PUBLIC
`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`Washington, D. C.
`
`In the Matter of: )
`)
`CERTAIN AGRICULTURAL VEHICLES )
`AND COMPONENTS THEREOF )
`)
`
`Investigation No. 337-TA-487
`Remand
`
`BOURDEAU RESPONDENTS' REPLY WRITTEN SUBMISSIONS
`ON ISSUES UNDER REVIEW
`
`Dated: March 13,2007
`
`Nicholas Mesiti, Esq.
`David P. Miranda, Esq.
`Brett Hutton, Esq.
`HESLIN ROTHENBERG FARLEY
`& MESITI P.C.
`5 Columbia Circle
`Albany, NY 12203
`Phone: (518) 452-5600
`Facsimile: (518) 452-5579
`
`Attorneys for Respondents Bourdeau Brothers, Inc.,
`Sunova Implement Co, Erntetechnik Franz Becker
`and OK Enterprises
`
`
`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`Washington, D. C.
`
`In the Matter of: )
`)
`CERTAIN AGRICULTURAL VEHICLES )
`AND COMPONENTS THEREOF )
`)
`
`Investigation No. 337-TA-487
`Remand
`
`BOURDEAU RESPONDENTS' REPLY WRITTEN SUBMISSIONS
`ON ISSUES UNDER REVIEW
`
`Dated: March 13,2007
`
`Nicholas Mesiti, Esq.
`David P. Miranda, Esq.
`Brett Hutton, Esq.
`HESLIN ROTHENBERG FARLEY
`& MESITI P.C.
`5 Columbia Circle
`Albany, NY 12203
`Phone: (518) 452-5600
`Facsimile: (518) 452-5579
`
`Attorneys for Respondents Bourdeau Brothers, Inc.,
`Sunova Implement Co, Erntetechnik Franz Becker
`and OK Enterprises
`
`
`
`TABLE OF CONTENTS
`
`REPLY INTRODUCTION ....................... ............................................................................ .........1
`
`SUMMARY OF REPLY ARGUMENT................................ .................................... ..................... 1
`
`ISSUE I THE ALl FAILED TO PROPERLY APPLY THE
`PRESUMPTION OF AUTHORIZATION STANDARD
`IN LIGHT OF DEERE'S BURDEN OF PROOF .......................................3
`
`ISSUE II DEERE FINANCED THE SALE OF EVFHs ............................................8
`
`ISSUE III IT IS INAPPROPRIATE TO INCLUDE THE
`SPECULATIVE ESTIMATE OF USED NORTH
`AMERICAN HARVESTERS IN THE ALL OR
`SUBSTANTIALL Y ALL CALCULATION ............................................ 1 1
`
`ISSUE IV DEERE FAILED TO MEET ITS BURDEN OF PROOF
`IN ESTABLISHING THE ALL OR SUBSTANTIALLY
`ALL STANDARD.... .................................................................................15
`
`CONCLUSION ............................................................................................................................. 17
`
`-1-
`
`
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Pages
`
`Bourdeau Bros, Inc. v. International Trade Comm 'n, 444 F .3d 1317
`(Fed.Cir. 2006) ................... ............ ............................... ..... ........................ ............... 3, 4, 12
`
`Troupe v. John Deere Credit a/k/a Deere & Company, 340 B.R. 86
`(Bkrtcy. W.D. Okla. 2006) ................ ................. .......................... ............ ...... ....... ..............8
`
`SKF USA v. lTC, 423 F.3d 1307 (Fed. Cir. 2005) .........................................................................15
`
`-11-
`
`
`
`REPL Y INTRODUCTION
`
`Pursuant to the Internal Trade Commission's ("ITC" or "Commission") Notice of
`
`Commission Decision to Review in Part the Administrative Law Judge's ("ALJ") Initial
`
`Determination on Remand, issued February 20,2007, the Respondents Bourdeau Bros, Inc.,
`
`Sunova Implement Co, Erntetechnik Franz Becker and OK Enterprises (hereinafter collectively
`
`referred to as "Bourdeau Respondents") submits this reply to the written submissions of
`
`Complainant Deere & Company ("Deere") and Offce of Unfair Import Investigations ("Staff')
`
`on the following issues under review.
`
`1. the standard for authorization that was applied in Order No. 55 (Motion for
`the burden
`
`Summary Determination) and how that standard was applied in light of
`
`of proof;
`
`2. the issue of
`
`3. the ALl's application of
`
`statement of
`
`those sales, especially the basis for including used sales of
`
`Deere's alleged financing of certain EVSPFHs;
`the "all or substantially all" standard, including a
`the type and number of sales relied on and the basis for reliance on
`North American-
`version harvesters in the assessment of whether that standard has been met by
`Deere; and
`
`4. whether all or substantially all of
`
`versions of these machines.
`
`Deere's sales of SPFHs were North American
`
`SUMMARY OF REPLY ARGUMENT
`
`The burden of proof is on Deere to rebut the presumption that the financing and sale of
`
`EVFHs was authorized by Deere. Deere continues to attempt to shift the burden onto Bourdeau
`
`Respondents to prove an "agency" relationship between Deere and its authorized dealers.
`
`However, the Federal Circuit clearly found such analysis to be appropriate only in considering
`
`Bourdeau Respondents affirmative defenses, not Deere's primafaGie case. Deere has failed to
`
`rebut the presumption that Deere financed the sale of at least 20 EVFHs in the United States, that
`
`such financing was conducted by Deere's financing division on behalf of
`
`Deere, that Deere
`
`- 1-
`
`
`
`profited from the sale of EVFHs and touted these profits in its Annual Reports, and authorized
`
`the sale of EVFHs by its authorized dealers.
`
`In computing the all or substantially all standard it is appropriate to consider each
`
`harvester sold or financed by Deere only once, upon its entry into the U.S. market; to include
`
`Deere's speculative and unsupported estimate of
`
`used North American harvesters improperly
`
`considers North American harvesters multiple times for the purpose of
`
`the all or substantially all
`
`calculation. Since Deere's records are incomplete, Deere is unable to prove with any certainty
`
`the full number of EVFHs that it financed or sold. It is unable to rebut the presumption of
`
`authorization for hundreds of EVFHs financed, sold or serviced by Deere in the United States.
`
`However, even using Deere's deceptively incomplete numbers, in applying the standard set forth
`
`by the Federal Circuit, EVFHs constitute at least 5-8% of sales in the United States.
`
`Finally, Deere's failure to meet its burden of
`
`proving diminution of
`
`value of
`
`its
`
`trademarks as required by the Federal Circuit, is fatal to its claims of
`
`trademark infringement.
`
`For these reasons and those further set forth herein, Deere has failed to meet its burden of
`
`proof
`
`in rebutting the presumption of authorization set forth by the Federal Circuit, and there is no
`
`Section 337 violation.
`
`-2-
`
`
`
`ISSUE I
`
`THE ALJ FAILED TO PROPERLY APPLY THE PRESUMPTION OF
`AUTHORIZATION STANDARD IN LIGHT OF DEERE'S BURDEN OF PROOF
`
`Deere and the Office of
`
`Unfair Import Investigations ("Staff') dutifully recite the Federal
`
`Circuit's holding that the ALJ applied the wrong burden of
`
`proof
`
`in determining whether Deere
`
`rebutted the legal presumption that Deere dealers were authorized to sell EVFH's. However,
`
`Deere and Staffs arguments to the ALJ and the Commission on Review continue to frame the
`
`analysis of the issue of authorization in the context of whether Bourdeau Respondents had a
`
`basis for relying upon Deere dealer representations, assistance and encouragement of
`
`Bourdeau
`
`Respondents' sales ofEVFH's, as attributable to Deere. (Deere's Brief on Review, pp. 3-8, Staff
`
`Brief on Review, pp 5-9). This argument is only relevant to Bourdeau Respondents' affrmative
`
`defenses in which Bourdeau Respondents were required to establish some agency relationship
`
`between Deere and its authorized dealers to justify its reliance upon authorized Deere dealer's
`
`conduct and representations. The ALl's continued misapplication of
`
`the presumption on
`
`Remand is evidenced by the conclusion on page 6 that "the Administrative Law Judge has
`
`rejected the argument 'that Deere somehow cloaked its dealers with the appearance of authority'
`
`to approve Respondents' sales of
`
`European version forage harvesters." Order No. 55, p. 6,
`
`emphasis added.
`
`While an analysis of
`
`the "agency" standard may have been appropriate when considering
`
`Bourdeau Respondents' affirmative defenses, the Federal Circuit held that on remand the
`
`analysis that must be provided is whether Deere met its burden of proof in rebutting the
`
`presumption that Deere authorized the sale of EVFHs by its authorized Deere dealers. Bourdeau
`
`Bros., v. lTC, 444 F.3d 13 17, at 1327 (Fed. Cir. 2006). On remand Bourdeau Respondents are
`
`-3-
`
`
`
`not required to prove an agency relationship, rather Deere must prove by a preponderance of
`
`the
`
`evidence that Deere did not authorize the financing and sale of EVFHs that are presumed
`
`authorized.
`
`Deere misrepresents the position of Bourdeau Respondents when it states "Respondents
`
`have argued that Order No. 55 was improper because it relied primarily on evidence and
`
`testimony introduced at the original hearing and included within the Initial ID." Deere Brief on
`
`Review, p. 4. Bourdeau Respondents do not contend that it is improper to consider proof from
`
`the Initial ID, but rather that the specific proof
`
`relied upon by the ALJ in Order No. 55, to rebut
`
`the presumption and meet the standard set by the Federal Circuit, was already found by the
`
`Federal Circuit to be insufficient to overcome the presumption of authorization. As noted by the
`
`Federal Circuit, the ALJ relied "primarily on the testimony of
`
`Deere's corporate witness, Mr.
`
`Meister" to find that Bourdeau Respondents "failed to bear their burden of proving the
`
`affrmative defenses...". Bourdeau, at 1326-1327. The Federal Circuit specifically found such
`
`self-serving testimony was inadequate for Deere to meet its burden of proof, stating "to hold
`
`otherwise would enable a Plaintiff
`
`to simply disclaim the sales of any products that do not
`
`contain the alleged material differences." Bourdeau, at 1327. Since Deere submitted no new
`
`proof on Summary Determination, the ALJ relied on the self-serving hearsay testimony ofMr.
`
`Meister, and Deere's corporate witnesses. Based upon the clear directive of
`
`the Federal Circuit
`
`in vacating and remanding the Initial Determination it was inappropriate for the ALJ to rely on
`
`proof
`
`that the Federal Circuit already found to be inadequate on this issue.
`
`The only cited proof, other than Deere's self-serving testimony of its corporate witness, is
`
`the Deere Dealership Agreement, which Deere argues "the ALJ relied on its factual
`
`determination in the Initial Hearing that the Dealership Agreement does not authorize Deere's
`
`-4-
`
`
`
`u.s. dealers to sell European version SPFHs". Deere Brief on Review, at p. 6. However, the
`
`language of
`
`the Dealer Agreement is also insuffcient to rebut the presumption of authorization
`
`found by the Federal Circuit because the Dealership Agreement does not preclude the sale of
`
`EVFHs by authorized dealers. Deere's authorized Dealer Agreement fails to distinguish between
`
`new or used equipment, or between the sale of
`
`North American, or European forage harvesters.
`
`In fact, the Dealer Agreement requires
`
`(RX-348, at
`
`~1, A0893). Deere misleadingly argues the agreement did not expressly authorize its dealers to
`
`sell EVFHs. Deere Brief on Review, p. 6-8. However, the burden is upon Deere to come
`
`forward with proof establishing that it specifically prohibited the sale of EVFHs by its authorized
`
`dealers in order to overcome the presumption of authorization found by the Federal Circuit.
`
`Deere is unable to come forward with any such proof.
`
`Although Deere argues that authorized Deere dealers are separate entities, Deere
`
`promotes and sells its products using the trademarks at issue, through its Deere dealers. Deere's
`
`Annual Report in 1999 states "we've grown from offering a single brand and a single channel -
`
`John Deere through John Deere dealers - to a point today of offering multiple brands through a
`
`variety of distribution channels." (CX-9, DER8036, A1602). Deere made a strategic corporate
`
`decision to promote its trademarks, brand and products through its authorized dealers and as such
`
`must share in the responsibility for the sale of
`
`EVFHs by its authorized dealers.
`
`Deere entered into agreements with its authorized Deere dealers in the United States to
`
`use the trademark at issue in conjunction with Deere dealers sale of new and used forage
`
`harvesters and failed to restrict the use of
`
`these trademarks with respect to EVFHs. Deere's
`
`authorized Deere dealers were permitted to use the trademarks at issue in this investigation, in
`
`-5-
`
`
`
`conjunction with the advertising, marketing, solicitation and sale ofEVFH's. Deere as
`
`trademark holder, had the ability to control its authorized dealers with respect to their use
`
`Deere's trademarks, but failed to engage in any such control. If, in fact, Deere permitted the use
`
`of its trademarks by its Deere dealers without retaining such control over of the use of its marks,
`
`such would amount to naked licensing of the marks at issue, and Deere would no longer have a
`
`protectable interest in the marks which are the subject of this proceeding.
`
`The ALJ also incorrectly finds that Deere's machinefinder.com website does not promote
`
`the sale ofEVFHs in the United States. Deere's promotion of
`
`the sale ofEVFHs via
`
`machinefinder.com was featured prominently in the message of Deere's chairman and CEO
`
`Hunz W. Becherer in his Chairman's message contained in Deere's 1999 Annual Report, in
`
`which he declares, "nothing is likely to mean more to our future than how effectively we adapt to
`
`information technology, and specifically, use the internet as a springboard to promote our brand
`
`and sell our products". To date, Deere has nearly 200 separate internet applications in place,
`
`including a very successful site for dealers to feature used equipment." (1999 Annual Report, p.
`
`5, DER8034, A1600) (emphasis added). On Remand Bourdeau Respondents submitted a letter
`
`from Deere promoting its machinefinder.com website to encourage the sale of used equipment
`
`"across North America and in several world markets". (A1154). Deere's use of
`
`machinefinder.com to brand and sell EVFHs in the United States is consistent with Deere's
`
`efforts to center its growth efforts around "international expansion of agricultural equipment".
`
`Id.
`
`The ALJ ignores the fact that Deere knew about the sale of EVFHs by authorized Deere
`
`dealers since 1999. Deere corporate representatives assisted authorized Deere dealers in the sale
`
`of EVFHs and encouraged the sale of EVFHs in the United States, via its machinefinder.com
`
`-6-
`
`
`
`website. Furthermore, the ALJ relied on the misrepresentations of
`
`Deere's Mr. Meister, however
`
`Mr. Meister admitted at hearing on Remand that his representations on Summary Determination
`
`about the extent of Deere dealers involvement and the quantity of sales of EVFHs was incorrect.
`
`(Meister Remand, Tr. at 291, A0213-0214). On Summary Determination the ALJ relied on
`
`proof
`
`the Federal Circuit found to be inadequate for Deere to meet its burden of
`
`proving its
`
`prima facie case and ignored record proof that furher supports the presumption of authorization
`
`of the sale of EVFHs by Deere dealers.
`
`-7-
`
`
`
`ISSUE II
`
`DEERE FINANCED THE SALE OF EVFHs
`
`The argument that generalized, unspecified "corporate boundaries" between Deere and its
`
`financing division, somehow inoculates Deere from responsibility for financing EVFHs is
`
`without factual or legal support. (Remand ID, at 29; Deere Brief on Review, p. 16- 1 7). John
`
`Deere Credit is a subsidiary and part ofDeere.1 (Hiatt Tr., at 155, A0077). Deere expressly
`
`authorized and accepted the loan and security agreements, and John Deere Credit was authorized
`
`to process such loans, security agreements and financing statements on behalf of Deere. (A0321-
`
`407, A0079-0085). Deere profited from the loans and retained a legal interest in the underlying
`
`EVFHs that were security for the loans. Furthermore, Deere's trademark, name and logo at issue
`
`in this proceeding were approvingly on the loan checks for the EVFHs, including a check to
`
`Respondent Bourdeau for an EVFH. (RX-403, A1203).
`
`Deere attempts to distance itself from its financing subsidiary, claiming different
`
`employees, different offces and lack of knowledge of its own financing division's conduct.
`
`(Deere Brief on Review, pp. 16- 1 7, Remand ID at 29). Although, there was unsupported, self-
`
`serving testimony that John Deere Credit is a separate entity, Deere failed to come forward with
`
`any records or other proof substantiating the alleged legal distinction between Deere and its
`
`subsidiary division, John Deere Credit. Furthermore, Deere's arguments regarding lack of
`
`knowledge of its financing divisions activities is contradicted by representations made repeatedly
`
`by Deere in its annual reports, that Deere knew of, supported, and profited from the activities of
`
`its credit division. (See 1997-2000 Annual Reports, CX-7-10, A1473-1671).
`
`i John Deere Credit is also known as Deere & Company for legal purposes. See Troupe v. John Deere Credit a/k/a
`Deere & Company, 340 B.R. 86 (Bkrtcy. W.D. Okla. 2006).
`-8-
`
`
`
`Deere in its Annual Reports to its shareholders repeatedly emphasizes the financial
`
`success of John Deere Credit and the international expansion of John Deere Credit's activities to
`
`finance European equipment. Id. The profits and revenues of
`
`Deere's financing subsidiary John
`
`Deere Credit are included in Deere's financial statements. (A1502-32, 1562-91, 1615-16, 1623-
`
`53). The expansion of
`
`Deere's financing division to include European equipment was also
`
`repeatedly emphasized in Deere's Annual Reports. In 1997, Deere boasted of its "financing
`
`expansion to Europe and another year of record earnings, based on the strong financial
`
`performance of its lending businesses." The Senior Vice President in charge of international
`
`lending states "we're expanding internationally to support sales of John Deere equipment and to
`
`provide profitable growth for our credit operation". (CX-7, DER7929, A1495).
`
`Contrary to Deere's unsupported representations, Deere's Credit division worked closely
`
`with other Deere divisions. Deere's 1998 Annual Report states "working closely with Deere
`
`equipment divisions, JDC continued to expand its global markets. European operations grew
`
`substantially...". CX-8, DER 7992, A1558). In 1999 the Chairman's message highlights John
`
`Deere Credit's activities noting:
`
`"John Deere Credit posted record net income - $175 milion-
`while bringing more focus to leasing, international expansion and
`agra business. Credit added over $ 1 bilion to company earnings in
`the 1990s, and had record yearly profits 8 times." (CX9,
`DER8033, A1599).
`
`In 2000 the Chairman's report again emphasizes John Deere Credit and its financing of
`
`European equipment:
`
`"John Deere Credit, as it pursues new profitable growth
`opportunities in servicing our customers, continues to profitably
`support the sale of company products on a global scale. One of our
`most consistently performing businesses, credit's net income,
`although off 8 percent, was $162 milion in 2000. Its managed
`
`-9-
`
`
`
`portfolio rose by 11 percent, to over $12 bilion. A banking license
`was received and a bank established in Luxembourg, giving John
`Deere Credit the ability to finance equipment throughout Europe."
`(emphasis added). (CX-I0, DER8094, A1660).
`
`John Deere Credit is a subdivision of
`
`Deere, with authority to enter into financing on
`
`Deere's behalf, was part of
`
`Deere's globalization strategy and Deere reaped the benefits of
`
`its
`
`revenues and profits, including profits from the financing of
`
`EVFHs in the United States. The
`
`testimony that there are different employees, and different offices for Deere's credit subdivision
`
`does not inoculate Deere, a multi-national corporation, from its own conduct. If
`
`the ALl's ID is
`
`permitted to stand, it wil support the proposition that a large trademark holder such as Deere,
`
`has a lower burden than a smaller company with respect to rebutting the presumption of
`
`authorization and establishing a §337 violation.
`
`- 10-
`
`
`
`ISSUE III
`
`IT IS INAPPROPRIATE TO INCLUDE THE SPECULATIVE
`ESTIMATE OF USED NORTH AMERICAN HARVESTERS
`IN THE ALL OR SUBSTANTIALLY ALL CALCULATION
`
`The inclusion of
`
`the sale of
`
`used North American harvesters in the all or substantially all
`
`calculation is entirely speculative and inappropriately inflates the denominator by counting
`
`Deere's authorized North American harvesters in the U.S. market multiple times and counting
`
`Deere's authorized EVFHs in the numerator only once. It is Bourdeau Respondents' position
`
`that the proper method is to count each Deere harvester sold in the U.S. market once for the
`
`purpose of the all or substantially all calculation.
`
`In order to properly establish that a harvester has been sold in the U.S., it is necessary to
`
`identify that harvester by model and serial number, so that the sale of
`
`the harvester can be
`
`confirmed and the Commission can determine with some minimal level of confidence that the
`
`number is accurate. In this case, the maximum number of
`
`harvesters that can be substantiated as
`
`having entered in the U. S. market during the 1997 through 2003 time period set forth by the ALJ
`
`is". This includes the" new North American harvesters that Deere contends were sold
`
`in the United States during the five-year period,2 the 32 European harvesters that Deere admits
`
`were financed or sold by Deere and its authorized dealers, the 60 EVFHs that were purchased or
`
`sold to Bourdeau Respondents by authorized Deere dealers, and the 247 EVFHs that Deere's
`
`own investigation reveals were sold or serviced by authorized Deere dealers in the United States.
`
`Thus, the highest number of new and used harvesters, that could be established for use as the
`
`denominator in the all, or substantially all calculation, is". Each of
`
`the used harvesters in
`
`-11-
`
`
`
`this number can be ascertained by model number and serial number based upon the record proof,
`
`and both North American and European harvesters are counted once and given the same weight
`
`for the purposes of the calculation.
`
`It is inappropriate to merely multiply the number of
`
`new harvesters sold in the U.S. by 3,
`
`and arbitrarily add this number to the denominator for the purposes of
`
`the calculation. The
`
`underlying basis for the ALl's denominator is completely speculative, constituting nothing more
`
`than the self-serving hearsay statements of
`
`Deere's corporate witnesses, which the Federal
`
`Circuit already found to be inadequate for Deere to meet its burden of proof. Bourdeau, at 1326-
`
`1327. It is inappropriate to rely upon Mr. Meister's unsupported estimates ofthe number of used
`
`harvesters sold by Deere dealers in the United States, based upon the fact that he admits that
`
`Deere does not track such harvesters, he has no personal knowledge of such, and he admittedly
`
`misrepresented the number of Deere used harvester sales in the past. On Motion for Summary
`
`Determination, Mr. Meister executed a declaration stating that Deere was aware of only 6
`
`EVFHs sold by 4 different Deere dealers in the United States. (Meister Remand, Tr., at 291,
`
`A0213). Three months later, after the ALJ granted Summary Determination based upon Mr.
`
`Meister's representations, Mr. Meister revised that number to 32 EVFHs sold by 20 different
`
`dealers in the United States. (Meister Remand, Tr., at 291-292, A0213-0214).
`
`In computing the numerator for the all or substantially standard, the Bourdeau
`
`Respondents contend that the proper number should include all EVFHs that have entered the
`
`U.S. market via an authorized Deere dealer. This includes the 32 harvesters admittedly sold or
`
`financed by Deere, the 60 harvesters in the U.S. market purchased from or sold to authorized
`
`Deere dealers. With respect all 92 of
`
`these harvesters, there is proof of
`
`model number, serial
`
`-12-
`
`
`
`number, and proof of a purchase or sale by an authorized Deere dealer. Thus, the total
`
`percentage of EVFHs authorized by Deere exceeds 6.3%.
`
`The denominator proposed by Bourdeau Respondents does not take into account the 247
`
`EVFHs that Deere admits entered in the U.S. market during the relevant time period, and were
`
`sold or serviced by authorized Deere dealers. Deere is unable to set forth with any certainty
`
`which ofMr. Meister's speculative number of
`
`used harvesters were European, and which are
`
`North American, since Deere does not track these harvesters and has no records pertaining to
`
`their sales. However, the proof of record indicates that there are at least 247 additional EVFHs
`
`in the U.S. market, sold or serviced by authorized Deere dealers, for which Deere failed to rebut
`
`the presumption of authorization. If the improperly speculative, and duplicative number of 3300
`
`used North American harvesters is added to the denominator, then the 247 EVFHs identified by
`
`model and serial number as being used European harvesters, must also be included in the
`
`denominator, bringing the total to 339. Thus, even ifthe calculation considers the speculative
`
`and unsupported estimate of
`
`used North American harvesters, the ratio for the all or substantially
`
`all standard rises to at least 7.7%. (RX-331, A0871-0885).
`
`As set forth by the Federal Circuit, the burden is upon Deere to establish that these
`
`EVFHs were not authorized. Although, the Commission has determined not to review Bourdeau
`
`Respondents' Motion to Compel (Order No. 59), it must recognize that Deere refused to provide
`
`the results of surveys to its authorized dealers regarding the total number of EVFHs purchased
`
`and sold by authorized Deere dealers in the United States. Thus, it is not unreasonable to
`
`presume that the sale of EVFHs involving Deere, or its authorized dealers, is much higher than
`
`339. Since the burden of proof is on Deere to establish the proper figures by a preponderance of
`
`-13-
`
`
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`the evidence, its failure to produce all information in its possession and control regarding this
`
`crucial issue is fatal to its claims.
`
`-14-
`
`
`
`ISSUE IV
`
`DEERE FAILED TO MEET ITS BURDEN OF PROOF IN ESTABLISHING
`THE ALL OR SUBST ANTIALL Y ALL STANDARD
`
`It is uncontroverted that Deere authorized the financing and sale of at least 20 EVFHs in
`
`the United States, that an additional 72 EVFHs were presumed authorized by Deere via its
`
`authorized dealers into the U. S. market, and there is evidence of hundreds of additional EVFHs
`
`that entered into the u.s. market for which Deere has failed to rebut the presumption of
`
`authorization. As noted by the Federal Circuit and SKF, there is no bright line or percentage
`
`standard that is required. SKF USA v. lTC, 423 F.3d 1307, at 1315 (Fed. Cir. 2005). However,
`
`the burden of proof is on Deere to establish that all or substantially all of the goods it is
`
`presumed to have authorized are non-infringing. Under any reasonable interpretation of
`
`the all
`
`or substantially all standard, Deere is unable to rebut the presumption of authorization for
`
`between 5 - 8% of
`
`Deere's U.S. harvester sales. In light of
`
`Deere's speculative and contradictory
`
`representations regarding the sale of used harvesters by its authorized dealers, Deere is unable to
`
`establish that this ratio is any lower without speculation. Deere admits that it does not know with
`
`any certainty either the denominator, or the numerator necessary to satisfy the all or substantially
`
`all standard set forth by the Federal Circuit. (Meister Remand, Tr., 281, A0203).
`
`As noted by the Federal Circuit, in establishing the all or substantially all standard, Deere
`
`has the burden of also proving a diminution of value of its trademark caused by Respondents'
`
`sales of alleged infringing harvesters. Deere completely ignored this burden, setting forth no
`
`empirical, or other quantifiable evidence of the required diminution in value of its marks. The
`
`ALl's reliance on Deere's corporate witnesses, and unsupported hearsay from the Initial hearing
`
`is the type of evidence that the Federal Circuit has already stated is insuffcient for Deere to meet
`
`- 15-
`
`
`
`its burden of proof. There is no diminution in value based upon Bourdeau Respondents' conduct
`
`because Deere engaged in and profited from the same conduct by financing and sellng EVFHs.
`
`The dearth of
`
`proof
`
`regarding diminution of
`
`value of Deere's marks is fatal to Deere's claims.
`
`Deere's inability to rebut the presumption of authorization of the financing and sale of
`
`EVFH's in the United States is consistent with Deere's efforts at globalization of its brand and
`
`products, and "to profitably support the sale of company products on a global scale". (DER8094,
`
`A1660). Deere knew about, and assisted its authorized dealers, in the sale ofEVFHs in the
`
`United States. It financed the sale ofEVFHs in the United States and made profits from such
`
`financing, profits that it repeatedly emphasized in its Annual Reports. Authorized Deere dealers
`
`used the marks at issue in the advertising and sale of
`
`used EVFHs in the United States; Deere
`
`used its trademarks to promote the sale ofEVFH's in the United States via its website at
`
`ww.machinefinder.com; Deere financed used EVFHs in the United States and paid Respondent
`
`Bourdeau directly for an EVFH with a check that approvingly contains Deere's trademark. In at
`
`least 60 instances, the EVFHs that are alleged against Bourdeau Respondents were obtained via
`
`transactions with authorized Deere dealers. The ALl's blind acceptance of
`
`Deere's unsupported
`
`statements and misleading representations regarding the burden of proof, ignores the clear
`
`standards and guidance set forth by the Federal Circuit. Although Deere has had two chances
`
`and four years in which to rebut the presumption of authorization, it has failed to do so.
`
`-16-
`
`
`
`CONCLUSION
`
`For the reasons set forth above, the Commission should find the ALJ did not properly
`
`apply the standard for authorization on summary determination and Deere failed to rebut the
`
`presumption of authorization of sales of
`
`EVFHs by authorized Deere dealers; Deere failed to
`
`rebut the presumption it financed the sale of at least 20 EVFHs in the U.S.; the ALJ improperly
`
`included used North American harvesters in calculating the all or substantially all standard;
`
`Deere failed to meet its burden of proof of establishing a diminution in the value of its trademark
`
`or that all or substantially all of its sales were of
`
`North American harvesters; and Deere failed to
`
`meet its burden of proof in establishing a Section 337 violation.
`
`Dated: March 13,2007
`
`Respectfully submitted:
`
`Isl David P. Miranda
`Nicholas Mesiti, Esq.
`David P. Miranda, Esq.
`Brett Hutton, Esq.
`HESLIN ROTHENBERG FARLEY
`& MESITI P.C.
`5 Columbia Circle
`Albany, NY 12203
`Phone: (518) 452-5600
`Facsimile: (518) 452-5579
`
`Attorneys for Respondents Bourdeau Brothers, Inc.,
`Sunova Implement Co, Erntetechnik Franz Becker,
`and OK Enterprises
`
`- 1 7-
`
`
`
`Certain Agricultural Vehicles And Components Thereof Investigation No. 337-TA-487
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that on March l3, 2007, he caused BOURDEAU
`
`RESPONDENTS' REPLY (PUBLIC) WRITTEN SUBMISSIONS ON ISSUES UNDER
`
`REVIEW, dated March 13,2007, to be filed with the Honorable Marilyn R. Abbott, Secretary
`
`(in electronic format), and served upon the parties in the manner indicated below:
`
`VIA FEDERAL EXPRESS
`Offce of the General Counsel, ITC:
`Jonathan Engler, Esq.
`United States International Trade Commission
`500 E Street, SW - Room 707P
`Washington, D.C. 20436
`
`VIA FEDERAL EXPRESS
`Commission Investigative Attorney:
`David O. Lloyd, Esq.
`United States International Trade Commission
`500 E Street, SW - Room 401
`Washington, DC 20436
`
`VIA FEDERAL EXPRESS
`Complainant Deere & Company:
`Bassam N. Ibrahim, Esq.
`BUCHANAN INGERSOLL PC
`1737 King Street, Suite 500
`Alexandria, Virginia 22314
`
`Dated: March 13, 2007
`
`Isl David P. Miranda
`David P. Miranda, Esq.
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