The U.S. Court of Appeals for the Federal Circuit ruled that a complainant before the International Trade Commission (the Commission) lacked standing to appeal a civil penalty imposed by the Commission on a respondent. The Federal Circuit also upheld the Commission’s decision to impose a civil penalty on a principal who was also the chief operating officer of the respondent. Fuji Photo Film Co., Ltd. v. International Trade Commission, Case Nos. 04-1618, 05-1274 (Fed. Cir., Jan. 11, 2007) (Dyk, J.).
The Commission instituted an investigation on March 25, 1998, to determine whether Jazz Photo Corp. and seven other respondents were infringing Fuji’s patented technology. After finding that respondents were infringing Fuji’s patents, the Commission imposed a general exclusion order barring the importation of cameras that infringed Fuji’s patents and issued a cease and desist order barring Jazz from importing infringing cameras or engaging in a variety of other activities related to disposable cameras. Fuji later initiated an enforcement proceeding before the Commission to investigate charges that Jazz, former Jazz CEO Jack Benum, and former Jazz president, Anthony Cossentino, were violating the cease and desist order. The Commission imposed a $119,750 penalty on Cossentino, a $13 million penalty on Jazz and held Benum jointly and severally liable for the entire penalty on Jazz. Fuji appealed the decision, presumably seeking a higher penalty, contending that the Commission erred in finding that 1.7 million of the 27 million cameras imported by Jazz were permissibly repaired, and therefore, non-infringing. In his appeal, Benum argued that the Commission lacked authority to impose a civil penalty on him.
The Federal Circuit rejected Fuji’s appeal for lack of standing. The Court noted that while it was unclear whether additional penalties would be imposed on Jazz even if the 1.7 million cameras were not permissibly repaired, it was abundantly clear that all penalties would go to the U.S. Treasury, not to Fuji. The Court cited Supreme Court precedent involving enforcement of environmental regulations for the proposition that private plaintiffs cannot sue to assess civil penalties for past violations. The Court left the window open for private plaintiffs when there is a threat of ongoing violations. In this case, there was no threat of ongoing violations since Jazz had ceased its business after filing for bankruptcy in 2003. The Court noted that if Fuji was seeking clarification of the exclusion order, its appropriate remedy was to apply for clarification from the Commission.
With regard to Benum, the Federal Circuit upheld the civil penalties imposed by the Commission. Benum primarily argued that the Commission lacked authority to issue a cease and desist order against him personally. The Court disagreed, finding that the Commission had the power to reach individual corporate officers, citing Supreme Court case law upholding cease and desist orders imposed by the Federal Trade Commission on corporate representatives. The Court dismissed Benum’s final argument, finding that the cease and desist order, which on its face applied to Jazz’s corporate officers, provided adequate notice to Benum that he was bound by the order.
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