morning everyone the panel here were total of five cases two of them will be submitted without argument so they based soley on the briefs those are appeal thirty to thirty broad merit system protection board and appeal thirty two eighty five madison versus department of defense on the three case argument list will hear arguments first an appeal ten sixteen deer and company versus international trade commission mr smith good please the court i am would smith here on behalf of the talent here and company in order to protect us consumers dear respectfully ask this court to overturn the ruling the commission for several reasons first and foremost who do we know the total number of sales in the u s of the european version harvester that are attributable to deer  orly european yes the approximate number of north american version machines is forty four hundred dear contends but what's the total of both the total of both is forty four hundred plus the thirty two that we believe were authorized by d or if you assume that authorization occurred yes i'm assuming that authorization yes you're on it then then the number would be forty four thirty two and that's what you think should denominator this is a denominator question isn't yes yes your honor this is most certainly a denominator in your it's an admission that something like one hundred thirty one sales  of the european version are attributable to dear there's no admission from d r the deer's number is thirty two there is a difference of opinion as to what the number in the numerator will if the alternative arguable added to the north american machines can't do the math in my head but that's a very tiny percentage yes your honor it's less than three issues whether substantially all of the sales by dear our of the american version as opposed to the european version that's right we believe that is very squarely the issue and under the percentages that we just laid out the one forty one over approximate forty five hundred it would be less than three percent which is well within the one lambert forty four percent approval from the second circuit the commissioner used to different to no later and that's the question isn't e s that the commissioner substituted what we would view as a very radically different test they did not use machines or what is at issue in the scheme this case all of the european version for chargers are used machines if for some reason the court would decide to use machines don't matter then the numerator would have to be zero because win that's right i mean that issue is a spot that we agree with you one hundred percent but if you don't win on the denominator issue we'll have to read it w issue we do have to reach authorization but we would also contend that you would have to create a new test instead of the s k f test that you recently created but in order to apply the commission's test you have to come up with an entirely new we win on the numbers and we feel certain that we do win on the numbers based on your opinion ask f and how you applied it to this case wardell then you do not need to reach any of the other issues in this case even if you take into account the european machine the european machines sold by the european dealers in the numerator which we contend do not belong likelihood of confusion but i do think that confusion is an important issue that weighs on the authority standard if you'd like me to address the authority standard as well the commission improperly applied an apparent thora the standard when they appears to be a certain way my thinking well assuming arguing to that it does the commission still misapplied the apparent authority standard they did not focus on consumers perceptions they focused on record about what consumers perceived about deers dealers lack of authority to service and handle these machines what's the what's the basis of saying apparent authority shouldn't be considered the basis for that is is the level of intent and knowledge required to hold the trademark owner responsible for the actions of third party about a likelihood of confusion you're part of a perception and when you're talking about perceptions that seem to point toward apparent authority rather than actual or explicit authority the reason we advocate actual thorny standard is because s k f talks about the quality control procedures of the trademark on and that necessarily includes the knowledge and intent of the trademark on the apparent authority now says conducted by the commission was about deers reactions to the infringements problems created by others s k f is a very different case in s k f that trademark owner intentionally chose to distribute grey market goods in order to maximize their profits it's right there this is a very different case from that there is no evidence that deer ever intentionally chose to distribute in the united states grey market machines instead the evidence relied on to find apparent authority was all evidence of deer's reaction to the problem created by third party infringers and this not completely true there was some financing done by a deer separate and distinct from the agricultural division of deer which is distributing the the goods in question ajay had significant findings about the separation of personnel computer systems physical obstacles john deere credit itself was not it was that year failed to present evidence about its relationship with its official european dealers and because of that commission presume that there are still those dealers were in fact authorized as instructed by the court in bordeaux commission presume because dick dear did not present any evidence about its european dealers official dealers the commission presume that they were authorized and because there was no information about the european version harvesters that were sold provided by dear respondents about purchases that they had made from deers official dealers and attributed those to those numbers and then said even if we just look at those limited numbers which are conservative estimate that spence was talking about which he says calculate the three percent against precedent saying four percent is still substantially all you got are those numbers were provided by in part by respond and so then to say that their own sales which were at the same level is just this small amounts in this particular case they would have to be intolerable as well and they would show that the commission found that not all are stanch the all of the sales were north american version harvest denominator require you to compare the alleged grey market sales with the sales of the complaining party in this case dear his argument is oh no under s k f in bordeaux it's exactly the opposite you don't look at that is that the number of your you look at the total say also both types of good your honor the commission argues that we should take into account all of these numbers that there is no particular calculation you know that we need to put a particular numerator ever particular denominator the commission was aware of the number of sales in forty four hundred sales of north american version harvesters in the united states and the commission was also aware that the question isn't whether the commission was aware of it the question is whether that's the required calculation in the case law where i don't believe that the case law has set out to require calculation that said if the sale indicates that there's a nominee there is a legacy holes in this case by dear my recollection of the case was that he's right and you're saying no that isn't what's required because the courts never said that and therefore the its use almost almost the same whichever way you do it i mean if this is something that needs to be current car we can certainly do so but in either case which every numbers you use the result is less than exactly what this court said should not be done that dear has the burden of coming forward with information about an authorization they did not comfortable without the commission says or we as we know the question is finished before the answer begin a customer who comes in with cash in hand in germany the question yes the question is whether they were authorized to sell the european version harvesters in the u s to us customers and they numbers so the commission was left without any numbers and therefore had to presume that they were authorized and presume that are that they fail to meet their needs if we do not resume but that deer fail to meet their burden of showing that all  despondent holding by the commission the federal circuit can occur in the commission on that basis alone the commission went on it did not need to but it went on to home the record extensively well why do you say what you say that one of two holdings  dispose of the case that the commission then alternatively went on it did not have to the commission could have stopped there and just said you're not present sufficient evidence we presume the sales are authorized they do not meet their very no if you're correct  in order to the commissions ruling we would have to overrule both of those all correct yes or i believe that's true now help me with this hypothetical if if  i have total sales of a product here in the u s of ten million and in addition i sell ten products that equate to the queues greenmail products and other people sell an additional ten and trying to decide whether substantially all of my sales are of proper products not remailed products it seems like the denominator has to be a million and ten but you seem to be saying no the commission can ignore the million sales and only look at the ten grey market sales and the ten imports of grey market products by others and you say well that's a one hundred percent your i think that's an excellent question and the commission would look at all three of those numbers will not look at the numbers in a vacuum because i don't think that given the complete picture and i don't think that the federal circuit has said that there is a war over where it's you know with that number over where it's but we say look at all three numbers i don't  that means if if what we're trying to figure out in my hypothetical is whether nearly all of my sales are what i'll call the gentleman we've got a million that are legitimate and ten that are not legitimate because they're of the same product as the grey market goods so i don't understand what you mean when you say when we look at all three numbers we look at the ten grey market imports we look at the ten that i saw all of the same problem and we also look at the not in my hypothetical i'm causing just as much confusion as the people whose imports on challenge correct so under your view you wouldn't look at the million you'd only look at the ten versus the ted and you'd say michele is causing as much problem as the grey market people so that acronym well i think when you're not looking at all three numbers you're only looking at two of the three no no you and i believe that we are looking at all three numbers but i think it's important we can will in what sense are you taking into account the million sales we're going to real well in this particular case you know and i guess in your hypothetical i think you might have a different case where you have a high volume number of sales in this particular case  large number when you consider the fact that there are causing the same amount of confusion that they're complaining of and it's difficult to parse out when you're looking at the consumer and they're confused i think confused because a few years sales are they confused because the gray market good sales i'm they said that these numbers of grey market sales were intolerable and then stick to turn around and say what our sales are in the same number they're just they're small they're minor they're not minor they should be equally as in power or so the emissions position is that it's totally irrelevant whether there are any significant differences between the products is that right it's irrelevant whether consumers may or may not be confused or deceived you right as long as we use the arithmetic that you're proposing here the federal circuit held less than that there were in fact material differences and there has never really been a question of whether there was confusion there is never argued that there wasn't confusion in fact to show that the grey market sales in france they would have to establish confusion consumer confusion to establish trademark infringement because they came up with what looked like a straightforward objective way of settling the differences without evaluating how how many people were or were not confused if there were a basis of doing that or how many people may or may not have called sell these will stay non conforming good then those attributes i'm quite become attributed to them are and they in some ways almost become genuinely good and then if it doesn't matter to me like you're saying the commission rightfully impose an equity type test that since dear cause part of the problem that it doesn't matter whether they were otherwise entitle under the law to the benefit of exclusion orders they should be punished for their own bid behavior and that has a certain logic to it but the commission isn't a court of equity that can make  punish or to term bad actors or bad actions by saying well if you hadn't done this you would get exclusion or because you did these big things you're not going to get an exclusion order even if you're otherwise  to what's the basis of generation authority to do that the commission was looking at the one hundred forty one failed to see whether those were sufficient number that not all or substantially all of the sales were materially different and the commission looked at that number and said yes that number sufficiently high and consider to work compared to the total number of sales the forty four hundred plus the one hundred forty one the commission well how can it be sufficiently high for three percent and the president says four percent defendant turmel in deciding whether to do plenary injunction the commit or the court looked at that four point four percent number and said that that was a triable issue of fact and was not a set or determined number and didn't if that was in a footnote it wasn't necessarily considering whether to grant a preliminary injunction i mean there's more harm to bring in a product that doesn't have the safety features that doesn't have the warranty the doesn't have instructions in english and all the rest of it's to cast that out on the the bargain hunting public i think that's a fair point thank you that's the commission's position yes now no harm no harm the saying it doesn't matter if there's any harm to the dear dear who are too good to do or to the public either way to bring in products without safety if you choose without instructions that that that does matter the increased safety features that that is something that your themselves are guilty of that they're bringing in those machines as well and that's even really uncertain i hear you say  to brings you back to the original point is that the commission found that your didn't present the evidence that the commission needed to make this calculation and didn't present these european dealer information about its european dealers for the commission to make the determination and so you know getting into these numbers you know i think it is important that the dispositive holding and i think the federal circuit i hope that they consider you know whether deer presented sufficient evidence and whether the commission pro miranda before you begin your argument can you help me understand the practicalities here we're talking about an order to exclude some imports right that's the basic background here yes granted and we're talking about a five year period it ended in zero three and you yes you're in now whatever the exact number of the imports were whatever happened to the where are they today after the explosion or vacated by this court well where are they today they're they're out in the in commerce so they've been sold and they're on somebodies form being used to create silence yes so does that mean it's a moot point whether there should be an exclusion order that's assume we determine that there should be an exclusion or course i don't know what we're going to determine but but but if you assume we the term there should be an exclusion order if they're all already sold longer then maybe you're being sold by somebody in iowa to somebody in kansas but it seems like under the scheme what counts is that the board once they've crossed the border and not been excluded it looks like it's too late where am i wrong  you're not wrong you're not wrong your honor i believe that the importance of the issue as it pertains to the clients has has diminished and perhaps as it pertains to dear has diminished but there is still harvesters that could be  and that the respondents in this case could have harvesters that were to be sold in the u s they would not be allowed to sell them under the explosion or if they had to harvest on their farm they would be prohibited from from selling ice so so the proper standard was in fact applied by the commission what the commission said was there is did not meet their burden of proof in establishing what the numerator should should be we're talking now about a number one hundred forty one but you're so there's possibly one hundred i'm sorry well of course the burdens on deer that part isn't disputed by anybody and the problem that we're having here is a deer did not meet its burden of proof of coming forward with with the full quantum of numbers and the commission looked at the proof in the record and they made a determination that dinner did not prove the numbers in the numerator were responsible for that there was a presumption that they authorized that information was in their control that they did not come forward with the full quantum of what those numbers or so it's impossible then to apply that standard what the what the what the commission  you're saying are you saying that because deer didn't prove what all of its european dealers did that the commission would be entitled to assume that the number of authorized sales was  not three hundred or two hundred but a million because because of the absence of proof yeah absolutely justify an assumption of any number that's usually what you're saying but i'm afraid it's it doesn't justify any number your honor but i think what the commission was saying harvesters that are coming in they can't you can't just come in and say well these are the only ones that respondents were able to bring up so that's the that's the number that we're going to use do what had a responsibility to come forward with what the commission would think would be satisfied by this standard the commission that's a factual issue for the commission to determine what those what those numbers are in the commission said here we can't determine that because we've not come forward with the red baron for or we're entitled to authorized dealer is not the same thing as a subsidiary is that they look if i'm a corporation and i have fifty subsidiaries selling things in a foreign country of course i control that i can fire all are employees i own the records of course i can be held  responsible to produce that information but if i authorize an independent corporation that i don't control to sell my products i don't own their records i can't fire their people and i can't force them to give me their records cannot do things with respect to iran and first of all how about a yes or no answer first you can't force them to give it could to give you well actually you can't force them to give you the records because this is a to be creating a company in europe that's an authorized dealer as if it was a subsidiary of here under deers control as to records and information i'm just saying were you get real you get that they would be able to presumption that those harvesters that are coming in are coming under authorized by the year and it's dangerous burden to overcome that presumption india did not submit the proof necessary to overcome that that presumption in this case their trademarks around the web site that are promoting these harvesters in the u s dealers financing these european harvest was in the u s in some instances there is taking a security interest in these harvesters in the us dear it did not submit the proof in the commission's determination sufficient for them to look at that and they were able to at the very least and i should point out with the numerator and  denominator with respect to the numbers that you're talking about there is no rigid percentage test and i think this court in both s k at n bordeaux made it clear that there wasn't a rigid tax when they when they clarified martin t typically one product would not be enough that indicates that in some instances one might be enough certainly not this case where we're talking you know in excess of one hundred it but this court made it clear that this is  standard where you need to look at the totality of the circumstances and the fatality the circumstances here was it dear was contributing to whatever confusion there was as much as the accused respondents thank you you're all right mr smith you have about four minutes f recognized as of the staff below and the numbers that came up which which is thirty two machines sold by its authorized us dealers or doe does not require the commission to take into account european dealers but even if it does those numbers were also in the record from dear dear said very specifically and put in evidence that at the time they were looking to do the safety pit on the cutterhead safety alarm they search for every grey market machine they could find nine states and they found two hundred forty seven machines the commission found based on logic we failed to understand that one hundred forty one of those machines were somehow so us and european dealers so that number is closed there are there are there is test when record that there are potentially some other machines out there but to charge deer with perpetually being charged with more and more investigation to prove a negative that there are no more machines out there can't be the appropriate standard there is evidence that here in this goat of the years of proof is different from what opposing counsel are saying is there is no dispute that they are independent third parties who did not have actual thore from deer to sell these machines and deer does not have unfettered access to their records there is evidence that their activities were hurrying without knowledge so for deer to be charge with knowing for certain one hundred percent certainty whether or not its dealers were selling these machines is not appropriate dear put in different things one is whether they knew or should have known but the other is whether they could have required the european dealers to provide the data that the commission seemed to suggest was part of their burden of proof well the commission remanded they said one of the time i will take him out of people like me and you would do things together thank you your honor the commission remanded this matter to the l j with open ended and instructions to conduct because the evidence you're hearing was in front of the tour and now the commission is complaining that the evidence that they received is not sufficient we disagree we bury clearly proved that we searched for and found two hundred forty seven machines and in the united states the commission believes that one hundred forty one of those machines were authorized for sale by the year's european and u s dealers so we proved a conclusive number yet the commission is again saying that number is insufficient we were never given any instructions in front of the l g during the adventure appearing to put in any different numbers so the commission is piatt applying an ex post facto disagreement without evidence that ever giving us we believe is the appropriate presumption in this case dear of your control over us and your dealers the stronger than your control over your the n your dealer because our control over us dealers and european dealers ensures that products intended for the u s market only are distributed by dear to us dealers and therefore the european dealers only receive they fell outside the us territorial designation of argue s trademarks so to presume that dealers are physically located and have a dealer area and only receive machines intended for foreign location that the sale of those machines outside their dealer territory does not make sense or it doesn't comport with the territorial nature of us trademarks it also imputes to deir activity which you can't control the evidence is very clear and you asked about the general exclusion or these machines being sold every one of them is used in many cases more than ten years old imputing the sale of a of a european machine that's to police their marks long after the first sale of the machine has occurred that's not consistent with the law either is it your position that you don't have sufficient control over either your authorized us dealers or authorized european dealers to be responsible to obtain their information we do have important quality controls in the us and that is we only sell u machines in the dealer's lot the question but we have seen is whether the ability to force dealers to give you information is any different for your dealers in the u s versus your dealers in europe i  believe that how we eventually forced our dealers to do what we wanted was by bringing us litigation as the ultimate quality control procedure if you're asking whether we have the right to go and seek discovery from our european dealers manufacturers in both locations and yes in both locations i mean the dealers are not required to exclusively carry their products they're independent third part all right well i think we've used last of the opportunity for counsel have holes for all three parties who will take the appeal and write lies and we thank all three