Jazz Photo Corp. v. International Trade Com'n
264 F.3d 1094 (2001)
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Rule of Law:
The refurbishment of a patented article, first sold in the U.S. without restriction, constitutes permissible repair and not infringing reconstruction when it involves replacing unpatented, spent components to restore the article's functionality. A patentee's unilateral intent for the article to be single-use does not convert such repair into reconstruction.
Facts:
- Fuji Photo Film Co., Ltd. (Fuji) manufactures and sells patented 'single-use' cameras, known as lens-fitted film packages (LFFPs), which are designed to be used only once.
- After a consumer uses the camera, a photoprocessor breaks open the plastic casing to remove the film for development, and the camera body is typically discarded.
- The packaging includes instructions for the consumer to return the entire camera for processing and warnings against opening it, stating it will not be returned.
- Jazz Photo Corporation and other appellants acquire these discarded LFFP camera bodies.
- At overseas facilities, these companies refurbish the cameras by opening the casing, inserting a new roll of film and container, replacing the battery in flash models, resetting the film counter, and resealing the casing under a new cardboard cover.
- The refurbished cameras are then imported into the United States for resale.
- Some of the LFFPs being refurbished were originally sold by Fuji only in foreign countries, not in the United States.
Procedural Posture:
- Fuji Photo Film Co., Ltd. filed a complaint with the U.S. International Trade Commission (ITC) under Section 337 of the Tariff Act of 1930.
- The complaint alleged that twenty-seven respondents, including Jazz Photo Corp., infringed Fuji's patents by importing refurbished single-use cameras.
- An Administrative Law Judge (ALJ) held a hearing and issued an Initial Determination finding that the refurbishment was impermissible 'reconstruction' and thus constituted patent infringement.
- The full Commission affirmed the ALJ's determination that the respondents' activities were infringing.
- The ITC issued a General Exclusion Order, barring importation of the infringing cameras, and associated Cease and Desist Orders.
- Jazz Photo Corporation, Dynatec International, Inc., and Opticolor, Inc. (appellants) appealed the ITC's final determination to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Does the refurbishment of patented 'single-use' cameras—which involves opening the casing, replacing the film and battery, resetting the counter, and resealing the unit—constitute impermissible patent reconstruction rather than permissible repair?
Opinions:
Majority - Newman, Circuit Judge
No. The described refurbishment of single-use cameras that were first sold in the United States constitutes permissible repair, not impermissible reconstruction. Under the doctrine of patent exhaustion, an authorized, unrestricted first sale of a patented article in the U.S. extinguishes the patentee's right to control subsequent use of that article. The right of an owner to repair the article to preserve its useful life is well-established. Precedent distinguishes permissible repair from prohibited reconstruction, which is a 'second creation' of the patented entity after it is 'spent.' Here, the appellants are merely replacing unpatented, spent components (film and batteries) while reusing the core patented components (lens, shutter, casing), which have a useful life beyond a single use. Fuji's unilateral intent for the cameras to be single-use, as indicated on the packaging, is not legally binding without an enforceable contract. Therefore, these refurbishment activities are permissible repair. However, this finding does not apply to cameras whose first sale occurred outside the U.S., as U.S. patent rights are not exhausted by foreign sales.
Analysis:
This decision significantly clarifies the repair vs. reconstruction doctrine in the context of products marketed as 'single-use.' It reinforces the principle that a patentee cannot unilaterally restrict a purchaser's right to repair a lawfully acquired article through mere labeling or design intent. By siding with the refurbishers, the court supports the viability of secondary markets for patented goods and promotes principles of reuse and waste reduction. The ruling sets a precedent that will make it more difficult for patent holders to use patent law to prevent the refurbishment of their products, so long as the process does not amount to a full 're-creation' of the patented item. The decision also carefully preserves the territoriality of U.S. patent law by affirming that the exhaustion doctrine does not apply to goods first sold abroad.
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