HQ 472103 - AFR of Protest No. 2809-01-100872; Lens Fitted Film Packages; General Exclusion Order; ITC Investigation No. 337-TA-406 - United States International Trade Commision Rulings

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HQ 472103

June 5, 2002

ENF 4-02 RR:IT:IP 472103 PBP

CATEGORY: UNFAIR COMPETITION 19 U.S.C. ' 1337

Acting Area Port Director
U.S. Customs Service
Attn: SIS Fred Gassert
555 Battery Street
San Francisco, CA 94111

RE: AFR of Protest No. 2809-01-100872; Lens Fitted Film Packages; General Exclusion Order; ITC Investigation No. 337-TA-406

Dear Madam:

This is in reply to your memorandum dated January 10, 2002, received in this office on February 12, 2002, under cover of which you forwarded an application for further review (AFR) of the above-referenced protest. Workman, Nydegger & Seely submitted the protest on behalf of the protestant and importer of record, Grandway U.S.A. Corporation (the “protestant”). Protestant seeks review of the decision by your office to exclude certain 35-mm cameras from entry into the United States pursuant to the General Exclusion Order issued by the U.S. International Trade Commission in Investigation No. 337-TA-406. The protest was timely filed on November 9, 2001.

FACTS:

The protest involves a shipment of approximately 100,000 cameras presented for entry on September 11, 2001. As indicated on the Customs Form 6445A accompanying the instant protest and application for further review, the protested entry covers “FunPak” cameras valued at $196,234.00. Salt Lake City Customs Inspectors forwarded a sample camera to the San Francisco Customs Laboratory for analysis, and upon receiving the laboratory’s report on September 27, 2001, the Port of Salt Lake City excluded these cameras from entry into the U.S. pursuant to the aforementioned general exclusion order.

The cameras are constructed of bodies made of plastic and are pre-loaded with film. The film is fully unwound from its patrone (canister) into a film roll; the film is then wound back into the canister (patrone) frame-by-frame as it is exposed. The cameras consist primarily of plastic components and the camera bodies are comprised of three main pieces: a front cover; a shell to which is assembled most of the components associated with the operation of the camera; and a back cover. The back covers of the cameras feature two pairs of curved horizontal guide ribs molded into the portion of the back wall covering the rolled film chamber. The ribs are longitudinally spaced such that they contact the film and hold it in a substantially cylindrical roll.

The excluded FunPak cameras are “refurbished” units originally manufactured by Fuji Photo Co., Ltd. or Eastman Kodak Company. In order to prevent light leakage caused by the reloading process, black plastic tape has been applied to various sections of the camera bodies. The cameras are packaged for retail sale in paper or cardboard covers branded “FunPak Flash.” Photographs of the cameras are displayed below.

In Investigation No. 337-TA-406 the U.S. ITC determined that there was a violation of 19 U.S.C. §1337 regarding certain lens-fitted film packages (LFFPs), also known as one-time use cameras, single use cameras, and disposable cameras, that infringed claims under one or more of fifteen patents owned by Fuji Photo Film Co., Inc. Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, General Exclusion Order at 1-2. With the exception of design patents DES. 345,750; DES. 356,101; and DES. 372,722 which claim ornamental designs of single use cameras and are represented by their application drawings, all of the claims of the patents at issue protect “a lens-fitted photographic film package” or “a lens-fitted photographic film unit.” To assist Customs in enforcing its order, the ITC identified as infringing LFFPs Types 1 through 6, 7, 7A, 8, and 8A and attached diagrams of these infringing products to its exclusion order. Id. General Exclusion Order at 2-3. In its Opinion, the ITC described an LFFP as follows:

The products at issue in this investigation are inexpensive, disposable, single use-cameras, technically referred to as “lens-fitted film packages” or “LFFPs.” LFFPs are generally constructed of a shell made of a plastic material such as polystyrene. They are equipped with a button-activated shutter, a lens, a viewfinder, a film advance mechanism, and optional flash units and buttons. An outer cardboard cover, containing printed information such as branding and instructions, encases the shell. LFFPs are preloaded with film and a film cartridge. When pictures are taken, the exposed film winds into the film cartridge. After taking pictures, a typical consumer brings the entire LFFP to a film processor to have the film developed and receives back only negatives and prints, not the LFFP shell and its contents.

Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (June 2, 1999), Commission Opinion at 2. The Administrative Law Judge, in his Final Initial and Recommended Determinations, described the products at issue in the investigation as “single use cameras, also known as ‘lens-fitted film packages’ or ‘LFFPs.’ Single use cameras are relatively inexpensive, disposable cameras which are preloaded with film and a film cartridge so that after use, all of the film has been advanced into the film cartridge.” Id., Final Initial and Recommended Determinations, at 4; see also, Additional Findings, no. 1 at 214.

As a result of Customs laboratory examination it was determined that the cameras that are the subject of the instant protest are refurbished LFFPs similar in construction to the Type 2 LFFP identified in the ITC’s general exclusion order. Images of the sample camera supplied by the Customs laboratory show that the camera’s back cover incorporates horizontal guide ribs molded into the portion of its back wall covering the rolled film chamber. This construction is similar to that protected by claims 14 and 15 of United States Letters Patent 4,855,774 (the ‘774 patent). Claims 14 and 15 assert the following:

14. A lens-fitted photographic film package comprising a light-tight film case with a taking lens fitted thereto and a rolled film, said case having a rolled film chamber, a film take-up chamber, and a back wall portion that closes said two chambers, said rolled film chamber having a rearwardly opening concave curved wall against which the outermost turn of the rolled film lies, said back wall portion having protuberances thereon that define a forwardly opening concave path for the film between said chambers, said back wall portion having a forwardly opening concave curved portion that overlies said rolled film chamber and that contacts and supports the rear of the film emerging from said roll at regions of said film spaced from the longitudinal edges of the film and that in cooperation with said rearwardly opening concave wall of said rolled film chamber contacts the outermost turn of said rolled film chamber and maintains said rolled film in a substantially cylindrical roll.

15. A lens-fitted photographic film package comprising a light-tight film case with a taking lens fitted thereto and a rolled film, said case having a rolled film chamber, a film take-up chamber, and a back wall portion that closes said two chambers, said rolled film chamber having a rearwardly opening concave curved wall against which the outermost turn of the rolled film lies, said back wall portion having a forwardly opening concave portion that overlies said rolled film chamber and that contacts and supports the rear of the film emerging from said roll at regions of said film spaced from the longitudinal edges of the film and that in cooperation with said rearwardly opening concave wall of said rolled film chamber contacts the outermost turn of said rolled film and maintains said rolled film is (sic) a substantially cylindrical roll.

Claims 14-15, United States Letters Patent 4,855,774, at 10.

On September 24, 1999, pursuant to a motion by Dynatec International Inc. (Dynatec) for a stay, pending appeal, of the ITC’s June 2, 1999 general exclusion order, the Court of Appeals for the Federal Circuit (CAFC) stayed the ITC’s orders as applied to FunPak cameras. Dynatec Int’l, Inc. v. ITC, 1999 U.S. App. LEXIS 38842. The CAFC noted in this order that the issue of whether Dynatec or Grandway China, Ltd., to whom Dynatec sold its FunPak business during the ITC proceedings, can seek review and relief from that court of the ITC’s orders should be addressed in the briefs on the merits. Id. at 2. On August 21, 2001, the CAFC issued its decision in that appeal which inter alia lifted the aforementioned stay. Jazz Photo Corp. v. ITC, 264 F. 3d 1094 (Fed. Cir. 2001). The CAFC issued this order as a mandate on November 9, 2001. Jazz Photo Corp. v. ITC, 2001 U.S. App. LEXIS 26127.

ISSUE:

The issue presented is whether the cameras that are the subject of the instant protest and AFR are within the scope of the general exclusion order issued by the ITC such that they are excluded from entry for consumption into the United States.

LAW AND ANALYSIS:

Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. §1337) prohibits, inter alia, the importation, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee of articles that infringe a valid and enforceable U.S. patent. 19 U.S.C. §1337(a)(1)(B)(i). The ITC has authority to investigate alleged violations of section 337. If the ITC determines that there has been a violation of section 337, it shall, subject to certain potential exceptions, direct that the articles concerned be excluded from entry into the U.S. and, accordingly, notify the Secretary of the Treasury who shall, through its proper officers, refuse such entry. 19 U.S.C. §1337. See also, 19 C.F.R. §12.39.

In Investigation No. 337-TA-406, the ITC determined that certain LFFPs infringed claims under one or more of fifteen patents owned by Fuji Photo Film Co., Inc. The ITC ordered that LFFPs that infringed any of the patents be excluded from entry for consumption into the U.S., and notified Customs accordingly. Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, General Exclusion Order (June 2, 1999), at 2.

The general exclusion order covers LFFPs, i.e., relatively inexpensive products also known as disposable cameras, single use-cameras and one-time use cameras. As described by the ALJ, LFFPs are single use cameras, i.e., relatively inexpensive, disposable cameras which are preloaded with film and a film cartridge so that after use, all of the film has been advanced into the film cartridge. Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, Final Initial and Recommended Determinations, at 4. As described in the Commission’s Opinion, LFFPs are generally constructed of a plastic material such as polystyrene, and are equipped with a button-activated shutter, lens, viewfinder, film advance mechanism, and optional flash units and buttons. The outer shell of the LFFP is encased in a cardboard cover or jacket containing printed information such as branding and operating instructions. When an exposure is made, the exposed film winds into the film cartridge. Once a roll of film has been exposed, the consumer typically brings the entire LFFP to a film processor to have the film developed and receives back only negatives and prints, but not the LFFP shell and its contents. Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, Commission Opinion (June 2, 1999), at 2.

The cameras that are the subject of the instant protest are constructed of bodies made of plastic and are pre-loaded with film. The film is fully unwound from its canister (patrone) into a film roll, so that the film is wound back into the film canister (patrone) frame-by-frame as it is exposed. The cameras consist primarily of plastic components and the camera bodies are comprised of three main sections: a front cover; a shell to which is assembled most of the components associated with the operation of the camera; and a back cover. The cameras are packaged for retail sale in paper or cardboard covers labeled “FunPak Flash.” Based on laboratory examination, it was determined that the subject cameras are refurbished units similar in construction to those classified as Type 2 LFFPs by the ITC. Thus, the cameras at issue fit the description of LFFPs contained in the ITC’s Opinion and in the ALJ Final Initial and Recommended Determinations.

As noted above, a concave curved back wall portion of the camera features two pairs of horizontal guide ribs molded into its back cover. It is Customs position that ribs on the subject cameras contact the film at a point spaced inward from the longitudinal or outer edges of the film, and that the function of the ribs is to maintain the film in a substantially cylindrical roll in order to avoid distortion of the film as it is unwound from the rolled film chamber. Accordingly, the subject cameras infringe claims 14 and 15 of the ‘774 patent. Inasmuch as we have determined that the subject cameras have a construction similar to that protected by claims 14 and 15 of the ‘774 patent, we do not address the question of whether they infringe any of the other fourteen patents at issue in ITC Investigation No. 337-TA-406.

The protestant argues that the ITC’s general exclusion order issued in Investigation No. 337-TA-406 was stayed when the Port of Salt Lake City excluded the subject cameras from entry on September 27, 2001. However, the CAFC lifted its stay of that order when it issued its opinion on August 21, 2001. The CAFC stated that

Any further proceedings in implementation of our decision shall be taken to the Commission. By motions recently filed, Fuji has asserted circumventions of the Commission's orders; this matter is appropriately considered by the Commission on remand. In addition, Dynatec states that it has sold its business, although no formal notice of substitution was provided. Our ruling applies only to the entities who have placed themselves before us.

This court’s stay of the Commission’s orders is lifted.

Jazz Photo Corp. v. ITC, 264 F. 3d 1094, at 1111 (Fed. Cir. 2001). It is our position that the court’s decision in this case amounts to review of federal agency action and that issuance of a mandate is not required for the court’s order to be effective. In addition, the ITC has advised Customs that it also considers the CAFC’s stay of its general exclusion order lifted when the court issued its opinion on August 21, 2001. The merchandise subject of this protest was presented for entry on September 11, 2001, and was excluded from entry by the Port of Salt Lake City on September 27, 2001, subsequent to August 21, 2001, when the CAFC issued its decision lifting the stay of the ITC’s general exclusion order and remanding the case to the ITC for further action.

Alternately, the protestant argues that Grandway is protected by a “safe harbor of non-infringing permissibly repaired products created by the Federal Circuit Decision.” Regarding the CAFC’s ruling as to patent infringement, the court stated that its ruling applies only to the parties before it at that time, specifically excluding the party to whom Dynatec sold its business. Further proceedings implementing the court’s decision were left to the Commission.

The ITC has stated that parties wishing to take advantage of the permissible repair exception created by the CAFC must affirmatively prove that the patent rights of the original manufacturer(s) of reloaded cameras were exhausted by first sale in the United States and that the reloading process was limited to the steps of removing the cardboard cover, cutting open the casing, inserting new film and film container, resetting the film counter, resealing the casing, and placing the device in a new cardboard cover. The ITC has stated that mere certification to the Commission or to Customs that the aforementioned requirements have been met is not acceptable.

It is our position that the scant documentary and testimonial evidence presented by protestant does not satisfy the ITC’s requirements as stated above. Bills of lading for camera cases exported from the U.S in no way provide assurances that patent rights for the goods described in the bills of lading were exhausted by first sale in the U.S. Indeed there is a possibility that some of the subject cameras were first purchased overseas by tourists or others visiting the U.S., or were sent to the U.S. for processing prior to exportation from the U.S. Similarly, as discussed above, a declaration by an interested party describing the reloading process used by its factory, is not sufficient to prove that the remanufacturing process used by Grandway is limited to the steps allowed by the CAFC as permissible repair of the products.

HOLDING:

In conformity with the foregoing, the sample cameras are within the scope of the general exclusion order issued by the ITC in Investigation No. 337-TA-406 and are excluded from entry for consumption into the United States

Therefore, the protest should be denied in full. In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, you are to mail this decision to the protestant, together with the Customs Form 19, no later than sixty days from the date of this letter.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel and the public via the Customs Home Page on the World Wide Web at www.customs.gov, through the Freedom of Information Act, and by other means of public distribution.

Sincerely,

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