Jazz Photo Corp. v. United States

Slip Op. 05-7
UNITED STATES COURT OF INTERNATIONAL TRADE
JAZZ PHOTO CORPORATION,
Plaintiff,
v. Court No. 04-00514
Before: Judge Timothy C. Stanceu
UNITED STATES,
Defendant.
[Motion for ex parte temporary restraining order denied]
Decided: January 25, 2005
Neville Peterson LLP (John M. Peterson, George W. Thompson, Curtis W. Knauss, Maria
E. Celis and Catherine Chess Chen) for plaintiff.
Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M.
McCarthy, Assistant Director, Stefan Shaibani, Trial Attorney, Commercial Litigation Branch,
Civil Division, United States Department of Justice; Beth Brotman and Paul Pizzeck, United
States Customs and Border Protection, Department of Homeland Security, of counsel, for
defendant.
OPINION AND ORDER
STANCEU, Judge:
Plaintiff Jazz Photo Corporation (“Jazz) moves this court ex parte, pursuant to USCIT
Rule 65(b), for a ten-day temporary restraining order enjoining United States Customs and
Border Protection (“Customs”) from “sampling, handling, removing, transporting, destroying or
testing any of the merchandise” that plaintiff entered for consumption at Newark, New Jersey, on
September 12, 2004, under Entry No. DT4-0028917-9. Pl.’s Application for a T.R.O. at 1; see
Court No. 04-00514 Page 2
Compl. ¶ 15. Because plaintiff has not made a showing of immediate and irreparable injury
sufficient to warrant an ex parte temporary restraining order, the motion must be denied.
I. BACKGROUND
The merchandise at issue in this litigation consists of “lens-fitted film packages”
(“LFFPs”), commonly referred to as “disposable cameras” or “one time use cameras,” from the
People’s Republic of China.1 See Compl. ¶ 23. Customs excluded the subject LFFPs from entry
into the United States, deeming them to be inadmissible under a general exclusion order that the
U.S. International Trade Commission (“ITC”) issued in 1999 under Section 337 of the Tariff Act
of 1930, as amended, 19 U.S.C. § 1337 (2000) (“Section 337”). See Compl. ¶¶ 14, 16. In the
ITC’s investigation under Section 337, Fuji Photo Film Co., Ltd. (“Fuji”), claiming infringement
of its various patents used in manufacturing LFFPs, had sought an order to exclude from entry
into the United States the LFFPs of various importers, including Jazz, that are in the business of
“refurbishing” (with new film and other components) and re-importing LFFPs originally
manufactured and sold by Fuji and its licensees. See In the Matter of Certain Lens-Fitted Film
Packages, USITC Inv. No. 337-TA-406, Pub. No. 3219 (1999).
The current litigation arose from the denial by Customs of Jazz’s administrative protest,
filed September 26, 2004, in which Jazz contested the exclusion of the LFFPs from entry. See
Compl. ¶ 17. After Customs denied the protest on October 8, 2004, plaintiff brought this action
to contest the denial of the protest, invoking this court’s jurisdiction under 28 U.S.C. § 1581(a)
(2004). See id. ¶¶ 2, 18.
1
Background on previous importations of Jazz’s LFFPs is provided in the opinion of this
court in Jazz Photo Corporation v. United States, Slip Op. 04-146 (Ct. Intl. Trade Nov. 17,
2004), appeal docketed, No. 05-1096 (Fed. Cir. Nov. 19, 2004).
Court No. 04-00514 Page 3
In its present motion, plaintiff maintains that a temporary injunction “will do nothing
more than preserve the status quo with respect to the excluded merchandise at bar pendente lite.”
Pl.’s Application for a T.R.O. at 2. Jazz argues that an order to this effect would permit the
government to respond to, and the court to fully consider, Plaintiff’s Application for a
Preliminary Injunction Restraining Defendant from Sampling or Testing the Imported
Merchandise Except by Order of Court (“Plaintiff’s Application for a Preliminary Injunction”)
that was filed simultaneously with Jazz’s motion for the temporary restraining order on
January 3, 2005. Id. at 2. In Plaintiff’s Application for a Preliminary Injunction, Jazz demands
court supervision over the sampling and testing by Customs of the excluded merchandise, which
plaintiff describes as currently located “in Customs bonded storage.” Plaintiff’s Application for
a Preliminary Injunction at 6 n.3. Plaintiff refers to the reasoning set forth in its Application for a
Preliminary Injunction to support its request for a temporary restraining order.
II. DISCUSSION
Rule 65(b) of this Court’s rules sets forth the “immediate and irreparable injury” standard
applying to motions for ex parte temporary restraining orders. The Rule provides as follows:
A temporary restraining order may be granted without written or oral
notice to the adverse party or that party’s attorney only if (1) it clearly
appears from specific facts shown by affidavit or by the verified complaint
that immediate and irreparable injury, loss, or damage will result to the
applicant before the adverse party or that party’s attorney can be heard in
opposition, and (2) the applicant’s attorney certifies to the court in writing
the efforts, if any, which have been made to give the notice and the reasons
supporting his claim that notice should not be required.
USCIT R. 65(b) (emphasis added). In Plaintiff’s Application for a Temporary Restraining Order,
Jazz certifies that it served a copy of this motion on defendant’s attorneys. See Pl.’s Application
Court No. 04-00514 Page 4
for a T.R.O. at 1 n.1. However, Jazz fails to show that immediate, irreparable injury will befall
Jazz if its application for a temporary restraining order is not granted. Such a showing is
required in order for this court to grant “the extraordinary equitable relief that is a temporary
restraining order.” Warner-Lambert Co. v. United States, 24 CIT 205, 208 (2000).
Jazz supplies the court with a variety of reasons to support its request for a temporary
restraining order, including the unconvincing argument that Customs must attain leave of court
before conducting any future sampling or testing of the imported merchandise that is the subject
of this action. See Pl.’s Application for a T.R.O. at 2; Pl.’s Application for a Preliminary
Injunction at 4-5. Jazz directs attention to the holding of this Court in Washington International
Insurance Co. v. United States, 25 CIT 207, 218, 138 F. Supp. 2d 1314, 1326 (2001), quoting
specifically the language in the opinion stating that “[j]urisdiction over Customs’ actions is
measured at the time the summons is filed. Once entries are properly before the Court, Customs
is powerless to exert authority over these entries in the absence of a Court order.” The holding in
Washington International Insurance Co., however, does not support plaintiff’s contention.
In relevant part, Washington International Insurance Co. addressed the issue of whether
Customs has the authority, absent a court order, to reliquidate entries after the jurisdiction of this
Court under 28 U.S.C. § 1581(a) has attached to an action to contest the denial of an
administrative protest challenging the original liquidations. In that situation, this Court held the
agency’s action in reliquidation to be null and void, reasoning that reliquidation of the entries
after the commencement of litigation essentially would divest the Court of jurisdiction to preside
over the action. See Washington International Insurance Co., 25 CIT at 218, 138 F. Supp. 2d at
1326. The Court concluded that holding otherwise “could unilaterally hinder the judicial process
Court No. 04-00514 Page 5
and arbitrarily divest this Court of jurisdiction over legitimate legal claims.” Id.Jazz does not, and indeed could not, maintain that this court will be divested of
jurisdiction to hear this matter if Customs conducts some sampling or testing of the merchandise
that Customs excluded from entry. Nor does Jazz convince this court that some sampling or
testing will prevent Jazz from proceeding with this litigation. This court finds nothing in the
holding of Washington International Insurance Co., or elsewhere, that would deprive defendant
of the opportunity to sample or test the subject merchandise within the limits of the permissible
process of discovery. To the contrary, defendant United States must be permitted to conduct
proper discovery and prepare its defense in this action in accordance with this Court’s rules. See
USCIT R. 26(b)(1).
Jazz makes the further argument that any information that may be produced from post-
exclusion sampling or testing amounts to “post-litigation ‘evidence.” See Pl.’s Application for a
Preliminary Injunction at 7-8. Jazz demands that the court, at the very least, prevent Customs
from sampling and/or testing the subject merchandise “until [the] plaintiff has had the
opportunity to depose the Customs officials who made the protested decision to exclude” the
subject merchandise. Id. at 7. Jazz posits that such a deposition is central to this litigation
because it may reveal whether “Customs instructed its port officers to exclude plaintiff’s goods
on the basis of improper or illegal factors.” Id. at 8. The court finds this argument unpersuasive.
Plaintiff is challenging the denial by Customs of its protest of the determination to exclude its
merchandise from entry, based on the ITC’s general exclusion order. The court reviews the
protest denial de novo, as required by 28 U.S.C. § 2640(a)(1). In this de novo proceeding,
plaintiff bears the burden of proving that the decision of Customs to exclude the merchandise
Court No. 04-00514 Page 6
was incorrect. See Universal Elec. Inc. v. United States, 112 F.3d 488, 491 (Fed. Cir. 1997)
(citing 28 U.S.C. § 2639(a)(1)). Even were plaintiff able to show that the decision to exclude the
merchandise was based on insufficient evidence or “improper factors,” such a showing would not
be central to this litigation because it would be insufficient to satisfy the burden of proof required
of plaintiff by statute.
Jazz also contends that court supervision over any sampling or testing of the subject
merchandise is necessary in order to protect the integrity of Jazz’s “Master Lot Number” system,
i.e., the inventory control system under which the LFFPs were refurbished. See Pl.’s Application
for a Preliminary Injunction at 6-7. According to Jazz, the Master Lot Number system is an
internal tracking system developed to ensure, inter alia, that the used camera cases (“shells”)
from which the imported disposable cameras were produced were subject to a patent-exhausting
first sale in the United States.2 See id. at 6-7. “Accordingly, any separation of goods from their
constituent entries, or removal of goods from their packages, whether for testing or otherwise,
could impair plaintiff’s ability to present its case-in-chief.” Id. at 7.
Jazz has not shown how the presentation of its case will be impaired by the defendant’s
selection and handling of samples such that Jazz would suffer immediate or irreparable injury.
It is in the interest of each party to preserve identifying information during the selection and
handling of samples, including preservation of all cartons and other packaging, so that the
2
The importance of proving where the shells that were used to refurbish the imported
disposable cameras were first sold stems from the United States Court of Appeals for the Federal
Circuit’s holding in Jazz Photo Corporation v. International Trade Commission, 264 F.3d 1094(Fed. Cir. 2001), cert. denied, 536 U.S. 950 (2002). In Jazz Photo Corporation, the Court of
Appeals for the Federal Circuit held that LFFPs that underwent a patent-exhausting first sale in
the United States and that are refurbished by a process constituting “permissible repair” do not
violate the intellectual property rights of the patent holder.
Court No. 04-00514 Page 7
samples will have probative value. This identifying information would include, but would not
necessarily be limited to, marks on packages that could identify plaintiff’s Master Lot Numbers,
which plaintiff relied upon in presenting its case in Jazz Photo Corporation, Slip Op. 04-146, a
case involving “substantially identical [disposable] cameras.” Pl.’s Application for a Preliminary
Injunction at 2. Neither party reasonably could expect to gain an advantage in litigation from
sampling that is conducted carelessly or in bad faith, and plaintiff has made no showing that
defendant intends to conduct sampling in this way. Moreover, the court is not aware of anything
that would prevent plaintiff from conducting its own sampling during the discovery process. The
court expects that the parties will extend to each other the cooperation in discovery that is
contemplated by the Rules of this Court.
Next, Jazz argues that the testing process will destroy the merchandise tested, thus
inflicting Jazz with economic harm. Jazz asserts that:
any testing of plaintiff’s merchandise which attempts to determine
whether the goods have been “permissibly repaired” or whether the
goods underwent a first sale in the United States is necessarily
destructive testing. Such testing involves, at a minimum, the
removal of the goods from their outer packaging and the removal
of inner packages and labels, rendering the goods unsalable. It may
also involve opening the camera shells, breaking the light-tight
boxes, and exposing the film, rendering the camera not only
unsalable but also unusable.
Pl.’s Application for a Preliminary Injunction at 8. Jazz argues that any such “destructive
testing” will impair its “property interest” in the subject LFFPs, pointing out that Jazz is free to
export the excluded disposable cameras and sell such merchandise in other markets. See id. The
shortcoming of this argument is the lack of any showing that defendant, absent an ex parte
temporary restraining order, will subject to destructive testing so great a quantity of the imported
Court No. 04-00514 Page 8
LFFPs as to cause plaintiff economic harm. Absent such a showing, this court will not presume
that defendant intends to conduct sampling and testing, or other aspects of discovery,
unreasonably, uncooperatively, or in bad faith.
The remaining arguments made in Jazz’s applications for injunctive relief present
evidentiary issues that do not address whether Jazz will suffer immediate, irreparable harm if a
temporary retraining order is not issued. Such issues are not ripe for decision during this early
stage of the litigation.
III. CONCLUSION
The factual assertions and arguments advanced by plaintiff do not constitute a showing of
immediate and irreparable injury. Therefore, it is hereby ORDERED that Plaintiff’s Application
for a Temporary Restraining Order is denied.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: January 25, 2005
New York, New York