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FUJI PHOTO FILM CO. LTD. v. JAZZ PHOTO CORP. INC.

November 15, 2001

FUJI PHOTO FILM CO. LTD., PLAINTIFF AND COUNTERCLAIM DEFENDANT,
v.
JAZZ PHOTO CORP. INC., JAZZ PHOTO HONG KONG LTD. AND JACK BENUN, DEFENDANTS AND COUNTERCLAIMANTS.



The opinion of the court was delivered by: Hochberg, District Judge.

Opinion and Order

A lens-fitted film package (LFFP), also known as a single-use camera or a disposable camera, is an inexpensive camera preloaded with film so that the unexposed film in a roll or on a spool is on the opposite side of the lens from the film cartridge. The film is then wound back into the cartridge as it is exposed each time a picture is taken.

Between 1987 and 1990, Plaintiff Fuji Photo Film Co., ("Fuji") prosecuted numerous patent applications directed to various features of LFFPs. Fuji sought protection of its LFFP product which achieved extraordinary world-wide commercial success. Fuji alleges that it was the first to provide a commercially successful disposable camera. Among Fuji's applications were those which issued as U.S. Patent Nos. 4,890,130 and 5,063,400 (the "`130 and `400 patents," respectively). These utility patents issued from a common specification and claim combinations of features directed to a structure which permits removal of the film cartridge for processing after all of the film is exposed. Fuji also prosecuted U.S. Patent No. 4,972,649 ("the `649 patent"), which Fuji asserts was issued from a different specification, identified a different, albeit overlapping, group of inventors, and claimed three methods of assembling the disclosed LFFPs.

In February 1998, Fuji filed a complaint with the International Trade Commission ("ITC") asserting unfair competition in international trade by reason of patent infringement pursuant to 19 U.S.C. § 1337. The ITC initiated Investigation No. 337 — TA — 406 (entitled In re Certain Lens — Fitted Film Packages) against twenty-seven named Respondents including Jazz Photo Corp. ("Jazz"), defendant herein. The Respondents are in the business and practice of refurbishing*fn1 LFFPs that had been used and from which the original film was already extracted by a film developer. The ITC referred the matter to Administrative Law Judge Paul J. Luckern (the "ALJ") who held a thirteen-day hearing that followed extensive discovery and motion practice. The ALJ rendered a 351 — page finding, Final Initial and Recommended Determinations ("Findings"), that twenty-six of the Respondents (including Jazz) had infringed one or more claims of one or more of the utility patents at issue and that all 26 had infringed one or more claims of the `649 method patent. On June 2, 1999, the ITC adopted the ALJ's determinations with certain modifications not pertinent herein. The ITC issued a cease and desist order specifically prohibiting Jazz from importing, selling or otherwise dealing with the imported infringing one-time-use cameras, as well as a general exclusion order barring importations by anyone into the United States of infringing one-time-use cameras.

During the ITC investigation, Jazz offered affirmative defenses of invalidity, on the grounds of obviousness, and unenforceability, on the grounds of inequitable misconduct in prosecuting the `649 patent The ITC, adopting the ALJ's recommendation, held that the patent was valid and enforceable.

Jazz appealed the ITC's decision to the Federal Circuit; the Circuit reversed on several grounds, but specifically affirmed the ITC on its findings that Fuji's patent was valid, and enforceable. Jazz Photo Corp. v. ITC, 264 F.3d 1094, 1109.

I. History of the prosecution.

Fuji first attempted to patent the `130 patent on October 19, 1987. The `130 patent is a design patent for an LFFP. When the application was first filed, Fuji's patent attorney brought to the attention of the Examiner five British patents which had been cited in the prosecution of a corresponding British application, including British Patent No. 1,060,937 (Prontor — Werk) and British Patent No. 558,516 (Kodak). The Examiner rejected the patent application as anticipated by the teaching in Netherlands Patent No. 6708486 to Bouchetal de la Roche (the "Roche patent"). The Examiner also rejected the patent by the teaching of German Patent No. 949,324 (Brandes). Fuji thereafter filed an amended application which was again rejected as obvious based on the teaching in the Roche patent in combination with additional prior art. For a second time, Fuji amended the application, and for a third time was rejected based on the teaching in Prontor — Werk and Kodak. A third amendment was met by a fourth rejection, again on the bases of Prontor — Werk and Kodak. Finally, after a fourth amendment, Fuji was granted a Notice of Allowance by the Examiner and the application proceeded to issuance on December 26, 1989.

The amended first claim of the `130 patent issued as follows:

A lens-fitted photographic film package comprising a light-tight film case with a taking lens fitted thereto, a separate empty film cartridge having a spool therein rotatable about an axis of rotation, said film cartridge being enclosed in said light-tight film case on one side of said lens, and an unexposed rolled film with one end retained on said spool in said empty film cartridge, said unexposed rolled film being disposed on the other side of said taking lens with its outermost turn in contact with said film case, said light-tight film case having a portion disposed only on said one side of said lens in alignment with said axis and which is openable only by destroying said film case on a performed line of weakness bordering said portion, to form an opening for allowing said film cartridge to be removed.

The `130 patent therefore entails an LFFP which has only one cartridge, that receives the film as it is exposed frame-by-frame. The shift to a single cartridge reduces the cost of the LFFPs. The LFFP is designed to permit the exposed film, inside the cartridge, to be removed without the use of a darkroom, which is differs from Prontor — Werk. Finally, the LFFP has a break line that is different from break lines in other LFFPs, include the Prontor — Werk design, permitting a smaller break.

The prosecution of the `400 patent involved a similar series of rejections and amendments. The Examiner first rejected the application, filed on December 22, 1989, in reliance on the patents to Roche and Kodak. The Examiner rejected the first-amended application based on patents to Prontor — Werk and Voigtlander. The second-amended application was rejected on Prontor — Werk as well as Roche and Voigtlander. Finally, after a third amendment, patent `400 issued on November 5, 1991.

The `649 method patent application was first filed on February 22, 1989. In the prior art description of the patent, Fuji's patent attorney did not mention the Prontor — Werk, Kodak and Voigtlander patents noted by the examiner of the `130 and `400 patents. The Fuji patent attorney did, however, identify two Japanese patents and a Netherlands patent to Bouchetal identified in the earlier prosecution of the `130 and `400 patents. In relevant part, these patents contained the same art as the omitted patents.

The patent Examiner rejected the first `649 application based on the teachings in the Roche and Harvey patents. The application was amended and ...


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