Full opinion text
OPINION STANCEU, Judge. Plaintiff Jazz Photo Corporation (“Jazz”) is an importer of “lens-fitted film packages” (“LFFPs”), more commonly known as “disposable cameras,” “single use cameras,” or “one-time use cameras.” In this case, Jazz contests the denial by U.S. Customs and Border Protection (“Customs”) of its administrative protest, in which it challenged decisions made by Customs on September 24 and' 26, 2004, to exclude from entry two shipments of Jazz’s LFFPs that were entered at the Port of Los Ange-les/Long Beach on August 26 and 27, 2004, respectively. Customs acted on its conclusion that Jazz had failed to prove its imported cameras were outside the scope of a general exclusion order issued in 1999 by the U.S. International Trade Commission (“ITC”) under Section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (2000) (“Section 337”). See In the Matter of Certain Lens-Fitted Film Packages, USITC Inv. No. 337-TA-406, Pub. No. 3219 (1999). The ITC’s general exclusion order applies to LFFPs produced and imported by 26 parties, including Jazz, who participated as respondents in Section 337 proceedings initiated by Fuji Photo Film Co., Ltd. (“Fuji”), the holder of various patents used in manufacturing LFFPs. In those proceedings and an enforcement proceeding conducted earlier this year, the ITC determined that disposable cameras imported by Jazz infringed patents held by Fuji. All of the Jazz cameras at issue are “reloaded” cameras (also known as “refurbished” cameras), i.e., the cameras initially were manufactured by Fuji or one of its licensees (Kodak, Concord, or Konica) and, after being used by consumers and collected following photo processing, were fitted with new film and, in some instances, new flash batteries. Jazz obtained the reloaded cameras from Polytech Enterprise Limited (“Polytech”), which processed the subject cameras at its facility in China. That processing, the nature of which is one of the issues in contention in this case, consisted of various operations which, in addition to film and battery replacement, were required to produce a functional and marketable camera. The processing included repair to the camera case to exclude light following the film reloading operation, repackaging, and relabeling under Jazz’s trademark. Also at issue in this case are the circumstances under which spent disposable cameras, known in the trade as “shells,” were collected for use in Poly-tech’s reloading operations. Under Section 337, Customs is charged with enforcing the ITC’s general exclusion order with respect to imported disposable cameras offered for admission into the United States. To demonstrate that the cameras in the two entries at bar are entitled to admission under the ITC’s general exclusion order, Jazz must establish that the shells used by Polytech to produce the reloaded cameras resulted from disposable cameras that had undergone a patent-exhausting “first sale” in the United States. To be “patent-exhausting,” the sale in the United States must be made under the authority of Fuji or one of its licensees. Jazz also must demonstrate that the processing Polytech performed to reload the cameras was a “permissible repair” of the original camera as opposed to a “prohibited reconstruction.” Both of these requirements stem from the decision of the U.S. Court of Appeals for the Federal Circuit in Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094 (Fed.Cir.2001), cert. denied, 536 U.S. 950, 122 S.Ct. 2644, 153 L.Ed.2d 823 (2002). There, the Court of Appeals, in reviewing the underlying general exclusion order, reversed the ITC’s judgment of patent infringement regarding LFFPs for which the patent rights were exhausted by first sale in the United States, and that were permissibly repaired. Id. at 1110. The court exercises jurisdiction over this matter pursuant to 28 U.S.C. § 1581(a) (2000). The court set an expedited trial schedule with the consent of both parties. At a four-day bench trial held October 12-14 and October 18, 2004, plaintiff produced evidence establishing permissible repair for all of the cameras in the two entries. Plaintiff produced evidence sufficient to establish “first sale” for only some of the subject cameras, as identified further in this opinion. Defendant United States presented no case in chief and instead relied principally on its cross-examination of the two witnesses called by Jazz at trial, and on its interpretation of the “first sale” requirement as addressed by the Court of Appeals for the Federal Circuit, to support its contention that Jazz failed to meet its burden of proof as to any camera offered for admission. The court concludes, based on the record made in these proceedings, that only the aforementioned cameras for which plaintiff produced evidence sufficient to establish “first sale” in the United States qualify for admission, and only to the extent that the court has identified those specific cameras as capable of being segregated from the remaining cameras in the two shipments. The court concludes that those remaining cameras are required to be exported or otherwise disposed of according to applicable customs laws. I. BACKGROUND This litigation did not arise in isolation. Its roots are in other proceedings in which Fuji claimed that Jazz’s business activities involving single use cameras infringed its patent rights. In the 1999 Section 337 action mentioned above, Fuji charged that 27 respondents, including Jazz, were infringing fifteen of Fuji’s patents. The ITC found infringement on the part of 26 respondents, including Jazz, and on June 2, 1999 issued its General Exclusion Order and Order to Cease and Desist (“Exclusion Order”) that, inter alia, prohibited the importation into the United States of “Certain Lens-Fitted Film Packages.” The Court of Appeals for the Federal Circuit stayed the Exclusion Order pending appeal. See Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d at 1098. The Court of Appeals affirmed the Commission’s orders; however, it provided for one exception to the Exclusion Order, holding that “[t]he [ITC’s] judgment of patent infringement is reversed with respect to LFFPs for which the patent right was exhausted by first sale in the United States, and that were permissibly repaired.” Id. at 1110. In addressing the questions of first sale and permissible repair, the Court of Appeals for the Federal Circuit stated the general rule that “patented articles when sold ‘become the private individual property of the purchasers, and are no longer specifically protected by the patent laws.’ ” Id. at 1102 (quoting Mitchell v. Hawley, 83 U.S. (16 Wall) 544, 548, 21 L.Ed. 322 (1872)). “The purchaser of a patented article has the rights of any owner of personal property, including the right to use it, repair it, modify it, discard it, or resell it, subject only to overriding conditions of the sale.” Id. The Court then addressed two specific questions arising from the application of this general principle of patent law to the single use cameras imported by Jazz. First, it addressed what “repair” of a single use camera is permissible under the patent laws. Second, it defined what type of sale is “patent-exhausting,” ie., the Court resolved the issue of the type of sale needed for the purchaser to obtain the full scope of rights, including the right to repair as well as the right to use and resell, that will attach only when an article no longer has patent protection. The Court of Appeals analyzed in detail the distinction patent law draws between “permissible repair” and “prohibited reconstruction.” The Court specified that an eight-step process undertaken by Jazz would qualify for permissible repair, as follows: (1) removing the cardboard cover; (2) opening the body of the shell (usually by cutting at least one weld); (3) replacing the winding wheel or modifying the film cartridge to be inserted; (4) resetting the film counter; (5) replacing the battery in a camera equipped with a flash; (6) winding new film out of a cannister onto a spool or into a roll; (7) resealing the camera body using tape and/or glue; and (8) applying a new cardboard cover. Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d at 1101. Regarding the “first sale” issue, the Court of Appeals for the Federal Circuit, settling a previously open question of patent law, held that [t]o invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent. Our decision applies only to LFFPs for which the United States patent rights have been exhausted by first sale in the United States. Imported LFFPs of solely foreign provenance are not immunized from infringement of United States patents by the nature of their refurbishment. Id. at 1105 (citation and parenthetical omitted). While Jazz’s appeal of the ITC Exclusion Order was pending, Fuji filed a second action with the ITC seeking “institution of a formal enforcement proceeding to enforce the exclusion and cease and desist orders, which [were] issued on June 2, 1999, imposition of] civil penalties, and imposition of] such other remedies and sanctions as are appropriate against Jazz and several other entities.” ITC Enforcement Initial Determination, USITC Inv. No. 337-TA-406 (Apr. 6, 2004). The ITC administrative law judge found that Jazz had violated the Exclusion Order with respect to some of its product imported from various facilities in the People’s Republic of China (“China”). See ITC Enforcement Initial Determination at 149. The ITC Enforcement Initial Determination effectively became the determination of the Commission when the ITC issued a notice declining to review the Enforcement Initial Determination on July 27, 2004. Determination Not To Review the Presiding Administrative Law Judge’s Enforcement Initial Determination and Request for Briefing on Recommended Enforcement Measures on Certain Lens-Fitted Film Packages, 69 Fed.Reg. 46,179 (Aug. 2, 2004). In addition to the actions it had brought before the ITC, Fuji sued Jazz for patent infringement in the U.S. District Court for New Jersey. See Fuji Photo Film Co. Ltd. v. Jazz Photo Corp., 249 F.Supp.2d 434 (D.N.J.2003). The District Court, after a jury trial, found Jazz “liable for infringement of Fuji’s patents with respect to 40,928,185 cameras sold by Jazz during the period 1995 through August 21, 2001.” Id. at 459. The District Court set damages owed by Jazz at $22,919,783.60. The Court also found Jazz’s president personally liable for inducement of infringement with respect to 39,103,664 of the cameras, and held him jointly and severally liable for an amount of $21,898,051.84. Id. at 459-60. The District Court judgment apparently contributed to a decision by Jazz to seek protection under chapter 11 of Title 11, United States Code. Jazz is now the subject of ongoing bankruptcy proceedings in the Bankruptcy Court for the District of New Jersey. On August 2, 2004, Fuji, a creditor participating in those proceedings, filed a motion to convert the proceedings from reorganization under chapter 11, to liquidation under chapter 7, of Title 11, United States Code. In this Court, Jazz has argued that it will have no means of staying in business and avoiding bankruptcy under chapter 7 should it be unsuccessful in obtaining the immediate release of its merchandise. II. SUMMARY OF CONTENTIONS OF THE PARTIES In its argument before this Court, Jazz submits that the subject imported merchandise reflects modifications Jazz made in its business operations to correct the circumstances that caused the ITC and the District Court for New Jersey to conclude that certain previous imports of Jazz’s disposable cameras infringed Fuji’s patents. By way of background, the ITC considered, and found infringing, reloaded LFFPs imported and sold by Jazz that fall into four categories: (1) cameras refurbished using shells that had been collected outside the United States; (2) cameras that had been refurbished more than once (so-called “reloaded reloads”); (3) Kodak cameras which, when undergoing the refurbishing process abroad, had been fitted with a full-width replacement -back for the camera case that was not produced by Fuji or a Fuji licensee and that infringed a Fuji patent; and (4) cameras for which Jazz was unable to show evidence that the refurbishing constituted “permissible repair.” Jazz maintains that it has established, by a preponderance of the evidence, that the cameras in the two entries at issue were refurbished only from shells collected in the United States, that in sorting the shells the supplier of the refurbished cameras, Polytech, excluded from processing shells that were previously reloaded, that Polytech did not use any full-width replacement backs in making the subject merchandise, and that the refurbishing process conformed to the standard of “permissible repair.” Defendant United States asserts generally that Jazz has failed to meet its burden of proof for either “first sale” or “permissible repair.” The United States further argues that this Court, in the event it orders the release of any merchandise, should grant no expedited relief to Jazz, disputing plaintiffs contentions about Jazz’s precarious financial status. III. Applicable Legal STANDARDS The court reviews de novo the protested decision by Customs to exclude the subject merchandise. See 28 U.S.C. § 2640(a)(1). For purposes of this review, the factual determinations by Customs are presumed to be correct. 28 U.S.C. § 2639(a)(1). To overcome this presumption, Jazz must establish, by a preponderance of the evidence, that the single use cameras qualify for admission. See St. Paul Fire & Marine Ins. Co. v. United States, 6 F.3d 763, 769 (Fed.Cir.1993) (holding that the preponderance of the evidence standard is the adequate burden of persuasion for factual matters in post-importation cases). Under the requirements found by the Court of Appeals for the Federal Circuit in Jazz Photo Corp. v. Int’l Trade Comm’n, plaintiff must establish that each individual camera offered for admission underwent a patent exhausting first sale in the United States and that the processing performed by Polytech in China was confined to “permissible repair,” i.e., that it did not constitute “prohibited reconstruction.” A. The Requirement of a Patentr-Exhausting “First Sale’’ The court takes judicial notice that Jazz, in marketing LFFPs reloaded from the shells manufactured by or under license of Fuji, does not have access to documentary evidence, such as sales receipts, establishing the location of the original sale. This conclusion stems from the practical consideration that Jazz and similar companies must obtain shells, directly or indirectly, from the businesses that develop the film in the LFFPs. The court takes further judicial notice that, as any consumer of a disposable camera knows from experience, if not from the label on the camera itself, the photo processor typically retains the spent shell when the consumer receives the prints or negatives. A second practical consideration, stemming at least in part from the protracted litigation between Fuji and Jazz, is that Jazz and similarly situated companies cannot reasonably be expected to have access to information that does or may exist, and would be expected to be proprietary to Fuji and the licensees, from which the location of first sale of a shell could be ascertained to a certainty. In order for the “permissible repair” exception identified and delineated by the Court of Appeals for the Federal Circuit in Jazz Photo Corp. v. Int’l Trade Comm’n to have any practical meaning in commerce, Jazz must be permitted to conduct its business such that “first sale” may be established on the basis of evidence that is commercially available to it. As a threshold consideration, the court is unable to presume that a shell collected from any source in the United States, and not previously reloaded, resulted from a single use camera that underwent a patent-exhausting first sale in the United States. The court finds no support in the Federal Circuit’s opinion in Jazz Photo Corp. v. Int’l Trade Comm’n, or in the Exclusion Order, for such a general presumption. Rather, the court concludes from these sources of law that Jazz must meet its evidentiary burden through factual evidence establishing first sale that goes beyond the mere fact that the shells were obtained in the United States. However, Jazz argues, and the court agrees, that Jazz should be entitled to rely on a “presumption of regularity” under which Customs must be presumed to be enforcing the Exclusion Order. Under such a presumption, any new single use cameras identified by the Exclusion Order that are commercially imported by anyone other than Fuji or one of its licensees would be unlawful imports and presumed to be excluded from the U.S. market. Because the Exclusion Order contains an exception allowing noncommercial (“personal use”) importations, this presumption does not extend to the LFFPs, which may be called “tourist” cameras, that are imported under that exception. The court addresses below the legal issues posed by previously-reloaded shells and by noncommercial importations. Following this discussion, the court addresses the remaining legal issues posed by the facts in this case as they pertain to the circumstances under which the shells used to produce Jazz’s imported cameras were collected. 1. The “Reloaded Reload” Issue In this proceeding, Jazz acknowledges that a shell from a “reloaded” camera, as opposed to a new camera, is not entitled to a presumption of patent-exhausting first sale, as such a shell could have resulted from a single use camera previously imported and found to have infringed Fuji’s patents. Instead, Jazz points to record evidence of a sorting operation conducted on the shells prior to the processing that refurbishes them with new film and, where applicable, flash batteries. That sorting operation, according to Jazz, reliably excludes from processing shells from reloaded cameras, based on physical indications of the previous reloading, such as the presence of black tape, the presence of replacement parts, or the absence of an original label of Fuji or one of its licensees. As discussed later in this opinion, Jazz at trial met its burden of establishing that its operations satisfactorily addressed the “reloaded reload” issue. 2. The “Tourist Camera" Issue In these proceedings, the parties devoted considerable argument to the issue of shells from what may be called “tourist cameras.” Jazz acknowledges, as a general matter, that some shells collected in the United States, even though processed by a film developer in the United States, may nevertheless have been first sold abroad. Such a shell would result, for example, if a U.S. tourist purchased and used a disposable camera in a foreign country and brought it back to the United States for developing of the film. The camera in its original condition could have been imported lawfully under the personal use exception in the Exclusion Order. The parties disagree on whether the resulting shell, if exported and permissibly repaired, would qualify for admission to the United States under the Exclusion Order. Jazz maintains that such a camera would be deemed under patent law principles not to violate the Exclusion Order. Jazz argues in the alternative that if the court should find to the contrary, it nevertheless should conclude that Jazz has met its evidentiary burden by presenting evidence that the sorting operation conducted on the shells prior to the processing, mentioned above, also is sufficiently reliable to exclude shells that contain labeling in a foreign language or are otherwise identifiable as being of models of LFFPs not. typical of those found in the United States market. The aforementioned “personal use,” or “tourist camera,” exception, set forth in paragraph four of the Exclusion Order, provides that the LFFPs are entitled to entry for consumption into the United States, without payment of bond, if upon importation they accompany a person arriving in the United States and are for the arriving person’s personal use, or which are otherwise imported into the United States in such small quantities and under such circumstances so as to reasonably indicate to the satisfaction of the U.S. Customs Service that they are being imported for personal use rather than for commercial purposes. The Exclusion Order was issued before the Court of Appeals for the Federal Circuit, in Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094, held that permissibly repaired LFFPs that underwent a patent-exhausting first sale constitute an exception to its general finding that the imported LFFPs at issue infringed Fuji’s patent rights. Under the clear holding of the Court of Appeals, a LFFP must undergo a patent-exhausting first sale in the United States to qualify for permissible repair. It is just as clear that LFFPs brought in under the “tourist” exception in paragraph four of the Exclusion Order do not meet this test. These two conclusions, however, do not resolve entirely the legal question posed by the factual situation of disposable cameras offered for importation into the United States after being refurbished abroad using “tourist shells” collected from U.S. photo processors, a situation not addressed anywhere in the Exclusion Order. Nor does the legal question posed by such cameras appear to have been before the Court of Appeals in Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094. This court concludes that, in resolving the dispute between the parties in this case, it need not decide the issue of whether shells from “tourist cameras,” in all circumstances and as a matter of law, may be exported from the United States, refurbished, and reimported lawfully under the Exclusion Order. That conclusion is grounded in the particular findings of fact identified later in this opinion. The court notes, in particular, the absence of any record evidence from which it could conclude that a camera made from a “tourist” shell actually is present in either of the entries of merchandise at issue. As also discussed later in this opinion, the only evidence of record bearing on the question of the likelihood of the presence of tourist shells among collections of shells obtained from photo processors in the United States supports a finding of fact that tourist shells may be present at a percentage that is “very small, much less than one percent.” A third group of findings relevant to the tourist camera question pertain to the evidence of sorting conducted by Polytech, Jazz’s Chinese supplier of refurbished cameras. Under the particular factual circumstances that plaintiff, by a preponderance of the evidence, established to exist in this case for a portion of the cameras offered for importation, the “first sale” requirement has been met. Because it would have simplified the issues presented by this case were the court able to accept plaintiffs arguments that cameras refurbished from tourist camera shells collected from U.S. photo processors may lawfully be entered for consumption, it is helpful to address the arguments and the reasons why the court concludes that plaintiffs arguments do not suffice. As a threshold consideration, the court notes that the questions of law properly before it concern the enforcement by Customs of the Exclusion Order as modified by the Court of Appeals. It is not the role of this Court or of Customs to settle questions of intellectual property law. See K Mart Corp. v. Cartier, Inc., 485 U.S. 176, 189, 108 S.Ct. 950, 99 L.Ed.2d 151 (1988). Thus, it is not within the power of this Court in the first instance to determine whether, as a matter of patent law, Fuji’s patent rights in tourist cameras or shells of tourist cameras have been extinguished under some principle distinct from the exhaustion by “first sale” principle or any other patent law principle unrelated to the application of the Exclusion Order. As a result, defenses to infringement that Jazz could have asserted before the ITC in the Section 337 proceeding, and thereafter raised on appeal before the Federal Circuit, will not be availing in this forum. That still leaves for this court’s consideration, however, the arguments advanced by plaintiff that stem from the personal use exception itself or from the ITC’s Section 337 proceeding and Jazz’s subsequent appeal of the ITC’s decisions affecting its imports in Jazz Photo Corp. v. Int'l Trade Comm’n, 264 F.3d 1094. Plaintiffs first argument is that the Exclusion Order, by explicitly creating the exception for personal use imports, implicitly approves of the use of tourist cameras for any purpose including repair and re-importation. The court finds no basis to conclude that the Exclusion Order, by excepting from the import exclusion the importation of cameras for personal use, had any legal effect beyond the express terms of paragraph four therein. Section 337 proceedings are based in patent law; however, they are not identical to patent law. A decision by Customs to enforce or not enforce the full scope of the patent holder’s rights to control the sale, use and manufacture of the merchandise in question does not affect other rights held by the patent holder. See Corning Glass Works v. U.S. Int’l Trade Comm’n, 799 F.2d 1559, 1571-72 (Fed.Cir.1986) (noting that ITC decision not to issue an exclusion order does not sanction the infringement of U.S. patents by importers). On its face, the exception to the Exclusion Order applies only to those cameras being imported for personal use. When a refurbished camera is imported for commercial purposes, the exception does not apply. To qualify for entry for consumption in the Customs territory, a disposable camera must comply with the Exclusion Order as a whole. Jazz’s second argument is that Fuji gave an implied license of its patent rights by not seeking an import exclusion for tourist cameras in the Section 337 proceeding. Patent law, however, does recognize the possibility of an implied license. See De Forest Radio Tel. & Tel. Co. v. United States, 273 U.S. 236, 47 S.Ct. 366, 71 L.Ed. 625 (1927). The common thread of implied license claims- is equitable estop-pel. “Thus, an implied license cannot arise out of the unilateral expectations or even reasonable hopes of one party. One must have been led to take action by the conduct of- the other party.” H.M. Stickle v. Heublein, Inc., 716 F.2d 1550, 1559 (Fed.Cir.1983). There is no evidence in the record that Fuji took any action, upon which Jazz reasonably could have relied, that implied a waiver of Fuji’s rights. Decisions as to the scope of the enforcement of an exclusion order are within the purview of Customs and the ITC. Typically, an implied license is found by determining “what the parties reasonably intended as to the scope of the implied license based on the circumstances of the sale.” Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 878 (Fed.Cir.1995). In this instance, there was no sale from Fuji to Jazz to examine. The sale of the camera to a customer by the patent holder or a licensee does not create an implied license that a third party can rely upon when that sale occurs in a foreign country. See Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d at 1105. Third, and related to the second theory, plaintiff maintains that the ITC and Customs, by not enforcing Fuji’s rights through an exclusion of the tourist cameras, has created a waiver of those rights. If the relationship between Fuji and Jazz is not sufficient grounds to establish an implied license, then actions by a third party, Customs in this case, cannot impose on a patent holder a waiver of patent rights. Customs and the ITC can exercise their discretion not to use their powers to enforce those rights, but that does not waive Fuji’s ability to pursue those rights in other fora. See Corning Glass Works, 799 F.2d at 1571-72. The court finds no legal authority allowing it to conclude that either the Exclusion Order by itself, or actions by Customs to permit importation of LFFPs for personal use, established an implied waiver of Fuji’s patent rights. Fourth, Jazz maintains that by failing to bring any action under domestic patent law that would seek to prevent the use or sale of the personal use cameras while they are in the United States, Fuji has abandoned any right to object to Jazz’s subsequent action relying on the legal collection of the shells in the United States. The parties apparently disagree as to whether Fuji could bring an action under the patent laws to prevent the use by consumers of the personal use LFFPs imported under paragraph four of the Exclusion Order; both parties agree that Fuji has not done so. Plaintiffs contention essentially is that if, arguendo, Fuji could bring such an action or an action to enjoin photo processors from selling spent tourist shells, its failure to do so has constituted a waiver of those rights. However, the court finds no legal authority under which it could conclude that Fuji’s failure to take either of these steps creates any such waiver. The remaining arguments Jazz advances on the tourist camera issue pertain to its contention that any cameras refurbished from tourist camera shells would exist, if at all, only in de minimis quantities. Actions arising under section 337 do include an implicit de minimis exception. This stands in contrast to traditional patent law, which holds that any infringing product creates a cause of action. Under section 337, only those imports which cause substantial injury will prompt the ITC to issue an exclusion order. See Corning Glass Works, 799 F.2d at 1567 (“[T]o accept proof of a conceivable or actual loss of sales or profits of any amount by the patentee as sufficient proof of an effect or tendency to substantially injure the domestic industry would eliminate the ‘independent proof of the ‘distinct injury requirement’ held to be necessary in [Textron, Inc. v. U.S. Int’l Trade Comm’n, 753 F.2d 1019, 1028-29 (Fed.Cir.1985) ].”). It is therefore possible that the ITC could amend its Exclusion Order expressly to permit re-importation of the tourist cameras, finding that they do not create a substantial injury. However, that determination is within the power of the ITC, and not within the jurisdiction of this Court. The issue before this court is confined to the exercise by Customs of its authority to enforce the Exclusion Order as it applies to the subject single use cameras. To incorporate a de minimis exception into the Exclusion Order, Jazz must present its argument before the ITC, with any appeal therefrom brought in the Court of Appeals for the Federal Circuit. Nevertheless, as noted earlier, there is no record evidence from which the court may conclude that the subject merchandise actually includes cameras refurbished from tourist shells. That, and the findings concerning the relative rarity of tourist shells, and concerning the sorting conducted to remove from processing those tourist shells presenting indications allowing them to be identified, are satisfactory to resolve the tourist camera issue as it is presented by the record evidence in this case. Defendant United States made much of the possibility that some tourist cameras may be labeled in English because they were intended for $ale in various English-speaking foreign countries, and of the likelihood that such shells could be selected for processing during the sorting procedure described at trial. Under defendant’s argument, Jazz would be expected to arrange for foolproof sorting of shells based on information known to Fuji and its licensees, which information Jazz likely could not obtain. The court declines to disallow the entire “permissible use” exception, which the Court of Appeals conditioned on first sale in the United- States, on the theoretical possibility that the entries at issue contain one or more cameras made from shells of tourist cameras collected in the United States. Were the court to impose a blanket prohibition upon such a theoretical possibility, it would be acting-contrary to the intent the Court of Appeals demonstrated by going to the lengths it did to apply the permissible repair doctrine to the specific class of merchandise at issue in this case. S. Collection of Shells in the United States In the ITC enforcement proceeding, the administrative law judge concluded that forty percent of the LFPPs Jazz imported in the time period August 21, 2001 to December 12, 2003 were refurbished from shells of LFPPs for which the first sale occurred outside the United States. [ .] ITC Enforcement Initial Determination at 43. Without specifying an exact percentage, the judge made a finding, based on an admission by Jazz, that “the primary source of foreign shells among samples of empty Jazz shells is the reloaded reloads.” ITC Enforcement Initial Determination at 65. Before the administrative law judge, Jazz contended that there was no practical means to differentiate between a shell sold abroad and one sold in the United States using nonproprietary information. ITC Enforcement Initial Determination at 35. The administrative law judge disagreed with Jazz, finding that with regard to Fuji, Kodak, and Konica, the language in which the package label is presented is an indication of the country in which the original manufacturer intended the LFFP to be sold. ITC Enforcement Initial Determination at 35. The administrative law judge observed that prior to the August 21, 2001 decision of the Court of Appeals in Jazz Photo Corp. v. Int'l Trade Comm’n, 264 F.3d 1094, Jazz relied on foreign collection of shells for ninety percent of its refurbished LFFPs. These previously reloaded foreign shells were found not to have been screened by Jazz from its shells collected in the United States, and they were found to have been the primary source of the LFFPs refurbished from foreign shells that were found in the sample of Jazz’s LFFPs in the enforcement proceeding. Before this court, Jazz argued that if it were to sort out from shells collected in the United States the two known sources of shells resulting from infringing LFFPs, i.e., shells labeled in a foreign language and shells previously reloaded, then a presumption arises that the remaining shells were subject to a patent-exhausting first sale in the United States. The court disagrees. A sorting process that removes foreign-language shells and previously reloaded shells, standing by itself, is not sufficient to establish first sale. Plaintiff did not make or attempt to make an evidentiary showing that LFFPs by the four original manufacturers (Fuji, Kodak, Konica and Concord) labeled in English are not sold in foreign countries. Therefore, the court does not have facts on the record supporting a finding that sorting is a foolproof method of identifying and sorting out shells from cameras first sold abroad. As counsel for the United States argued, sorting that excludes foreign-language shells cannot identify shells that may have been sold abroad in an English-speaking country. Such shells could be imported into the domestic market and then sold to a company that refurbishes LFFPs. As plaintiff itself acknowledged during its closing argument at trial, shells may be imported into the United States without violating the Exclusion Order, which according to plaintiff does not apply to “Lens-Fitted Film Packages” that are not fitted with film. According to the ITC administrative law judge, there is a significant international market in used shells. ITC Enforcement Initial Determination at 65. The court infers from the existence of this market, and from the absence of a prohibition on the importation of shells into the United States, that a collection of shells obtained in the United States, from which previously reloaded shells and foreign-labeled shells have been removed, would not necessarily satisfy the first sale requirement. The court concludes, in the particular context of the facts established in this case, as set forth later in this opinion, that additional evidence is necessary to establish compliance with the first sale requirement. As discussed in detail in the Findings of Fact portion of this opinion, Jazz was able to demonstrate, for some but not all of its LFFPs in the two entries, that the shells used by Polytech in the refurbishing process not only were collected in the United States, but were collected, directly or indirectly, from entities engaged in the particular business of photo processing. Collection from a photo processor located in the United States, combined with a system to sort out shells that previously were reloaded, would address the possible sources of shells from LFFPs first sold abroad, except for shells from LFFPs that entered the United States in violation of the Exclusion Order or entered the United States under the personal use exception in the Exclusion Order. As to the former, Jazz may rely on the aforementioned presumption of regularity that Customs is enforcing the clear terms of the Exclusion Order and preventing importation of infringing LFFPs sold outside the United States. See Fuji Photo Co., Ltd. v. Int’l Trade Comm’n, 386 F.3d 1095, 1107 (Fed.Cir.2004). Concerning the latter, the “tourist camera” shells, sorting of shells so that those with original labels in a foreign language, or those with other indications that would reveal, based on nonproprietary information, that they are of a type not sold in the U.S. market, are not selected for processing is a practical means to remove “tourist camera” shells from the mix of collected shells. Thus, shells collected, directly or indirectly, from a photo processor in the United States are far more reliable, from the standpoint of showing “first sale,” than those that are shown to have been collected in the United States but that have no evidence linking them to a source in the United States that actually is in the photo processing business. It is theoretically possible that a U.S. photo processor could engage in the additional business of “international shell arbitrage,” i.e., importing shells from abroad for resale to shell collectors or reloaders. The court, however, finds this hypothetical to be highly speculative. Defendant placed no evidence on the record in this'proceeding to establish that such a scenario actually exists. B. The Requirement of “Permissible Repair” Polytech’s camera refurbishing operations in China must comply with the requirement of “permissible repair,” i.e., the processing must not constitute “prohibited reconstruction.” Jazz Photo Corp. v. Int'l Trade Comm’n, 264. F.3d at 1101. The Court of Appeals for the Federal Circuit identified, as permissible repair, the previously-mentioned eight-step process, which includes: (1) removing the cardboard cover; (2) opening the body of the shell (usually by cutting at least one weld); (3) replacing the winding wheel or modifying the film cartridge to be inserted; (4) resetting the film counter; (5) replacing the battery in a camera equipped with a flash; (6) winding new film out of a cannister onto a spool or into a roll; (7) resealing the camera body using tape and/or glue; and (8) applying a new cardboard cover. In the proceedings in U.S. District Court for New Jersey, the permissible repair standard set forth by the Federal Circuit was further elucidated. The District Court identified a series of nineteen permissible steps that included operations incidental to the eight steps identified by the Court of Appeals. However, the District Court did not conclude that the nineteen steps it identified were exhaustive. The Court held that under the Federal Circuit’s formulation in Jazz v. ITC, when a camera is opened, film is properly inserted, the battery is replaced, and the camera is closed, the camera has been permissibly repaired. These four permissible processés serve the function of preserving the remaining useful life of the camera as a whole. Fuji Photo Film Co. Ltd. v. Jazz Photo Corp., 249 F.Supp.2d at 445-46. The District Court further noted: Whether these refurbishment procedures are counted as four, eight or nineteen “steps” is a matter of semantics, as virtually any step can be divided into multiple “sub-steps.” The legal issue is whether the totality of the refurbishment procedures are of such a nature that they preserve the useful life of the patented article, or whether they in fact recreate the article after it has become spent. Id. at 446-47. This court agrees with the District Court’s analysis, noting that the opinion of the Court of Appeals for the Federal Circuit is not properly interpreted to disallow minor processing incidental to the eight steps identified in the Court’s opinion in Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094. IV. Findings of Fact on First Sale and Permissible Repair At trial, Jazz produced two witnesses who testified on various factual matters relevant to the first sale and permissible repair issues. Jazz also introduced a large number of documents, almost all of which documents the court found admissible and, accordingly, admitted to the record. Defendant United States declined to put on a case in chief, instead relying largely on its cross-examination of plaintiffs two witnesses to support its contention that Jazz had failed to show that all the cameras at issue satisfied the first sale and permissible repair requirements. As a result, the critical evidence introduced by the plaintiff at trial in this case is unrebutted. The court, after considering whether plaintiff has met its burden of proof by a preponderance of the evidence on each of the various factual issues in this case, has made individual findings of fact on the following core issues: (A) Whether Jazz has established a patent-exhausting first sale for any or all of the cameras at bar, based on the circumstances under which the shells used in processing were collected; and (B) Whether Jazz has established that Polytech’s camera refurbishing operations qualify as “permissible repair” for any or all of those cameras. These core findings of fact, and certain related factual findings, are set forth in this section of the opinion. The findings of fact reached by the court on issue (A), ie., “first sale,” required the court to make findings of fact on a third issue. That issue is whether Jazz has demonstrated, by a preponderance of the evidence, that cameras refurbished from a group of shells obtained from a company known as Seven Buck’s, Inc. can be segregated from the remaining cameras in the two shipments. A fourth factual issue pertains to a determination under USCIT R. 62 governing any stay affecting the time at which this court’s judgment may be enforced. The findings of fact and conclusions of law pertaining to these two additional issues are set forth in subsequent sections of this opinion. A. Findings of Fact Relevant to the Issue of First Sale in the United States Plaintiff established at trial that the LFFPs in the two shipments at bar were refurbished in China by Polytech. Plaintiff also established that a portion of these LFFPs were refurbished by Polytech using shells that Polytech obtained from a collector of shells, Photo Recycling Enterprises, Inc. (“Photo Recycling”), a company headquartered in Piscataway, New Jersey. Plaintiff established that the remainder of the LFFPs at issue were refurbished by Polytech in China using shells that Jazz provided to Polytech after acquiring them from the company known as Seven Buck’s, Inc. (“Seven Buck’s”), which operated in Newport Beach, California. The court further finds, based on the records of plaintiff admitted into evidence and the testimony of the two witnesses at trial, that the LFFPs made from shells acquired from Seven Buck’s were identified separately in plaintiffs inventory control system, which assigned to these LFFPs a “Master Lot Number” (“MLN”), and that they were identified in that inventory control system by Master Lot Number 463. The court further finds, based on plaintiffs records and the testimony of the two witnesses at trial, that plaintiffs inventory control system assigned Master Lot Numbers other than Master Lot Number 463 to the LFFPs in the two subject shipments that resulted from Polytech’s refurbishing of shells acquired from Photo Recycling. The evidence establishes, as discussed later in this opinion, that the inventory control system using Master Lot Numbers enables finished LFFPs to be identified by Master Lot Number according to the shipments of shells from which they were refurbished by Polytech. Based on a preponderance of the evidence presented at trial, the court finds as a fact that all the shells acquired from Photo Recycling that were used in refurbishing LFFPs in the two subject shipments were acquired, directly or indirectly, from entities that performed photo processing operations in the United States. With respect to any of the aforementioned shells that Polytech acquired from collectors of shells, instead of from U.S. photo processors, the court finds, based on a preponderance of the evidence, that a condition of the purchase of such shells was collection from photo processors in the United States. The evidence supporting the aforementioned findings of fact and other findings of fact relevant to the issue of first sale is summarized below. 1.Findings of Fact Established by the Testimony of Mr. Leon Silvera Jazz introduced at trial the testimony of Mr. Leon Silvera, President of Photo Recycling. The court found his testimony credible based on his demeanor, demonstrated knowledge of Photo Recycling’s business activities, and general knowledge of the business of collecting spent shells. His testimony established, by a preponderance of the evidence, the following facts. 1. Photo Recycling is in the business of collecting spent shells from three distinct types of vendors. These vendors include (1) national retailers that operate internal photo processing labs (e.g., CVS and COSTCO), (2) independent photo processors or small, wholesale photo finishing labs, and (3) entities that are in the business of collecting shells, otherwise known as shell collectors. Tr. 184-86. 2. Photo Recycling contracts a price for shells with individual vendors and sends each pre-paid, domestic UPS labels and cartons that most suppliers use to ship shells to. Photo Recycling’s warehouse in Piscata-way, New Jersey. Tr. 188-89. 3. Approximately 80% of the shells collected by Photo Recycling in the United States in 2004 were obtained from the national retailers referred to in paragraph 1, above. Tr. 187. 4. Approximately 10% to 15% of the shells collected by Photo Recycling in the United States in 2004 were obtained from independent photo processors or small, wholesale photo finishing labs. Tr. 187. 5. According to Mr. Silvera, based on his knowledge of the industry, 85% of disposable cameras developed at photo processing locations are likely purchased from that same location. Tr. 316-17. 6. The remaining 10% to 12% of the ■ shells collected by Photo Recycling in the United States in 2004 were obtained from shell collectors. Tr. 187. 7. Photo Recycling contracts to buy from the third'type of vendor, i.e., shell collectors, only shells with original Kodak, Fuji, Koniea or Concord packaging identifying the manufac- ■ turer. Tr. 192, 341. 8. Photo Recycling requires that shipments it purchases from shell collectors be accompanied with letter certifications indicating that the shells in the cax-tons were collected from photo processors in the United States. Tr. 303-04, 354-55. 9. Photo Recycling collects in excess of one million shells per month from approximately 5,000 different vendors. Tr. 314, 321. 10. Photo Recycling sells and ships at least 90% of all the shells it collects to Polytech in China. Tr. 193, 218. 11. Between the summer of 2001 and the winter of 2003, Photo Recycling-sorted all the shells it collected. Tr. 319, 326. Photo Recycling did not sort for tourist shells until the latter stages of this sorting program. Tr. 326. Tourist shells, with clearly identifying foreign markings and foreign language, comprised “way less than 1%” of the total shells collected during that time. Tr. 323. This percentage is based on Photo Recycling’s sorting experience gained from the sorting of “probably in excess of 10 million shells.” Tr. 323. 12. Photo Recycling no longer performs complete sorts of the shells it collects. Instead, Photo Recycling performs sample sorts of approximately 5% of the total shells it receives from all its vendors. Tr. 301-02, 320. 13. Photo Recycling’s sample sorting system focuses primarily on identifying shells that came from disposable cameras first sold in the United States by sorting for shells with original labeling and those with foreign markings. Tr. 326-28. During sample sorts, shipments from collectors are, on rare occasion, completely sorted. Tr. 329. A complete sort of a shipment occurs only when a variance involving previously reloaded or foreign-labeled shells is detected. Tr. 301-02, 329, 357. 14. In Mr. Silvera’s opinion, if there were an inordinately high number of tourist shells in the mix of shells sent to Polytech, Polytech would report that to Photo Recycling as being some aberration, which Poly-tech and Photo Recycling then would discuss. Photo Recycling has not had that reporting from Polytech. Tr. 323-24. 15. In Mr. Silvera’s opinion, payments received by Photo Recycling from Polytech and the reports generated by Polytech indicate that Photo Recycling does not sell Polytech a significant number of tourist shells. Tr. 332. 16. Photo Recycling’s sample sorting system also screens for shells with black tape and other signs indicating shells that previously were reloaded. Tr. 328. Photo Recycling depends upon reports from Poly-tech to ensure that a shipment of Photo Recycling shells does not contain a high percentage of reloaded shells. Tr. 357. 17. Photo Recycling also collects shells from countries other than the United States, but these shells are shipped directly to Hong Kong from those countries instead of being shipped to Photo Recycling in New Jersey. Tr. 308. 18. In Mr. Silvera’s opinion, a “very tiny” number or de minimis amount of tourist shells that were first sold in English-speaking countries, such as Ireland, Australia or the United Kingdom, could possibly have been among the shells Photo Recycling collected in 2004 from photo processors in the United States. Tr. 308, 317-18. 19. In Mr. Silvera’s opinion, a “very tiny” number or de minimis amount of tourist shells with foreign-language wrappers or bilingual wrappers could possibly have been among the shells Photo Recycling collected in 2004 from photo processors in the United States. Tr. 316-19. 2. Findings of Fact Established by the Testimony of Mr. Miehal Zawodny During trial, Jazz also introduced the testimony of its quality manager, Mr. Mi-ehal Zawodny, who oversees the production quality of all Jazz disposable cameras and is responsible for overseeing the procedures that the Polytech factory in China uses to produce Jazz cameras. The court found his testimony credible, based on his demeanor, his demonstrated knowledge of Polytech’s sorting and processing operations, and the precision with which he responded during direct testimony and cross-examination. His testimony, some of which was aided by viewing the footage of two videotapes filmed in 2003 of Polytech’s facility, and admitted into evidence, established, by a preponderance of the evidence, the following facts. 20. The Polytech facility occupies several floors in an industrial building in Shenzhen City. Shells sent to the Polytech facility are stored, sorted, refurbished and packaged on different floors. Tr. 395. 21. The sorting operation begins with Polytech sorters “dumping” shells from individual shipping boxes, previously part of a larger container, onto the sorting line. Tr. 399. Sorters then select shells for the production of Jazz cameras intended for sale in the United States. Tr. 400-01. 22. Polytech employs between 30 and 40 sorters, and the facility sorts approximately 130,000 to 150,000 shells per day or day and a half. Tr. 411-12, 588-90. 23. Shipments of shells usually contain 50% to 60% Kodak brand shells, approximately 20% Fuji brand shells, 5% to 10% Konica brand shells and a relatively small percentage of Concord brand shells. Tr. 586-87. 24. Only Kodak, Fuji, Konica and Concord brand shells are chosen for production for the United States. Tr. 399-400. 25. Within the group of acceptable brands, Polytech sorters choose only shells with original wrapping or labeling produced by Kodak, Fuji, Konica and Concord, and they screen for any- shells with foreign characters (ie., Japanese or Arabic). Tr. 406, 410-11, 585-90. Sorters will not choose shells with foreign characters for United States production. Tr. 588-59. 26. Questionable shells, such as shells with English lettering not typical of the United States market, are further reviewed by ' other Polytech staff; shells not chosen for production for the United States are sent back to the, storage area and labeled as “inactive for U.S. production.” Tr. 400-01, 406, 587-88, 590. Shells neither selected for production nor set aside as “inactive” are placed on the sorting line a second time. Tr. 589. 27. Although Polytech’s sorters do not, for the most part, speak English, they select shells for processing by comparing the shell packaging to the packaging on sample packages. Tr. 590. 28. In Mr. Zawodny’s opinion, it may not be possible to screen out all foreign (ie., English language shells that may have been sold abroad, e.g., in England) or foreign language shells (ie., shells labeled in French and English that were probably sold in Canada). Tr. 588, 590. The sorting system is based on a “certain process and certain standards.” Tr. 598. In Mr. Za-wodny’s opinion, the sorting system is “quite accurate” and “works well.” Tr. 598. 29. Polytech’s sorting procedure requires that each shipment is sorted separately, so that shipments collected from foreign sources are removed from the sorting line and sorting area. Tr. 398-99. 30. Polytech sorters also screen for shells with black tape or shells that contain replacement parts. Tr. 551-52. 31. In 2004, Jazz purchased one shipment of shells from Seven Buck’s Inc., in Newport Beach, California. Jazz purchased from Seven Buck’s only shells with original wrappers. Mr. Zawodny witnessed the sorting of this shipment in the greater Los Angeles area, and “reviewed” the products that were made available by Seven Buck’s for purchase by Jazz. Tr. 556-57; Pl.’s Ex. 19. 32. Seven Buck’s workers “separated” shells in accordance with the samples provided by Mr. Zawodny and using the same standards employed by sorters at Polytech. Seven Buck’s employees prepared the container for shipment to Polytech. Tr. 556-57. The court finds, based on the testimony of Mr. Zawodny, corroborated by documentary evidence, including reports of sorting, that Polytech, during the time at which the LFFPs at issue were processed, employed a sorting system adequate to identify and exclude from processing shells that previously were reloaded, and adequate in the context of the information commercially available, to identify and exclude from processing any shells of cameras, if present, that entered the United States under the personal use exception in the Exclusion Order. B. Findings of Fact Relevant to the Issue of Permissible Repair Mr. Zawodny’s testimony, some of which, as noted above, was aided by viewing the footage of two videotapes filmed in 2003 of Polytech’s facility, established, by a preponderance of the evidence, the following facts. 33. Mr. Zawodny spent February, March, April, June, August, and September of 2004 in China overseeing the Polytech facility’s processes of sorting shells and producing Jazz disposable cameras. Tr. 393-94. 34. Boxes containing sorted shells to be repaired for the United States market are moved to production areas of the Polytech facility. Tr. 412-14. Mr. Zawodny characterized this procedure as the first step of the repair process. Tr. 415. 35. Each shipment of shells is processed one at a time on the production lines. Tr. 415. 36. Polytech operates three production lines for daylight camera loading operations and one production line for dark loading operation (for Fuji and Konica type shells) at Polytech. Tr. 513, 540. 37. The removal of original wrapping and packaging from the shells is the next step of the process. Tr. 415. 38. Operators stationed at production lines perform different procedures, including opening the shells, replacing advance wheels to fit the new film, removing dust and debris from the interior, replacing batteries in flash cameras, loading the film, checking the charge of the flash and resetting the counter. Tr. 514-18. 39. Operators close the camera with the original back covers produced by Kodak, Fuji, Konica or Concord and attach an additional molded part to cover the portion of the camera where the film is placed. Tr. 515-16. 40. “Full back replacement” is a term used to describe a reloaded camera with a completely new full back cover. Tr. 607. Shells that were repaired with full back replacements are easily identifiable by inspecting the exterior of the back cover and are not used for production of Jazz cameras intended for sale in the United States. Tr. 607, 611. The “full back replacement” testimony refers to refurbishing of Kodak shells. Tr. 611. 41. Black light-tight tape is used to seal any gaps between the seams. Tr. 516. 42. Jazz cameras are screened at quality control stations to ensure that the flash and trigger function properly and are ultimately packaged with new, Jazz wrappers. Tr. 517-18, 537, 553-54. The exhibits admitted into evidence establish that the subject LFFPs were refurbished in late July 2004. Mr. Zawodny’s testimony was aided by viewing the videotapes admitted into evidence as Segments 1 and 2 of Plaintiffs Exhibit 18. Mr. Zawodny’s testimony showed that the videotapes were filmed in 2003. The court finds, based on Mr. Zawodny’s testimony, that the processes shown in the videotapes do not differ in a way material to the permissible repair issue, from Mr. Zawod-ny’s description of the processes used to refurbish the subject merchandise. The court further finds, based on Mr. Zawodny’s testimony, that the processing undertaken by Polytech at the time the subject merchandise was refurbished were opening of the body of the shell, replacement of the advance wheel, replacement of the film and of the battery (if a flash camera), resetting the counter, closing and repairing the case using original parts except for the additional molded part referred to above, repackaging the refurbished camera, and various minor operations incidental to these processes. The court further finds, based on his testimony, that the aforementioned processing did not employ full-width back replacements in reloading Kodak or other shells. C. Findings of Facts Relevant to Jazz’s Inventory Control Program 1. Findings of Fact Established by the Testimony of Mr. Leon Silvera Mr. Silvera’s testimony established, by a preponderance of the evidence, the following facts. 43. Photo Recycling ships shells to Po-lytech via ocean freight, Tr. 252, and prepares summary information documents for each shipment, which include the vessel name, the date that the shipment sailed, where the shipment is consigned to, the quantity of cartons and shells and the total weight of shells. Tr. 225; Pl.’s Exs. 1-14 (encompassing both parts A and B). 44. Photo Recycling assigns a unique master lot number (“MLN”) to every shipment sent to Polytech to identify each shipment. Tr.