Jazz Photo Corp. v International Trade Commission
264 F.3d 1094 (Fed. Cir. 2001)

  • Fuji made disposable cameras that were meant to be used for one roll of film and then thrown away when the film was developed.
    • This was back in the day before digital when film needed to be sent in to a photo lab to be developed.
  • 37 companies, including Jazz Photo were buying up bins of used disposable cameras from photo labs in the US, taking them apart in overseas facilities, adding a fresh roll of film and new batteries, and reselling them in the US as 'refurbished' disposable cameras.
  • Fuji sued Jazz Photo et al under the Tariff Act of 1930 (18 U.S.C. 1337) for infringement of 15 different patents.
    • Jazz Photo et al argued that they were simply repairing the cameras, and that repairing a patented product is by definition non-infringing.
      • See Aro Manufacturing Co. v. Convertible Replacement Co., (377 U.S. 476 (1964)) which held that a purchaser of patented goods obtains an implied license to repair the goods, so those that sell replacement parts are not contributory infringers.
    • Fuji argued that what Jazz Photo et al were doing went beyond repair and was reconstruction, (it was essentially a new product) so they were not protected by Aro.
  • The International Trade Commission found that 26 of the companies had infringed on Fuji's patent. They appealed.
  • The Appellate Court reversed.
    • The Appellate Court looked to a whole bunch of cases (like Mitchell v. Hawley (83 U.S. (16 Wall.) 544 (1872))) and found that it is well established that once sold, a product is no longer specifically protected by patent laws.
      • That includes the right to repair.
      • It does not include the right to make an entirely new product by reproducing all of the individual parts (See e.g. Wilson v. Simpson (50 U.S. (9 How.) 109 (1850)).
    • The Court found that the difference between repair and reconstruction was when the patentee "exhausts" the patent right.
      • Basically, the first sale doctrine says that a patentee recoups all their profits in the "first sale" and subsequent sales of the product (like people buying used items at a flea market) don't count as patent infringement.
    • The Court found that since the refurbishment didn't replace any patented components, it was more like a repair than a reconstruction and so the first sale doctrine applied.
      • Fuji unsuccessfully argued that since the cameras were meant to de disposable, after they'd been used once their useful life had been spent, and that the refurbished cameras were essentially a new product, so the first sale doctrine doesn't apply.
      • The Court found that just because Fuji said the cameras shouldn't be reused, that didn't mean that their useful life ended after the first use. The cameras could obviously be used more than once.
    • The Court noted that in order to exhaust the US patent, that first sale must occur in the US. So if there was a disposable camera sold in Japan and then refurbished in Japan, that camera could not be sold in the US.
      • This doctrine of international exhaustion is still in debate in US courts.