Deere & Co. v. Int'l Trade Comm'n

• Decision Date: 26 May 2010
• Docket Number: No. 2009-1016.,2009-1016.
• Parties: DEERE & COMPANY, Appellant,v.INTERNATIONAL TRADE COMMISSION, Appellee,andBourdeau Brothers, Inc., OK Enterprises, and Sunova Implement Co., Intervenors.
• Court: U.S. Court of Appeals — Federal Circuit

605 F.3d 1350

DEERE & COMPANY, Appellant,v.INTERNATIONAL TRADE COMMISSION, Appellee,andBourdeau Brothers, Inc., OK Enterprises, and Sunova Implement Co., Intervenors.

No. 2009-1016.

United States Court of Appeals, Federal Circuit.

May 26, 2010.

S. Lloyd Smith, Buchanan Ingersoll & Rooney PC, of Alexandria, Virginia, argued for appellant. With him on the brief were Bassam N. Ibrahim and Bryce J. Maynard.

Michelle Walters Klancnik, Attorney, Office of the General Counsel, United States International Trade Commission, of Washington, DC, argued for appellee. on the brief were James M. Lyons, General Counsel, and Mark B. Rees, Attorney. Of counsel was Wayne W. Herrington.

David P. Miranda, Heslin Rothenberg Farley & Mesiti, PC, of Albany, New York, argued for intervenors. With him on the brief were Nicholas Mesiti and Brett M. Hutton.

Before MICHEL, Chief Judge, and NEWMAN and LOURIE, Circuit Judges.

Opinion for the court filed by Circuit Judge LOURIE, in which Chief Judge MICHEL joins. Opinion concurring in the remand, dissenting in part filed by Circuit Judge NEWMAN.

LOURIE, Circuit Judge.

Deere & Company (“Deere”) appeals from the judgment of the United States International Trade Commission, which determined that the sales of European-version self-propelled John Deere forage harvesters in the United States by Intervenors Bourdeau Brothers, Inc., OK Enterprises, and Sunova Implement Co. (collectively, “Bourdeau”) did not violate § 337 of the Tariff Act of 1930 as amended, 19 U.S.C. § 1337. The Commission based its decision on a finding that, although Bourdeau infringed Deere's trademarks through gray market importation, not “all or substantially all” of Deere's authorized sales of harvesters in the United States were of the North American version, so Deere was not entitled to an exclusion order. See In the Matter of Certain Agric. Vehicles & Components Thereof, No. 337-TA-487, 2008 WL 4352378 (ITC Aug. 25, 2008) (“ Commission Remand Opinion ”). Because the Commission improperly applied the “all or substantially all” test, we vacate and remand.

Background

Deere manufactures self-propelled forage harvesters for sale in Europe, and it manufactures different self-propelled forage harvesters for sale in the United States. All of Deere's harvesters are sold under its trademarks, including, in the United States, U.S. Registered Trademarks 1,254,339; 1,502,103; and 1,503,576. New and used Deere harvesters are sold through various distribution channels, including official ¹ Deere dealers and independent dealers. Independent dealers sell Deere products without any oversight from Deere. Deere has official and independent dealers in both the United States and Europe. Bourdeau is an independent dealer in the United States.

In February 2003, the Commission instituted an investigation based on a complaint filed by Deere. Deere alleged violations of 19 U.S.C. § 1337(a)(1)(C), in which Congress forbade inter alia, importation of products that were “produced by the owner of the United States trademark or with its consent, but not authorized for sale in the United States,” often called “gray market goods.” Gamut Trading Co. v. Int'l Trade Comm'n, 200 F.3d 775, 777 (Fed.Cir.1999). Deere contended that Bourdeau and other independent and official Deere dealers based in both the United States and Europe had infringed Deere's trademarks by unlawfully importing and selling Deere's European-version harvesters in the United States.

In May 2004, the Commission issued a general exclusion order prohibiting importation of European-version harvesters manufactured by or under the authority of Deere bearing Deere's trademarks, finding that they infringed Deere's U.S. trademarks. Bourdeau appealed, and in March 2006, a panel of this court vacated in part and remanded. See Bourdeau Bros., Inc. v. Int'l Trade Comm'n, 444 F.3d 1317 (Fed.Cir.2006). We held that substantial evidence supported the Commission's determination that there were material differences between Deere's North American-version and European-version harvesters, supporting a finding of infringement and thus the exclusion order. Id. at 1324-25.

However, we vacated in part and remanded the Commission's decision based on a particular requirement for recovery, under our recent decision in SKF USA, Inc. v. International Trade Commission, 423 F.3d 1307 (Fed.Cir.2005), that Deere also show that all or substantially all of Deere's authorized domestic products are materially different from the accused gray market goods. Bourdeau, 444 F.3d at 1325-27. In other words, Deere had to show that substantially all of the Deere harvesters being sold in the United States that were authorized by Deere were North American-version harvesters, as opposed to European-version harvesters. In discussing the “all or substantially all” requirement, we stated:

As we noted in SKF, the sale by a trademark owner of the very same goods that he claims are gray market goods is inconsistent with a claim that consumers will be confused by those alleged gray market goods. “To permit recovery by a trademark owner when less than ‘substantially all’ of its goods bear the material difference ... would allow the owner itself to contribute to the confusion by consumers that it accuses gray market importers of creating.” That is, a trademark owner has the right to determine the set of characteristics that are associated with his trademark in the United States; however, a trademark owner cannot authorize the sale of trademarked goods with a set of characteristics and at the same time claim that the set of characteristics should not be associated with the trademark.

Id. at 1321 (quoting SKF, 423 F.3d at 1315) (alterations in original).

In our remand instructions, we noted that Deere might have authorized some or all sales of European-version harvesters in the United States and that there was a presumption, which Deere could rebut on remand, that all sales by official Deere dealers were authorized. Bourdeau, 444 F.3d at 1327. Thus, we remanded to give Deere an opportunity to show that sales of European-version harvesters in the United States by official U.S. and European dealers were not in fact authorized by Deere and, to the extent that any such sales were authorized by Deere, that substantially all of its authorized domestic sales were nevertheless of North American-version harvesters. Id.

The Commission remanded the investigation to the administrative law judge (“ALJ”) for proceedings consistent with our decision in Bourdeau. On remand, the ALJ issued an initial decision in December 2006. In the Matter of Certain Agric. Vehicles & Components Thereof, No. 337-TA-487, 2006 ITC Lexis 862 (ITC Dec. 20, 2006) (“ ALJ Remand Opinion ”). The ALJ found that the original record showed that Deere did not authorize the sales of European-version harvesters in the United States. Id. at *39-43. With respect to new evidence concerning alleged Deere financing of European-version harvesters sold by its dealers, the ALJ found that that evidence did not show authorization; hence the ALJ found infringement. Id. The ALJ also found that the number of sales that Bourdeau alleged were authorized was, in any event, so small that “substantially all” of Deere's authorized U.S. sales were of North American-version harvesters. Id. at *47-48. Thus, even if the ALJ had agreed with Bourdeau's contentions, any unauthorized European-version harvester sales would have been infringing. The parties each petitioned the Commission for review.

In August 2008, the Commission reversed the ALJ. Commission Remand Opinion, No. 337-TA-487. The Commission first determined that the ALJ had failed to consider whether official Deere dealers had had apparent authority to sell European-version harvesters in the United States, despite the absence of actual authority. Id., slip op. at 12-13. The Commission reasoned that, because trademark law focuses on the potential for third-party confusion in the marketplace, apparent authority is sufficient to constitute “authority” under our remand instructions. Id. at 16-17.

The Commission then found “substantial evidence” that Deere's U.S. and European dealers had apparent authority to sell European-version harvesters. Id. at 13. The Commission explained that third parties reasonably could have and did construe Deere's acts and omissions as condoning the importation and sale of European-version harvesters. Id. at 17. According to the Commission, our remand instructions included a presumption that all official Deere dealer sales were authorized by Deere, and Deere had failed to rebut that presumption. Id. at 19. The Commission found that Deere had presented only conclusory testimony to argue that it had not authorized its official European dealers to sell European-version harvesters in the United States, and it found that Deere had been on notice that the sales activities of its official European dealers were at issue in the remand. Id. at 19-22. Thus, the Commission presumed that all sales of European-version harvesters to the United States by Deere's official European dealers were authorized. Id. at 22-23. (If they had not been authorized, then such sales surely would have been infringing.) It also presumed, based on a lack of evidence from Deere, “that the volume of such sales was sufficiently great that a full accounting would have demonstrated” that a substantial number of Deere's sales of harvesters in the United States were of the European version and hence that Deere was itself contributing to consumer confusion, supporting a conclusion of noninfringement. Id. at 23-24.

The Commission also found that official U.S. Deere dealers and Deere itself sold and/or facilitated the sale of European-version harvesters in the United States. According to the Commission, Deere was aware for five years of the growing market penetration of European-version harvesters in the United States but did not discourage such sales until the end of the...