CAFA Affirms that U.S. Patent Rights are Exhausted Only When the Product is Sold in the U.S.

Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 03-1324, -1331 (Fed. Cir. 2005), the Federal Circuit held that the district court did not err in finding Jazz liable for direct and induced infringement, in awarding damages based upon the jury’s reasonable royalty rate, in refusing to enhance those damages, or in denying Fuji a permanent injunction. The Federal Circuit hold that to qualify for the repair defense under the exhaustion doctrine, the product must have been sold within the U.S., note that because the U.S. patent system does not have extraterritorial effect, foreign sales can never occur under a United States patent. On the issue of inducement, the Federal Circuit said that it had historically required either a general or a specific level of intent to induce infringement. Proof of actual intent to cause the acts which constitute infringement is a necessary perquisite to finding active inducement. The plaintiff has the burden of shown that the alleged infringer’s actions induced infringing acts and that he know or should have also his actions would induce actual infringement.
COMMENT: This is one of those where instances where the trial court got everything right! Kudos to Judge Hochberg from District of New Jersey.