', no. 10-486, U.S. Supreme Court
docket entry
The Supreme Court denied the petition December 10, 2010.

Related Cases

* ''Quanta Computer, Inc. v. LG Electronics''
128 S. Ct. 2109
(Supreme Court 2008). * ''Omega v. Costco''

(9th Cir. 2008).

References

External links

*
Fujifilm Official Site
{{Fujifilm United States patent case law United States Court of Appeals for the Federal Circuit cases 2010 in United States case law Fujifilm litigation