Friday, May 28, 2010

Jazz slammed by CAFC on disposable cameras

In a thread about disposable cameras in 2005, one commenter wrote:

The Kodak empties don't necessarily go back to Kodak, they go back to whoever the photofinisher gets the best price from. As for Fuji or Kodak look-alikes that don't actually say Fuji or Kodak, that's like "Guchi" knockoff bags or "Rollecks" watches or "Likeuh" cameras. Counterfeit goods like that are most rampant in China and third world countries but pop up everywhere.

The commenter raises a trademark issue, wherein the counterfeit appears to be the original, and the consumer is misled.
With disposable cameras, the brand can be something else, but the product really was made by an original manufacturer.

In FujiFilm, the CAFC re-visited the disposable camera
[lens- fitted film package (LFFP) ] area:

Defendants present four issues for review: (1) whether
Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S.
, 128 S. Ct. 2109 (2008), eliminated the territoriality
requirement for patent exhaustion announced in Jazz
Photo Corp. v. United States International Trade Com-
mission, 264 F.3d 1094 (Fed. Cir. 2001) (Quanta argu-
ment); (2) whether the court invoked non-mutual
collateral estoppel and precluded Polytech from present-
ing its permissible repair and first sale defenses on the
basis of court proceedings to which Polytech was not a
party (estoppel argument); (3) was a new trial on damages
warranted by the jury’s $2.00 per infringing LFFP run-
ning royalty and $2.5 million lump sum award (new trial
argument); and (4) whether the court properly held de-
fendants in contempt of a preliminary order enjoining
importation of infringing LFFPs (contempt argument).

The damages portion of the decision is of some interest:

Fuji presented testimony that in a hypothetical nego-
tiation it would have enjoyed a strong bargaining position
based on (1) defendants’ entire business depending on a
Fuji license; (2) Customs excluding infringing LFFPs; and
(3) defendants’ demonstrated inability to segregate in-
fringing LFFPs from non-infringing LFFPs. Relying on
these and other factors from Georgia-Pacific Corp. v.
United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y.
1970), Fuji’s expert testified that the parties would have
agreed to a 40 cent royalty rate. Based on defendants’
inability to separate the LFFPs, the expert testified at
length about Georgia-Pacific factor 6 (collateral sales) and
included both infringing and non-infringing LFFPs in the
royalty base. In support of its all-product royalty base,
Fuji presented the method as an accepted technique to
avoid repeated disputes over what percentage of LFFPs
infringe, a point of contention between Fuji and defen-

Critically, Fuji’s expert testified that in a hypothetical
negotiation the royalty rate would have changed inversely
to royalty-base changes, resulting in a consistent royalty
Specifically, if 50% of LFFPs infringed, and the
royalty base only included infringing LFFPs (a reduction
by one-half in the size of the potential royalty base of all
LFFPs), then the royalty rate would double from 40 cents
to 80 cents per infringing LFFP. In short, Fuji advocated
a consistent royalty amount that would not vary with
changes in the royalty-base size. To that end, Fuji’s
expert provided the jury with sufficient information to
reach Fuji’s proposed royalty amount, whether the royalty
base included all LFFPs (a larger royalty base, driving the
royalty rate down to reach Fuji’s proposed royalty
amount), or only infringing LFFPs (a smaller royalty
base, driving the royalty rate up to reach Fuji’s proposed
royalty amount). By increasing the royalty rate in an
amount proportionate to any reduction in the size of the
royalty base, the jury could have reached a $2.21 royalty
rate for application to a royalty base including only in-
fringing LFFPs.** $2.21 is even larger than tinfringing LFFP royalty the jury awarded.

***Related theme. When plagiarism inspires creativity

Innovation is about changing the way we live. Outside of a "Sex in the City" world, one might challenge the notion that the fashion industry is about innovation. Further, one might challenge the notion that the fashion industry is unrestricted by copyrights, or by trademarks. As to evidence that "knock-offs" hinder sales of originals, one can look to the recent FujiFilm v. Jazz case. The Venetians in the 15th century figured out that allowing people to "steal" ideas didn't encourage creative people to talk about their ideas. Blakely needs to do her homework.


In response to S. Burroughs (pen name? related to William S. Burroughs?), Lawrence B. Ebert is a registered patent attorney, which does not imply that Ebert's interest is in maintaining the status quo. Ebert does have a Ph.D. from Stanford, and a J.D. from the University of Chicago. Blakely received a PhD in English from the University of California, Santa Barbara. Ebert does oppose "post grant review" in the patent area, introduction of which would create more work for patent attorneys. So-called reformers, such as Jaffe and Lerner, who demonize patent attorneys, favor post grant review, which would benefit patent attorneys. Going beyond arguments about people, it remains true that intellectual property, in the form of copyrights, trademarks, and design patents, is utilized in the fashion industry. A world in which ideas are routinely stolen evokes Hobbes.

As to IP, the comments of Johanna Blakley are Sooooooooooooo yesterday.

***Speaking of "yesterday", note the NYT article
Will Last Century’s Styles Open Today’s Wallets? which includes the text:

Brands are combing their archives in the hope that old clothing styles with a classic feel will assuage consumer anxiety in shaky times. With some Americans feeling as if they can’t trust government, Wall Street or big business, the brands are betting their heritage lines will evoke memories of better times — and help pry open shoppers’ wallets.

Note to Johanna, "looking backwards" is not innovation.

Also from the NYT:

At L. L. Bean, a clothing maker for almost 100 years, the task has fallen to Alex Carleton, the creative director for L. L. Bean’s “Signature” collection. Housed behind Mr. Bean’s old Victorian house off of Main Street in Freeport, Me., the company’s archives include rooms full of clothes, lockers stuffed with boots, every catalog ever printed, letters from people like Babe Ruth, and Mr. Bean’s hunting journals.


Mr. Fiske, of Eddie Bauer, also turned to an archivist to assemble old items for inspiration. The company recently introduced clothes like the B-9 parka, which Mr. Bauer supplied to the Army Air Forces during World War II, and the Skyliner jacket, a quilted coat that Mr. Bauer designed after a freezing winter fishing expedition.


Other brands glancing backward include Halston, which reworked designs from the Seventies to create its heritage line. Sperry Top-Siders is selling limited-edition shoes with old-school styling, like brick-colored soles. Keds is issuing two shoe designs for each decade from the last century (a 1920s sneaker looks almost like a dress shoe, with black and white details).

The trend extends to other industries, too. Earlier this year, General Mills sold some Lucky Charms and Cheerios in limited-edition vintage boxes. Pepsi-Cola brought back limited-edition Pepsi and Mountain Dew with retro labels late last year. And Carl’s Jr. brought back a vintage menu item — chili dogs, which Carl Karcher sold from a cart in the 1940s — last year.

At the end of the day, (formerly) protected IP goes into the public domain, and everyone is free to comb the archives.


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