PUBLIC VERSION
`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`
`Washington, D.C.
`
`In the Matter of
`
`CERTAIN INDUSTRIAL AUTOMATION
`SYSTEMS AND COMPONENTS THEREOF
`INCLUDING CONTROL SYSTEMS,
`CONTROLLERS, VISUALIZATION
`HARDWARE, MOTION CONTROL
`SYSTEMS, NETWORKING EQUIPMENT,
`SAFETY DEVICES, AND POWER
`SUPPLIES
`
`Inv. No. 337-TA-1074
`*
`
`ORDER NO. 33:
`
`DENYING COMPLAINANT ROCKWELL’S MOTION FOR
`SUMMARY DETERMINATION FINDING THAT THE ONLY
`ENTITIES THAT ARE AUTHORIZED BY ROCKWELL TO SELL
`THE TRADEMARKED GOODS THAT ARE ASSERTED IN THIS
`INVESTIGATION ARE ROCKVVELLAND ITS AUTHORIZED
`DISTIUBUTORS
`A
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`I. BACKGROUND
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`(June 29, 2018)
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`On October 16, 2017, the Commission instituted this investigation based on a complaint
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`by Rockwell Automation, Inc. (“Rockwell”) for alleged violations of section 337 “based upon
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`the importation into the United States, the sale for importation, and the sale within the United
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`States after importation of certain industrial automation systems and components thereof
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`including control systems, controllers, visualization hardware, motion and motor control
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`systems, networking equipment, safety devices, and power supplies” under subsection (a)(l)(B)
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`and (C) of section ‘337by reason of infringernent of various copyrights and trademarks, and
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`under subsection (a)(l)(A) of section 337 “by reasohof unfair methods of competition[] and
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`unfair acts, the threat or effect of which is to destroy or substantially injure an industry in the
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`

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`PUBLIC VERSION
`
`United States.” 83 F.R. 48113-48114 (Oct. 16, 2017). Among other respondents, the complaint
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`names Radwell International, Inc. (“Radwell”).
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`.
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`Rockwell alleges, inter alia, that Radwell sells trademarked Rockwell products on the
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`gray market that “lack a characteristic found in all or substantially all” of the products sold by
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`Rockwell. Motion Docket No. 1074~O24at 1 (the “motion”). Rockwell maintains that it only
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`authorizes sale of its products by Rockwell and its authorized distributors, and further, that it
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`prohibits Rockwell customers from re-selling Rockwell products. Comp. at 9. Rockwell asserts
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`that its authorized products policy assures quality control, enables Rockwell to issue software
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`and firmware updates, and pennits Rockwell to track its products and to “understand where its
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`products are being used and any issues that might arise.” Id
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`According to Rockwell, its distributors have the right to sell Rockwell’s products within a
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`given territory. Id. at 9-10. In addition to other contractual tenns, “Rockwell assumes
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`responsibility for warrantying its products sold by its authorized distributors to end users,”
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`Rockwell’s complaint continues, and the authorized distributors agree to “sell Rockwell products
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`only to end users or to certain value-added resellers, such as original equipment manufacturers
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`(“OEMs”) and system integrators.” Id at 10. “[T]hese third parties are not pennitted to buy
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`Rockwell products from an authorized distributor for mere resale on the gray market. To the
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`contrary, they are expected and required to use the Rockwell products only for value-added
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`purposes —such as for direct integration into larger machines.” Id.
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`Rockwell asserts that these contractual obligations prohibiting sales to non-value-added
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`resellers are contained in every contract between Rockwell and its authorized distributors, and
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`also is “explained in great detail in the Unauthorized Third Party Resellers policy,” which is
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`incorporated into each contract with an authorized distributor. Id.
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`2
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`

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`PUBLIC VERSION
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`Rockwell filed the motion on May 25, 2018. On June 7, 2018, Radwell filed an
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`opposition (“Opp”). On the same date, Commission Staff filed a response in support of the
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`motion, stating that it “neither has substantive criticisms of Rockwell’s arguments nor has any
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`supplemental legal or factual arguments to raise beyond those presented” in the motion. Staff
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`Response at 1.
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`t
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`In its opposition, Radwell points to several alleged factual disputes that preclude granting
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`summary determination, in Radwell’s view. Principally, Radwell alleges that many Rockwell
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`value-added resellers “are in fact resellers of Allen-Bradley products, operating with Rockwell’s
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`complete approval.” Opp. at 1.1 According to Radwell, these resellers are not original
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`equipment manufacturers, as alleged by Rockwell. Radwell alleges that “these Rockwell­
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`approved sales of Allen-Bradley products by Rockwe1l’sVARs are not accompanied by the
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`alleged ‘material differences?” Id. at 1-2. According to Radwell, the pertinent dispute thus
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`centers on whether the “very significant volume” of sales by alleged resellers of Allen-Bradley
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`products, and allegedly condoned by Rockwell, lack a characteristic found in all or substantially
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`all of the authorized products sold by Rockwell and its authorized dealers. Opp. at 2.
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`I
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`On June 12, 2018, Rockwell filed a reply brief. In its reply, Rockwell states that the issue
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`is whether entities other than Rockwell and its authorized distributors had actual or apparent
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`authority from Rockwell to sell Allen-Bradley products and that, on the facts in the record, it is
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`clear that they did not.
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`l Allen-Bradley is a brand name for Rockwell products.
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`3
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`

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`PUBLIC VERSION
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`II. DISCUSSION
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`.
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`A. Partial Summarv Determination
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`7
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`.
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`Federal Rule of Civil Procedure 56(a) provides a party may seek summary judgment
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`upon “all or part” of a claim. Fed.R.Civ.P. 56(a).2 Additionally, Rule 56(d) states that a court
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`may “make an order specifying the facts that appear without substantial controversy, including V
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`the extent to which the amount of damages or other relief is not in controversy, and directing
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`such further proceedings in the action as are just. Upon the trial of the action the facts so
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`specified shall be deemed established, and the trial shall be conducted accordingly.”
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`Fed.R.Civ.P. Rule 56(d). See McDonnell v. Cardiothoracic & Vascular Surgical Ass0cs., Ina,
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`2004 WL 1234138, at *3 (S.D. Ohio 2004) (citing Fed. R. Civ. P. 56(a), (d)). “Partial summary
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`judgment allows for the prompt disposition of specific claims or defenses.” Hendrickson v.
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`Octagon Ina, 225 F. Supp. 3d 1013, 1024 (N.D. Cal. 2016).
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`The grant of a motion for partial summary judgment does not necessarily resolve a claim
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`but “is merely a pretrial adjudication that certain issues shall be deemed established for the trial
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`of the case. This type of adjudication
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`serves the purpose of speeding up litigation by
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`eliminating before trial matters wherein there is no genuine issue of fact.” McDonnell, 2004 WL
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`1234138, at *1—2(citations and internal quotation marks omitted). See Fed.R.Civ.P. 56(d)
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`Advisory Committee’s Note (1946) (“[A] partial summary ‘judgment’ is not a final judgment,
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`and, therefore, is not [generally] appealable. Th_epartial summary judgment is merely a pretrial
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`adjudication that certain issues shall be deemed establishedfor the trial of the case”).
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`ZCommission Rule 210.18 is analogous to a motion for summary judgment under Rule 56, Fed.
`R. Civ. P. Certain Carbon and Alloy Steel Products, Inv. No. 337-TA-1002, Initial
`Determination, 2017 WL 5167413 at *11, not reviewed by Commission Notice, 2017 WL
`6434923 (Nov. 1, 2017).
`.
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`4
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`

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`PUBLIC VERSION
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`B. Gray Market Infringement
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`As explained by the Commission in Certain Cigarettes and Packaging Thereof
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`(“Cigarettes”), trademark infringement (and thus a violation of section 337) “is established by
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`proof there are ‘material differences’ between the accused imported products and the products
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`authorized for sale in the United States.” Inv. No. 337-TA-643, Comm’n Op., 2009 WL
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`6751505 at *3 (Oct. l, 2009) (citation omitted). “The existence of material differences,” the
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`Commission stated, “creates a presumption that consumers are likely to be confused as to the
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`source of the gray market product, resulting in damage to the markholder’s goodwill.” Id.
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`“If the trademark owner, however, introduces goods into the United States market that
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`are not materially different from the gray market product,” this undercuts the claim of
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`infringement because pennitting recovery “by a trademark owner when less than ‘substantially’
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`all of its goods bear the material difference from the gray [market] goods thus would allow the
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`owner itself to contribute to the confusion by consumers that it accuses the gray market
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`importers of creating.’” Id. at * 4 (quoting SKF USAInc. v. Int’! Trade Comm ’n, 423 F.3d 1307,
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`1315 (Fed. Cir. 2005)). “A trademark owner may contribute to consumer confusion in the gray
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`market if it directly imports or sells the same gray market goods of which it complains, or if it
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`authorizes importation and sale of these gray market goods.” Id. (citation omitted).
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`To determine whether a trademark owner has contributed to consumer confusion by
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`authorizing the importation of gray market goods, the Commission has borrowed from the law of
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`agency. Where a trademark owner has actually or apparently authorized the sale of gray market
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`goods, the sale of such goods may be counted against the trademark owner. “Apparent authority
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`is created when ‘[T]he‘principal, either intentionally or by lack of ordinary care, induces third
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`5
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`

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`PUBLIC VERSION
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`persons to believe that an individual is his agent even though no actual authority, express or
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`implied, has been granted to such individual.”’ Cigarettes, 2009 WL 6751505 at *4 (citation
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`omitted).
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`.
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`C. Summary Determination Cannot be Granted as a Matter of Fact or Law
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`The question posed by Rockwell’s motion is Whether certain sales by entities other than
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`Rockwell or its authorized distributors should be counted in determining Whether “substantially
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`all” Rockwell products are materially different from the products allegedly imported by Radwell.
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`See e.g., id. at *8 (affirming the ALJ_’sfinding that the trademark oWner’s “authorization of sales
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`in foreign embassies through 2006 and duty-free sales of gray market cigarettes should not be
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`included in the ‘substantially all’ authorization analysis”). This question, per the Commission‘s
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`decision in Cigarettes, tums on whether Rockwell either intentionally or by lack of ordinary
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`care, induced third persons to believe that Rockwell expressly or impliedly granted authority to
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`entities (other than Rockwell or its authorized distributors) to sell Allen-Bradley products.
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`Rockwell maintains that the vast majority of products sold by third parties, including,
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`allegedly, Radwell, are materially different from authorized products? Rockwell argues that
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`nothing in its own conduct would induce third parties to believe that Rockwell expressly or
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`impliedly granted authority to anyone other than authorized sellers to sell Rockwell products. In
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`support of its argument, Rockwell points to: contracts limiting sales by entities that are not
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`authorized distributors, notifications Rockwell sends out to various entities to “remind them” of
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`3 It is not completely clear from the parties’ briefing what are the alleged material differences
`between products sold by Rockwell and its authorized dealers and products allegedly sold by
`others, like Radwell. See Cigarettes, 2009 WI 6751505 at *8 (“We take no position on whether
`[the alleged infringer’s] lack of quality control over gray market cigarette distribution, storage,
`and transportation constitutes a material difference for gray market infringement analysis”) This
`is another reason to deny summary detennination.
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`6
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`

`

`PUBLIC VERSION
`
`Rockwell’s prohibition on authorized sales, Rockwell’s enforcement efforts to prevent and
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`terminate unauthorized resale of Rockwell components, and letters sent to customers stating that
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`“‘Rockwell Automation sells its products and services either directly to its customers or through
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`its authorized distributor network’ . . . [which] letters include a web link to the Authorized
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`Distributor page on Rockwell’s website and tell customers to look for the Authorized Distributor
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`logo.” Rockwell Reply at 8-9.
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`_
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`Radwell, in opposition, claims that there are genuine issues of material fact that preclude
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`any determination that, as a matter of law, Rockwell’s conduct could not create apparent
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`authority in third parties to resell Allen-Bradley products. Both Radwell and Rockwell point to
`certaincontractsthatcouldbeconstruedasambiguous
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`-
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`
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`SeeReplyat
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`6_ A seeehd type of agreement states that
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`Id. at 7- What these eentreets mean, how
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`they are enforced by Rockwell, and how they are interpreted by others, is not so clear as to
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`pennit summary detennination to be based on them. Thus, Rodney Michael, a Rockwell
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`employee, testified at deposition that
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`at 205:6~9. Mr. Michael stated further that
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`17.
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`Opp. Ex. 2, Tr.
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`Id. at 205215­
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`I
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`In short, Rockwell seems to maintain a rather complex relationship with various entities it
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`concedes are not authorized distributors. Such entities nevertheless apparently are permitted by
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`7
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`

`

`PUBLIC VERSION
`
`'
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`Rockwell to sell new Allen-Bradley products Lmdercertain circumstances. Given the complexity
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`of the factual circumstances involved in these relationships, it would be inappropriate to
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`determine as a matter of law that such products should or should not be counted as “materially
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`different.” Stunmary determination must therefore be denied.
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`III. CONCLUSION
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`Based on the foregoing, Motion Docket No. 1074-024 is hereby DENIED.
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`This order is being issued with a confidential designation, and pursuant to Ground Rule
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`1.10, each party shall submit to the Administrative Law Judge a statement as to whether or not it
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`seeks to have any portion of this order deleted from the public version within seven (7) days.
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`See l9 .C.F.R. § 2l0.5(t). A party seeking to have a portion of the order deleted from the public
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`version thereof must attach to its submission a copy of the order with red brackets indicating the
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`portion(s) asserted to contain confidential business informat‘ion.4 The parties’ submissions under
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`this subsection need not be filed with the Commission Secretary but shall be submitted by paper
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`copy to the Administrative Law Judge and by e-mail to the Administrative Law Judge’s attorney
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`advisor.
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`SO ORDERED.
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`:m/<,A,/@/
`
`Dee Lord
`Administrative Law Judge
`
`4 Redactions should be limited to ‘avoiddepriving the public of the basis for understanding the
`result and reasoning underlying the decision. Parties who submit excessive redactions may be
`required to provide an additional written statement, supported by declarations from individuals
`with personal knowledge, justifying each proposed redaction and specifically explaining why the
`information sought to be redacted meets the definition for confidential business infonnation set
`forth in Commission Rule 201 .6(a). 19 C.F.R. § 201.6(a).
`
`J
`
`8
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`

`

`CERTAIN INDUSTRIAL AUTOMATION SYSTEMS AND
`COMPONENTS THEREOF INCLUDING CONTROL
`SYSTEMS, CONTROLLERS, VISUALIZATION
`HARDWARE, MOTION CONTROL SYSTEMS,
`NETWORKING EQUIPMENT, SAFETY DEVICES, AND
`POVVER SUPPLIES i
`
`PUBLIC CERTIFICATE OF SERVICE
`
`Inv. N0. 337-TA-1074
`
`I, Lisa R. Barton, hereby certify that the attached ORDER has been served by hand upon
`the Commission Investigative Attorney, Brian Koo, Esq., and the following parties as indicated,
`on 7/1 '7/201 8
`'
`
`Lisa R. Barton, ecretary
`U.S. International Trade Commission
`500 E Street, SW, Room 112
`Washington, DC 20436
`
`On Behalf of Complainants Rockwell Automation, Inc.:
`
`Adam D. Swain
`ALSTON 8; BIRD LLP
`950 F Street NW
`Washington, DC 20004
`
`On Behalf of Respondent RadwellInternational
`d/b/a PLC Center:
`
`Deanna Tanner Okun
`ADDUCI, MASTRIANI & SCHAUMBERG LLP
`1133 Connecticut Ave., NW
`Washington, DC 20036
`
`Respondents:
`
`Can Electric Limited
`No. 2 Danan Rd, Yueziu District
`Guangzhou, Guangdong, 510115
`China
`
`Capnil (HK) Company Limited
`Unit 603 6/F Koon Wah Mirrow
`Factory 3 Ind Bldg 5-9 Ka Hing
`Rd Kln Hk
`Hong Kong
`
`gyia HandDelivery
`Via Express Delivery
`Cl Via First Class Mail
`El Other:
`
`U Via Hand Delivery
`|E’Via Express Delivery
`El Via First Class Mail
`El Other:
`
`gvia HandDelivery
`Via Express Delivery
`U Via First Class Mail
`[II Otherf
`
`Il§l!)7iaHand Delivery
`Via Express Delivery
`II! Via First Class Mail
`El Other:
`
`­
`

`

`CERTAIN INDUSTRIAL AUTOMATION SYSTEMS AND
`COMPONENTS THEREOF INCLUDING CONTROL
`SYSTEMS, CONTROLLERS, VISUALIZATION
`HARDWARE, MOTION CONTROL SYSTEMS,
`NETWORKING EQUIPMENT, SAFETY DEVICES, AND
`POWER SUPPLIES
`,
`
`Inv. N0. 337-TA-1074
`
`Certificate of Service —Page 2
`
`Fujian Dahong Trade C0., Ltd.
`A15-2303 Taihongyu Pushang Road
`Cangshan Fuzhou Fujian
`Fujian 350008
`China
`
`Huang Wei Feng d/b/a A-O-M Industry
`Room 201 No. 55 2 Qu,
`Tdngshuiwei, Minzhi,
`Longhua, Boa’An, Shenzhen 511700
`China
`
`PLC-VIP Shop d/b/a VIP Tech Limited
`95 Fuk Wing Street,
`Cheung Sha Wan, Kowloon .
`Hong Kong
`
`Wenzhou Sparker Group C0. Ltd.
`d/b/a Sparker Instruments
`Room 503, Oujiang Masion, Wenzhou Road,
`Wenzhou, 325000, China
`
`Yaspro Electronics (Shanghai) C0., Ltd.
`Room l808E,,N0. 488, Vaohua Road
`Pudong New District
`Shanghai, China
`
`S)/ia HandDelivery
`Via Express Delivery
`III Via First Class Mail
`II! Other:
`
`Cl Via Hand Delivery
`E/Via Express Delivery
`E] Via First Class Mail
`El Other:
`
`III Via Hand Delivery
`E/Via Express Delivery
`III Via First Class Mail
`El Other:
`
`\
`
`52/ia HandDelivery
`Via Express Delivery
`[:1Via First Class Mail
`lj Other:
`
`|:l Via Hand Delivery
`Q/Via Express Delivery
`Cl Via First Class Mail
`El Other:
`
`