04
Jan
By Barry Herman
The Federal Circuit was scheduled to hear oral argument today in Deere & Company v. ITC, (2009-1016).

On January 8, 2003, Deere & Company (“Deere”) filed a complaint alleging violations of Section 337 in the importation into the United States, sale for importation, and sale within the United States after importation of certain agricultural vehicles and components thereof by reason of infringement and dilution of U.S. Registered Trademarks Nos. 1,254,339, 1,502,103, 1,503,576, and 91,860.  The complaint named, among others, Bourdeau Brothers, Inc., OK Enterprises, and Sunova Implement Co., (collectively, “Bourdeau”) as Respondents.  On February 13, 2003, the Commission instituted an investigation (Inv. No. 337-TA-487).  On January 13, 2004, Chief ALJ Paul J. Luckern issued his Initial Determination (“ID”) finding violation of Section 337.  On May 14, 2004, the Commission issued a Final Determination adopting ALJ Luckern’s ID together with a general exclusion order, two limited exclusion orders, and cease-and-desist orders.

On appeal by Bourdeau, the Federal Circuit affirmed various aspects of the Commission’s Final Determination.  However, the Federal Circuit found error with the Final Determination, in particular finding that ALJ Luckern erred in placing the burden of proving authorization on Bourdeau rather than on Deere in violation of its opinion in SKF USA, Inc. v. ITC, 423 F.3d 1307 (Fed. Cir. 2005).  Thus, on March 30, 2006, the Federal Circuit vacated the Commission’s Final Determination as it related to European version self-propelled forage harvesters (“EVSPFHs”) and remanded the investigation for further proceedings at the ITC.

On June 20, 2006, the Commission referred the investigation to ALJ Luckern for further proceedings consistent with the Federal Circuit’s decision.  On August 18, 2006, ALJ Luckern issued Order No. 55 denying the parties’ cross motions for summary judgment and held an evidentiary hearing in November 2006.  ALJ Luckern issued his Initial Determination on remand on December 20, 2006 (“Remand ID”).  In his Remand ID, ALJ Luckern found that a violation of Section 337 occurred, determining that Deere had established that it did not authorize the sale of EVSPFHs in the United States, and that “all or substantially all” of Deere’s self-propelled forage harvesters (“SPFH”) sales in the United States were North American version self-propelled forage harvesters (“NAVSPFH”).  After requesting additional comments and briefing, the Commission issued, on August 12, 2008, its final opinion and order reversing ALJ Luckern’s determination of violation of Section 337.

According to Deere’s opening and reply briefs, Deere raises four issues on appeal.  First, Deere asserts that the Commission erred in determining whether “all or substantially all of Deere’s sales in the United States were of North American forage harvesters” as set forth in Bourdeau Bros. v. ITC, 444 F.3d 1317 (Fed. Cir. 2006).  In particular, Deere asserts that the Commission improperly “compared the number of 'authorized' EVSPFH sales by official Deere dealers to the total number of EVSPFHs known to be in the United States” rather than to the total number of SPFH sales in the United States (i.e., the number of NAVSPFH sales combined with “authorized” EVSPFH sales).  Second, Deere asserts that the Commission erred “in determining that sales by Deere’s official European dealers were relevant to the ‘all or substantially all’ test and that Deere had ‘authorized’ these dealers’ sales of EVSPFHs.”  In support of this assertion, Deere argues that (i) the relevance of such sales had not been in dispute prior to the Commission’s request on remand for further briefing on the issue; (ii) on remand Bourdeau and ALJ Luckern did not include such sales in the “all or substantially all” analysis; (iii) inclusion of such sales is “inconsistent with the territorial nature of U.S. trademarks and the language and purpose of Section 337”; and (iv) record evidence demonstrates that Deere was unaware of and could not have prevented such sales.  Third, Deere asserts that “even if the sales of European dealers are relevant, the ITC erred as a matter of law in not giving Deere an opportunity to demonstrate that it did not authorize the sale of EVSPFHs by its official European dealers.”  Fourth, Deere asserts that the Commission erred in its analysis of whether Deere’s official U.S. dealers were authorized to sell EVSPFHs.  In support of this assertion, Deere argues that the Commission’s findings with respect to the theory of “apparent authority” were legally erroneous and not supported by substantial evidence.

In its brief, the Commission asserts that substantial evidence supports the Commission’s factual findings that Deere failed to (1) meet its burden under the “all or substantially all” test and (2) prove that its official dealers were not authorized to sell subject EVSPFHs.  In support of the assertion that Deere failed to meet its burden under the “all or substantially all” test, the Commission argued that it was impossible to complete the test because “Deere failed to put on any evidence of its authorized European dealer sales to purchasers in the United States” as required for the analysis.  Further, the Commission argued that even with all the available data, the record did not support a finding that “all or substantially all” of Deere’s sales in SPFHs in the United States were NAVSPFHs, because the available data demonstrated that “authorized Deere dealer sales accounted for approximately half of the non-conforming sales of EVSPFHs in the United States.”  Next, with respect to the assertion that Deere failed to prove its official dealers were not authorized to sell subject EVSPFHs, the Commission argued that the Commission’s finding in this regard was reasonable based on the following factors: (i) the volume of non-conforming sales by official Deere dealers; (ii) Deere’s knowledge of sales by official dealers and failure to act to curb such sales; (iii) Deere’s provision of warranty services to EVSPFHs present in the United States; (iv) the lack of a stated policy discouraging or forbidding the practice of gray market importations by Deere’s official dealers; (v) the Machinefinder.com website maintained and operated by Deere; and (vi) Deere’s involvement in the financing of EVSPFHs by official dealers through JD Credit.

In Bourdeau’s Intervenor brief, Bourdeau asserted that Deere failed to (i) satisfy the “all or substantially all” standard by a preponderance of the evidence, because Deere failed to sufficiently “establish the total number of European harvesters sold by official Deere dealers, and the total number of harvesters sold by official Deere dealers”; (ii) establish a diminution of the value of its trademarks; (iii) rebut the presumption of authorization given the lack of “testimony or documentary proof that Deere prohibited, or even tried to prohibit its authorized European Deere Dealers from selling or offering for sale for importation to the U.S., [EVSPFHs]”; and (iv) rebut the presumption that sales of EVSPFHs by official European Deere dealers were authorized by submitting insufficient proof on this issue and having actively supported the conduct of its dealers.
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