[00:00:00] Speaker 01: 20-6057 and 20-6100, Hetronik International versus Hetronik Germany, GmbH. [00:00:12] Speaker 02: Good morning, Council. [00:00:15] Speaker 02: All right. [00:00:15] Speaker 02: I will turn to you then, Mr. Walker, and ask you to proceed when you're ready. [00:00:21] Speaker 01: Thank you. [00:00:22] Speaker 01: May it please the Court, Lucas Walker for Abitron Austria and the other appellants. [00:00:26] Speaker 01: The Supreme Court held in this case that the Lanham Act provisions asserted here are not extraterritorial and that they extend only to claims where the claimed infringing use in commerce is domestic. [00:00:38] Speaker 01: That has three major implications for how this case should now proceed. [00:00:41] Speaker 01: First, Hedronik International cannot recover defendants' profits from their foreign sales because those sales did not involve defendants' domestic use of marks in commerce. [00:00:52] Speaker 01: Which is why Hetronic instead tries to reach those foreign sales under a completely different theory based on something other than a domestic use of the mark and commerce. [00:01:00] Speaker 01: But that just wishes away the Supreme Court's decision, which held squarely that domestic use of the mark and commerce is necessary. [00:01:07] Speaker 01: And that's what provides the dividing line between a permissible domestic application and an impermissible extraterritorial application. [00:01:14] Speaker 01: As a result, any discouragement must be limited to sales that arose from a domestic use of the market in commerce. [00:01:20] Speaker 01: And here, that means that only defendant sales to U.S. [00:01:23] Speaker 01: buyers can be the basis for discouragement. [00:01:26] Speaker 01: Now, that's not because sales are the only use in commerce that can possibly be. [00:01:31] Speaker 01: There could be advertising or something like that. [00:01:33] Speaker 01: But the disgorgement remedy that Hetronik has sought here specifically looks to defendants' sales. [00:01:39] Speaker 01: And the only sales by the defendants that could be contributed to any kind of domestic use in commerce are sales to US buyers. [00:01:47] Speaker 03: Second, any- What about sales in Europe to a European company [00:01:57] Speaker 03: who then distributes to the United States. [00:02:02] Speaker 03: Doesn't that fit use of the trademark in commerce? [00:02:06] Speaker 01: So the sale by that foreign buyer in the United States, that would be a domestic use of the mark in commerce, but it would be a domestic use by the reseller. [00:02:17] Speaker 01: It wouldn't be a domestic use by the defendants. [00:02:19] Speaker 03: Well, that's not the way I read what Justice Jackson said. [00:02:25] Speaker 01: Yeah, so Justice Jackson did propose, speaking only for herself on a question on whether justice addressed, did suggest that in that situation, if you have a foreign seller who sells to a foreign buyer in a foreign country, that if that foreign buyer ever sells it in the United States, that somehow becomes a domestic use by the foreign seller. [00:02:46] Speaker 03: And I think- Why isn't Justice Jackson's [00:02:50] Speaker 03: paradigm, the one we follow here, because apparently it would be accepted by the four dissenters in the majority opinion. [00:03:06] Speaker 03: And it was not disclaimed by any one of the other four in the majority. [00:03:14] Speaker 03: That suggests to me that that is the rule. [00:03:20] Speaker 01: Respectfully, I think that's not the way to read the different opinions in the from the Supreme Court here. [00:03:26] Speaker 01: So five justices. [00:03:27] Speaker 03: Precisely correct me and why that is not the right way to read this opinion. [00:03:33] Speaker 01: Yes, so five justices, a majority of the court held that a domestic use in commerce is required. [00:03:39] Speaker 01: Justice Jackson joined that in full without reservation. [00:03:42] Speaker 01: Four justices disagreed. [00:03:43] Speaker 01: They thought that domestic likelihood of confusion was enough and that a domestic use wasn't required. [00:03:48] Speaker 01: So that's a 5-4 split on the holding that a domestic use is required. [00:03:53] Speaker 01: Then there's the later question, which the majority and the concurrence by Justice Sotomayor never addressed. [00:03:59] Speaker 01: And that's what exactly could be considered a domestic use in commerce. [00:04:03] Speaker 01: That later question that subsequent question, which is the question, I think, for this court to decide is what counts exactly as a domestic use in commerce and justice Jackson expressed a view on that. [00:04:14] Speaker 01: But she was the only one who expressed any view on that the other a justice's didn't say anything about it. [00:04:19] Speaker 01: And so it really is that you know her views merit consideration. [00:04:23] Speaker 01: but I think ultimately it's an incomplete view of what would be necessary to attribute someone else's use to foreign sellers. [00:04:31] Speaker 03: And the- Why is that view of Justice Jackson not the one that would be necessarily applied by the dissenters when the next case comes before them and the precedent is Abitron? [00:04:50] Speaker 01: So the precedent is that a domestic use and commerce is required. [00:04:54] Speaker 01: That is now the holding. [00:04:54] Speaker 01: That's the rule that has to be applied in this court. [00:04:57] Speaker 01: And if it were to go up to the Supreme Court again. [00:04:59] Speaker 01: And those four call them the dissenters, but the concurrence and the judgment did not say anything about what they think would be a domestic use in commerce. [00:05:07] Speaker 01: To the extent they did, I think Justice Sotomayor suggested in footnote seven that that situation might not be a domestic use in commerce, but it's just not something they addressed. [00:05:19] Speaker 01: They went entirely on thinking that the likelihood of confusion in the United States was enough. [00:05:24] Speaker 01: And so it would be a fresh question for the court to decide what is enough for domestic use in commerce in that sort of situation. [00:05:31] Speaker 01: And I think Justice Jackson's approach is a bit incomplete because the rule for when a use in commerce counts as a foreign entity's use in domestic commerce turns on whether that sale in the United States, a resale by some third party is done on behalf of the foreign seller. [00:05:51] Speaker 01: Not just it was bought abroad and then someone resells in the United States, but that resale in the United States is done on behalf of the foreign seller. [00:05:58] Speaker 01: That's the rule that applies when you're trying to register a trademark. [00:06:01] Speaker 01: Which also requires using commerce and then using commerce has to have a consistent meaning throughout the entire statute. [00:06:08] Speaker 01: And so here there's no allegation that anyone ever [00:06:11] Speaker 01: resold on behalf of us after buying something outside of the United States. [00:06:15] Speaker 01: We had a distributor, but actually we sold them to the United States. [00:06:19] Speaker 01: That was the 16,000 euros worth of sales, direct US sales. [00:06:24] Speaker 01: But there's just nothing that shows that that was on behalf of us or something else that would be the basis for attributing those later resales to us. [00:06:35] Speaker 00: But let me ask, I want to focus you on the state court claims. [00:06:41] Speaker 00: You didn't appeal the state court, the verdict related to the state court claims. [00:06:47] Speaker 00: And now you want to raise essentially a evidentiary 403 issue with respect to those claims. [00:06:57] Speaker 00: I don't know how you can do that when you never appealed. [00:07:00] Speaker 00: All along, you've been arguing that there's no extraterritorial reach. [00:07:06] Speaker 00: And if you believed that, and if you were successful, you could have made exactly the argument you're making now about the impact of that evidence on the state law verdict in the district court and again on appeal to us, but you never did. [00:07:20] Speaker 00: How can you now make that argument? [00:07:23] Speaker 01: Yeah, well, it is something we did not previously raise. [00:07:27] Speaker 01: I think the appeal brings the entire case before this court. [00:07:29] Speaker 01: I think it does have the power to reach that. [00:07:31] Speaker 01: And let me let me refine. [00:07:32] Speaker 00: How do we have the power to reach it when you never appealed it? [00:07:35] Speaker 00: We, you know, we don't reach out and take issues that weren't raised on appeal. [00:07:40] Speaker 01: Yeah, so I mean, the notice of appeal does bring the entire case up to this court. [00:07:45] Speaker 01: But so, I mean, in terms of jurisdiction, it does have power. [00:07:47] Speaker 01: I do admit that we didn't raise it in the previous opening brief. [00:07:51] Speaker 00: Well, you'd have a waiver and a forfeiture issue. [00:07:54] Speaker 01: I yes, and I and I think what I would just say on this is all we're asking is all we want to say is that given how dramatically this case has now changed where 90 million or some large part of that 90 million Lanham Act award that was a huge part of this case has now gone away, realizing that it was impermissibly extraterritorial. [00:08:12] Speaker 01: It would be within the discretion of the district court to grant a new trial in that situation on the state law claims. [00:08:17] Speaker 01: And so we're just asking all we're asking right now is for the court to remand for the district court to make that discretionary determination. [00:08:23] Speaker 00: I don't even know how we can do that. [00:08:26] Speaker 00: You didn't appeal it. [00:08:27] Speaker 00: It's done. [00:08:27] Speaker 01: Again, I think in terms of the court's jurisdiction, a notice of appeal brings the whole case up. [00:08:33] Speaker 01: But this is not our primary submission. [00:08:37] Speaker 01: And so certainly, it may be within the court's discretion to not address it for those reasons. [00:08:44] Speaker 01: But we do think since the case is going to have to go back down because the discouragement award has to be severely reduced and because the injunction needs to be redone, that it would make sense to allow the court to exercise its discretion whether to do that and perhaps it would consider all of those considerations that you you've raised yourself. [00:09:02] Speaker 01: But I think the primary thing that I want to focus on is just the Discouragement Award and the injunctions, the Lanham Act claims that it really is our primary focus here. [00:09:10] Speaker 02: Before we leave that though, you're not saying that we would commit any error if we went as Judge McHugh suggests. [00:09:19] Speaker 01: I think it would probably be within the court's discretion not to do so. [00:09:22] Speaker 01: We just think that given how dramatically this has changed, the Supreme Court has changed the law, that that might be a situation to exercise the discretion to allow the district court to then exercise its discretion on this question. [00:09:34] Speaker 00: Well, and focusing again on, you know, what's available here, to the extent that HETRONIC wants to argue other uses in commerce that are domestic, it would be limited to the record it's already created. [00:09:50] Speaker 00: Would you agree with that? [00:09:51] Speaker 01: I think so. [00:09:52] Speaker 01: HETRONIC has not asked to reopen the record for a new trial on anything like that. [00:09:56] Speaker 01: And they haven't pointed to anything that suggests that those numbers we've identified are wrong. [00:10:00] Speaker 01: I don't think they've made any argument that the number of the direct sales is incorrect, whether that number is the 16,000 we made to non-Hetronic U.S. [00:10:08] Speaker 01: buyers or the 202,000 that we made to all U.S. [00:10:11] Speaker 01: buyers, including Hetronic itself. [00:10:13] Speaker 01: I don't think there's any dispute that that's the right number of direct U.S. [00:10:16] Speaker 01: sales. [00:10:17] Speaker 01: And while we don't think those indirect sales, that 1.7 million euros of goods that were sold outside of the United States and may have later reached the United States, while we don't think that those are properly reached by the Lanham Act, if that category of sales were subject to it, Atronik hasn't provided any evidence that shows that that number should be any higher than it is. [00:10:36] Speaker 01: They pointed to some alleged additional sales by Tupin, but we showed that those, that testimony was talking about sales that go back all the way to 2003, 2004. [00:10:44] Speaker 01: which is before Hetronic International even existed. [00:10:47] Speaker 01: And so I don't think there's any factual dispute on this record that the proper amounts for those categories are either the $16,000 or the $202,000 for the direct US sales or the $1.7 million if you were to count those foreign sales of goods that later reach the United States. [00:11:05] Speaker 03: Mr. Walker, before you go on, I want to inquire about the foreign sales that you indicated that are [00:11:13] Speaker 03: Now, not proper damages under the Lanham Act. [00:11:19] Speaker 03: Okay. [00:11:21] Speaker 03: Assume that this panel just does not accept your argument about the applicability of Justice Jackson's approach. [00:11:29] Speaker 04: Just assume that. [00:11:34] Speaker 03: How does this panel or the district court on remand analyze those foreign sales [00:11:44] Speaker 03: and determine which of those actually ended up in the United States bearing the infringing trademark. [00:12:00] Speaker 03: Because some of those foreign sales probably did end up in the United States. [00:12:05] Speaker 03: Is there anything in the record that would distinguish [00:12:11] Speaker 03: foreign sales that never reached this country, and foreign sales that did reach this country. [00:12:17] Speaker 01: Yeah, so the absolute maximum of the foreign sales that could have reached this country is the 1.7 million euros that we identified and the court identified in its prior opinion in this case, because those are, that's actually over inclusive because it includes any order that had a U.S. [00:12:33] Speaker 01: destination for any product, but that's any, [00:12:37] Speaker 03: Wait a minute, what about these sales that ended up in cranes in this country that were never counted in the 1.7 euros? [00:12:50] Speaker 01: I don't think there's any evidence that anything wasn't counted within the 1.7 because that includes products that we sold to crane manufacturers or crane sellers who would have incorporated them into their products and then brought them to the United States. [00:13:03] Speaker 01: And I think one reason why we know that is because we had to make modifications. [00:13:06] Speaker 01: We had to make sure that they could be used on the right radio frequencies in the United States. [00:13:10] Speaker 01: So we didn't have down that it was a US destination. [00:13:13] Speaker 01: We wouldn't have been able to make those necessary modifications. [00:13:17] Speaker 01: And so there's just no evidence. [00:13:20] Speaker 03: You're telling this panel that that 1.7 million includes every device that had the infringing mark on it, even though the defendant was not directly responsible for getting those goods into this country. [00:13:43] Speaker 03: Are you telling me that? [00:13:44] Speaker 01: I think that is what the record shows. [00:13:46] Speaker 01: There's no evidence that that doesn't include anything else. [00:13:49] Speaker 01: And I would say the two-pin products are the only ones that Hedronik otherwise points to, and we responded to that supplemental reply. [00:13:56] Speaker 01: So unless there are further questions right now, I'd like to reserve the remainder of my time. [00:14:01] Speaker 04: Very well. [00:14:04] Speaker 04: Ms. [00:14:04] Speaker 04: Berman, proceed when you're ready. [00:14:07] Speaker 07: Morning, Your Honors. [00:14:08] Speaker 07: May it please the Court, Debbie Berman on behalf of APOLE, Hetronic International, Inc. [00:14:13] Speaker 07: I'd like to start with responding to Judge Murphy's last question about whether there's anything in the record that would suggest additional sales beyond the 1.7 million euros were resold into the United States. [00:14:27] Speaker 07: And the answer is definitely yes. [00:14:29] Speaker 07: We identify much of that evidence in our response post remand and as a defendant's own witnesses testified that it was not a requirement on the invoice to indicate if the radio remote control would be installed on a piece of equipment that would later be sold into the United States. [00:14:50] Speaker 07: While that happened, it was not required and so their own witnesses testified and that evidence is on the record that that's an under inclusive number not an over inclusive number, and not only what do we have that general testimony but then we also gave specific examples in our response of. [00:15:09] Speaker 07: the Toypen products coming to the United States. [00:15:12] Speaker 07: Also, their own distributor testified about another customer who's not in those 1.7 million euros of invoices who was seeking repair for their unit in the United States that they sent to Hotronic International. [00:15:29] Speaker 07: And then you heard from Hotronic's own witnesses of receiving radio remote controls [00:15:34] Speaker 07: in Oklahoma for radio remote controls that were not included in the 1.7 million euros. [00:15:42] Speaker 03: Do you agree that that would require not just a remand, but a new trial for you to put on evidence of what those amounts would be that you did not earlier put in because you are operating under a [00:16:03] Speaker 03: a theory of extra-territoriality that has been reversed. [00:16:08] Speaker 07: So Your Honor, I do not believe that a retrial is necessary in this case. [00:16:12] Speaker 07: All of this evidence is in the record that Judge Fry had heard during the three-week trial. [00:16:17] Speaker 07: And if the way that this scourgement remedy works is it is our burden to put in front of Judge Fryett the revenues for sales that are attributable to the domestic infringing conduct. [00:16:30] Speaker 07: And if I can just address that for one minute, we believe that under the Supreme Court's new authority, domestic infringing conduct, that many, many of the defendant's sales are gonna be covered because the domestic infringing conduct that they committed in the United States permitted them [00:16:47] Speaker 07: to sell the radio milk controls to original equipment manufacturers in Europe, who they knew were going to install them on products. [00:16:58] Speaker 07: And those original equipment manufacturers would not have bought the products from Abitron if those products could not be in the United States. [00:17:07] Speaker 07: and there are significant evidence already in the record on that issue. [00:17:11] Speaker 07: The defendant's own distributor testified that the whole reason that they were created was so that they could take care of toypen and other products that they knew were coming to United States. [00:17:23] Speaker 07: Mr. Fuchs, who's a defendant in this case. [00:17:26] Speaker 03: Let me interrupt you. [00:17:27] Speaker 03: I understand there may be evidence. [00:17:30] Speaker 03: But what you're missing is a finding by the fact finder in that regard. [00:17:37] Speaker 03: Now, that jury verdict is very extensive, and I almost got dizzy looking at it. [00:17:44] Speaker 03: But can you tell from the jury verdict what that additional number would be beyond the 1.7 euros from the jury verdict? [00:17:59] Speaker 07: I'm sorry, Your Honor, I didn't mean to speak over you. [00:18:01] Speaker 07: So actually, the jury is not the finder of fact who decides the Scourgement. [00:18:06] Speaker 07: The Lanham Act is clear that that's for the judge to decide. [00:18:08] Speaker 07: At most, the jury gives a recommendation. [00:18:12] Speaker 07: But ultimately, it's Judge Fryett who has to make that determination. [00:18:16] Speaker 07: And he heard all of that evidence. [00:18:17] Speaker 07: And the way that Scourgement works, and it's worked in prior cases where the 10th Circuit has sent down Lanham Act cases, including Your Honor's case that you've decided, [00:18:27] Speaker 07: to go back to the district court. [00:18:30] Speaker 07: And the district court, we have met our burden to show, and will reiterate it to Judge Fryett, the quantum of sales that are attributable to domestic infringing conduct. [00:18:41] Speaker 07: And we all agree that that's what the standard is. [00:18:44] Speaker 07: That's what the defendants repeatedly say in their brief. [00:18:46] Speaker 07: And you heard Mr. Walker say it today. [00:18:48] Speaker 07: Then the burden then shifts to the defendants [00:18:51] Speaker 07: to say that, no, those sales were attributable to something other than the domestic infringing conduct. [00:18:57] Speaker 07: But all the dollar values for all the sales, who they were all sold to, all of that information is in the record. [00:19:04] Speaker 07: And it would be for Judge Fry to do post-jury in the first instance like he did in this case. [00:19:09] Speaker 07: And he can now do it on remand. [00:19:11] Speaker 07: There's no need for a retrial. [00:19:13] Speaker 03: So you were telling me that the evidence that exists, you can determine [00:19:18] Speaker 03: whether or not an infringing mark was placed on products that the defendant was not responsible directly for getting into the United States. [00:19:37] Speaker 03: Do you identify those products? [00:19:39] Speaker 07: I believe we can identify a number of them. [00:19:43] Speaker 07: One other thing I'd like to point out is that the Lanham Act is clear that if you can't determine from the defendant's records which products actually came to the United States because of their record keeping, they don't get the benefit of that doubt because that just rewards the infringer. [00:20:02] Speaker 07: And here we have a wolf or infringer. [00:20:05] Speaker 07: And so the law is clear. [00:20:07] Speaker 07: And what Judge Fryett will do is we'll put in the evidence of the revenues. [00:20:11] Speaker 07: They'll say these aren't attributable to that. [00:20:13] Speaker 07: And Judge Fryett will then wait to determine what is fair, given the total circumstances in this case. [00:20:19] Speaker 07: That's what disgorgement is. [00:20:20] Speaker 07: It's not like lost profits where, OK, this is the profit number. [00:20:23] Speaker 07: Discouragement is a determination of what is fair in this case. [00:20:27] Speaker 07: One, to deter future conduct. [00:20:29] Speaker 07: And here we have willful infringers who were not easily deterred. [00:20:33] Speaker 07: And two, to ensure that the defendants don't have unjust enrichment from their willful infringement. [00:20:42] Speaker 07: And again, if there's, go ahead. [00:20:44] Speaker 02: Are you talking about 1117, right? [00:20:47] Speaker 02: Section 1117. [00:20:49] Speaker 02: All right. [00:20:50] Speaker 02: On this category, the second category of sales, products sold abroad that wound up in the United States. [00:20:57] Speaker 02: How dependent are you that we accept your view that the Supreme Court simply clarified and reaffirmed steel? [00:21:04] Speaker 02: Which is to say, if we take steel out of the mix, do you still have a claim for that category? [00:21:10] Speaker 07: Yes, Your Honor, we believe that steel is an alternative basis to award damage, to award disgorgement in this case. [00:21:20] Speaker 07: You know, the Abitron decision did not hold that, you know, willful infringers who infringe using domestic, with domestic infringement cannot be held viable in the United States. [00:21:33] Speaker 07: But you don't need to reach steel because you can look at the domestic infringing conduct in this case, [00:21:38] Speaker 07: where they were advertising, they had distributors, they were doing repairs, they send letters to U.S. [00:21:43] Speaker 07: customers saying, we're now Hetronic, you're not Hetronic. [00:21:47] Speaker 07: And it was because the original equipment manufacturers knew that they could, that their products could be repaired and serviced in the United States, that they bought those products in Europe. [00:21:58] Speaker 07: even if they were not originally designated for the United States. [00:22:00] Speaker 07: These original equipment manufacturers don't buy one product for the United States, one product for Germany, one product for Austria. [00:22:07] Speaker 07: They buy because their products move all over the places. [00:22:09] Speaker 07: The evidence has shown in spades in this case. [00:22:12] Speaker 07: And so it's those domestic infringing uses that led to the sales to the OEMs. [00:22:17] Speaker 07: And those are properly discourageable for putting aside steel and putting aside Justice Jackson's definition of domestic infringing conduct. [00:22:28] Speaker 00: Do you have the burden of tying the disgorgement amount you're claiming to a domestic use in commerce? [00:22:38] Speaker 00: So for example, if you're saying the use in commerce is their advertising in the United States, do you then have an initial burden to tie the profits to that advertising? [00:22:54] Speaker 07: So Your Honor, the initial burden that we have is to show that there's a plausible connection between their domestic infringing conduct and their sales that they made that we believe are covered by the Lanham Act. [00:23:05] Speaker 07: That is a burden that is on the plaintiff in a Lanham Act case. [00:23:08] Speaker 07: The Supreme Court didn't change how remedies work in Lanham Act cases. [00:23:12] Speaker 07: That's how they work in cases. [00:23:14] Speaker 07: The burden then shifts to the defendants for them to come forward and argue that there was some other reason why those sales were made. [00:23:22] Speaker 07: Ours doesn't have to be the only reason or even the predominant reason, but as long as there's a plausible connection between the sales. [00:23:29] Speaker 07: And then Judge Fryett will exercise his discretion to determine, okay, well, the defendant sales me and it's not a sale by sale basis. [00:23:36] Speaker 07: It's over the entire products that were sold necessary. [00:23:39] Speaker 07: And this is exactly what district court judges do all the time. [00:23:43] Speaker 07: When there's a advertisement in the United States that's shown to be infringing for product X, all of the revenues for product X [00:23:51] Speaker 07: are put into evidence by the plaintiff. [00:23:53] Speaker 07: And as long as they've shown, and then what then it burdened then shifts to the defendants to say, well, there's other reasons why we made those sales. [00:24:02] Speaker 07: We have a better product. [00:24:03] Speaker 07: We have a better price. [00:24:04] Speaker 07: That's what judges, district court judges do all the time in Lanham Act disgorgement cases. [00:24:08] Speaker 07: And as I said earlier, the Supreme court didn't change remedies. [00:24:11] Speaker 07: It only talked about what uses count for liability, but we have an admission by the defendants here that they're liable and that they're willful infringers. [00:24:19] Speaker 07: So this case on remand is only [00:24:21] Speaker 07: about remedies. [00:24:23] Speaker 00: And you're saying that all of that can be done on the existing record? [00:24:30] Speaker 07: Yes, Your Honor, we believe that it can be. [00:24:34] Speaker 04: Thank you. [00:24:38] Speaker 03: Counsel, did you ask for attorney's fees and travel damages in the original proceedings in district court? [00:24:47] Speaker 07: So your honor, we did. [00:24:48] Speaker 07: All the way up through in our complaint and in all the pre-trial filings, we did ask for attorney's fees and trouble damages actually is just an element of- Was that denied? [00:25:04] Speaker 07: No, Your Honor. [00:25:05] Speaker 07: So given the amount of damages that were awarded, we elected not to ask Judge Fryett to treble them or to award attorney's fees. [00:25:14] Speaker 07: But the law is clear now that that award is being vacated, that we can revisit our elections again. [00:25:20] Speaker 03: What is there in the record that indicates that you gave up that claim because of the size of the verdict? [00:25:32] Speaker 07: Your honor, it's our motion to enter a final judgment in this case, where we indicated why we would not be seeking attorney's fees or treble damages. [00:25:42] Speaker 03: And in that document, you say, we're not going to pursue them because we got so much money and worried. [00:25:49] Speaker 07: That's suggestive. [00:25:50] Speaker 07: Yes, your honor. [00:25:54] Speaker 07: And even if we hadn't said that, [00:25:57] Speaker 07: given the fact that we elected to post-jury. [00:26:01] Speaker 07: So the trial wouldn't have changed in any way. [00:26:03] Speaker 07: The thing that the courts look at is whether the defendants would have wanted to put in different evidence. [00:26:09] Speaker 07: We didn't make that election until after the jury verdict, till after Judge Fryett entered the injunction when we moved for entry of final judgment in this case. [00:26:17] Speaker 07: So there was every incentive for the defendants to deal with those issues at that time. [00:26:23] Speaker 07: And because the verdict is now being [00:26:26] Speaker 07: vacated, we can revisit those elections. [00:26:29] Speaker 07: But I do want to point out that trouble damages is not a different type of damage. [00:26:34] Speaker 07: It is part of the discouragement considerations that district courts take into. [00:26:39] Speaker 07: It's part of discouraging. [00:26:40] Speaker 07: You can discourage up to three times the amount, as opposed to a separate, where attorney's fees are separate. [00:26:48] Speaker 00: So is it your position that even if you don't ask for trouble damages, the district courthouse discretion to trouble them anyway? [00:26:58] Speaker 07: I don't know if Judge Fry had had, Judge Fry presumably had the, what we did ask for them in all of the pleadings up to and through the trial, he could have had the discretion to do that. [00:27:11] Speaker 07: We indicated that we weren't seeking that as part of our disgorgement judgment in light of the size of the award. [00:27:20] Speaker 00: I don't think that answered my question. [00:27:22] Speaker 07: I'm sorry, Your Honor, I thought I did. [00:27:24] Speaker 00: Okay, my question is where you specifically told the district court that you were electing not to ask for trouble damages. [00:27:35] Speaker 00: Could the district court have been troubled them anyway. [00:27:40] Speaker 07: I suppose that the court could, because it's ultimately the court's discretion to determine if they want to treble damages or not. [00:27:48] Speaker 07: But I don't think that it would be likely, because we told Judge Friatt we weren't interested in that part of the remedy. [00:27:53] Speaker 07: And I'm not aware in most cases where a judge is going to give you a larger judgment than you've requested. [00:27:59] Speaker 07: So whether it's theoretically possible, maybe. [00:28:03] Speaker 07: But I don't think that it's likely, because we told the judge we weren't interested in that at the time. [00:28:10] Speaker 02: Can you speak to Justice Jackson's concurrence and the effect? [00:28:14] Speaker 02: Because it is kind of confusing as far as how we plug that in with either of the bands of four. [00:28:22] Speaker 07: Yes, Your Honor. [00:28:23] Speaker 07: So I will address Justice Jackson's concurrence. [00:28:27] Speaker 07: I don't think it's necessary for Your Honors to go as far as Justice Jackson suggests, because this is an entirely different case. [00:28:34] Speaker 07: In her hypothetical, there was really no relationship between the original seller and the reseller, other than that person had bought the purse for their own personal use and then later decided to sell it. [00:28:48] Speaker 07: And there was no conduct in the United States by the defendants in her hypothetical. [00:28:54] Speaker 07: In our case, there are significant domestic infringing conduct in the record that your honors have already recognized in the last opinion, that that is what led to the sales in Europe. [00:29:06] Speaker 07: So it's a different situation. [00:29:08] Speaker 02: It's different, but it's actually much better than for you. [00:29:14] Speaker 02: Your situation is better than Justice Jackson's hypothetical, right? [00:29:18] Speaker 02: sounds like you're trying to argue away from her hypothetical that because it's more favorable to you than your own situation seemed like you would be grasping up with both arms. [00:29:30] Speaker 07: So, Your Honor, I think that they're different because her hypothetical only focuses on resale within the United States, and you are correct. [00:29:38] Speaker 07: Her hypothetical is more favorable because we don't have to show domestic infringing uses. [00:29:45] Speaker 07: Under her hypothetical that the infringement that occurred in Europe by selling the product initially sort of got reinvigorated in the United States, and you don't have to show any additional domestic infringing uses. [00:29:57] Speaker 02: Well, what I'm talking about when I say more favorable is [00:30:02] Speaker 02: It was known here that these remote controls were going to go into products that were going to come to the United States, unlike the purses which got here randomly. [00:30:14] Speaker 07: Correct. [00:30:14] Speaker 07: And I agree that that is the more favorable aspect. [00:30:17] Speaker 07: What I'm suggesting is her hypothetical covers one element of those damages that we think need to be discouraged in this case. [00:30:25] Speaker 07: There's also all the other sales that were made abroad that were attributable to the domestic infringing conduct conducted by the defendants in the United States, which would cover a whole nother swath of products, whether they came back into the United States or not. [00:30:44] Speaker 02: Maybe I can ask it this way. [00:30:45] Speaker 02: When Justice Jackson says at the end of her concurrence that she joins the Justice Alito opinion in full, then that's that. [00:30:58] Speaker 02: That's five votes for Justice Alitos. [00:31:00] Speaker 02: And so that's what we operate on. [00:31:02] Speaker 02: We don't try to determine whether or not there are five justices that match up on some other point. [00:31:10] Speaker 07: Yes, runner and I, our situation is a super easy application of justice Jackson's hypothetical. [00:31:20] Speaker 02: This, let me ask it this way then does justice Jackson type opinion even matter as far as what we're doing. [00:31:29] Speaker 07: I think it's instructive. [00:31:31] Speaker 07: We believe that we're entitled to a disgorgement of substantial amount of defendant sales, regardless of Justice Jackson's opinion. [00:31:40] Speaker 07: But certainly, we fit squarely in her hypothetical for a good portion of those sales. [00:31:48] Speaker 02: Is her hypothetical important? [00:31:51] Speaker 07: I'm sorry. [00:31:52] Speaker 07: I didn't hear you, Your Honor. [00:31:52] Speaker 02: Well, I've been talking about a 4-4-1 split with her saying she joined the first four in full. [00:31:59] Speaker 02: And now you're talking about the hypothetical, but do we care about it? [00:32:03] Speaker 02: How does Justice Jackson's opinion affect your argument? [00:32:07] Speaker 02: Are you saying because Justice Jackson said this, that changes the result in some fashion? [00:32:13] Speaker 02: Or is it just interesting reading for the next time that case comes, another case comes along? [00:32:19] Speaker 07: So your honor, we believe that under the majority's standard of domestic infringing uses that we're entitled to the discouragement that we seek, and that you don't need the concurrence by Justice Jackson that we do fit within her hypothetical we you don't. [00:32:34] Speaker 07: some of the sales, so you don't need it for the disgorgement that we're seeking. [00:32:37] Speaker 07: We believe that the record is already replete with examples of defendants' domestic infringing uses that led to sales abroad. [00:32:45] Speaker 07: Defendants ironically want to focus where the sales took place, but that's not the domestic infringing uses that we're looking at. [00:32:51] Speaker 07: We're looking at... The sale is not the use. [00:32:56] Speaker 07: It's the other things that I've already mentioned. [00:32:59] Speaker 03: But how do you translate those other things [00:33:02] Speaker 03: into dollars of infringement. [00:33:07] Speaker 03: That suggests that you're entitled to the same amount on foreign sales that you got in the original trial. [00:33:15] Speaker 03: And that doesn't seem right to me. [00:33:18] Speaker 07: So your honor, I don't think it's the exact same amount. [00:33:21] Speaker 07: So I think that sales that are attributable to their domestic infringing uses would be included. [00:33:28] Speaker 07: But for example, if they make a sale- How do I measure that? [00:33:32] Speaker 03: You're not telling me how I measure that. [00:33:34] Speaker 07: Well, so, your honor, we'll put the evidence into Judge Fry to show all of the sales that were made to original equipment manufacturers who sell into the United States. [00:33:42] Speaker 07: We believe that all of those sales are attributable to domestic infringing conduct, but there are other sales that will not be attributable to domestic infringing conduct. [00:33:52] Speaker 03: But just because they sold to an original equipment manufacturer, [00:33:57] Speaker 03: doesn't mean, well, certainly not all of those ended up in the United States. [00:34:01] Speaker 03: Well, a lot of them ended up in Belgium and in, you know, Czechoslovakia, places like that. [00:34:10] Speaker 07: That's correct, Your Honor, but those sales are attributable to the domestic infringing conduct that took place in the United States. [00:34:16] Speaker 07: If those original equipment manufacturers didn't know that their products could be resold into the United States, they would have not bought any of those radio remote controls. [00:34:26] Speaker 07: Because as the evidence shows, these radio remote controls are used all over. [00:34:30] Speaker 07: They're swapped in, swapped out, including by the original equipment manufacturer. [00:34:34] Speaker 07: So we believe those squarely fit within this report. [00:34:36] Speaker 03: That means you have evidence in this record [00:34:40] Speaker 03: that foreign purchasers of these devices said, I would not have bought any from this defendant if I knew they could not be distributed to the United States, even though I have distribution all over the world. [00:35:00] Speaker 03: Is that what you're saying? [00:35:01] Speaker 03: There is evidence to that effect? [00:35:03] Speaker 07: So your honor, we have evidence showing that where products can be used, including in the United States, is an important factor in the decision making. [00:35:11] Speaker 07: And again, for discouragement, we don't have to show it's the only or even the main. [00:35:14] Speaker 07: We have to show there's a reasonable connection and that there is evidence in the record as to what OEMs think about when they choose which product they're gonna buy. [00:35:25] Speaker 03: Would you at least concede that merely because there's evidence [00:35:29] Speaker 03: doesn't resolve this on remand, that it would actually take a finding that that evidence establishes that generally foreign OEMs would not buy any product from the defendant if they knew they could not distribute it to the United States. [00:35:51] Speaker 03: Wouldn't that require a new finding? [00:35:53] Speaker 07: So, Your Honor, I don't think so. [00:35:55] Speaker 07: And the way that the disgorgement remedy works is we would put in evidence to Judge Fryett to show that there's a plausible connection between the domestic infringing uses and the sales that we seek to disgorge. [00:36:09] Speaker 07: That's what our burden is under the law and under the case law and how these cases play out. [00:36:16] Speaker 07: And then the burden shifts to the defendant to say, no, no. [00:36:19] Speaker 07: And it doesn't have to be the only reason or the predominant reason. [00:36:22] Speaker 07: It has to be a reasonable, plausible connection. [00:36:24] Speaker 07: The burden shifts to the defendant to say, there's no conceivable connection. [00:36:30] Speaker 07: And then Judge Fryett, in exercising his discretion as to what is fair, will do what district court judges routinely do in Lanham Act cases of disgorgement, will hear the different evidence, and he'll decide what amount of those sales is appropriate to be disgorged, what's fair, and what will meet the requirements for deterrence and to prevent the defendants from being unjustly enriched. [00:36:57] Speaker 04: Are there other questions? [00:37:00] Speaker 02: not here all right thank you council one of the luxuries of having one case to be argued as we can go a little bit over time and there we went eight minutes over time mr walker we're not going to hold you to the small amount that you had left for rebuttal so long as you're rebutting and not raising new arguments so please proceed thank you your honor [00:37:23] Speaker 01: I'll start with the idea that Steele was somehow reaffirmed or expanded and allows Lanham Act liability based on something other than a domestic use in commerce. [00:37:32] Speaker 01: I think that's just inconsistent with the courts holding that the Act applies only to cases where the accused infringing act use in commerce is domestic. [00:37:44] Speaker 00: And I think the argument is that the domestic use in commerce is advertising an infringing product, for example, in the United States, and they're arguing that that. [00:38:00] Speaker 00: Infringing use. [00:38:01] Speaker 00: resulted in profits because the original equipment manufacturers would not have bought but for those infringing uses in the United States. [00:38:13] Speaker 00: That's what I think is the argument. [00:38:16] Speaker 01: So I think that is the argument today. [00:38:18] Speaker 01: I think in their supplemental brief, they argue that something other than a domestic use in commerce is enough. [00:38:22] Speaker 01: And I think maybe they've now abandoned that. [00:38:25] Speaker 01: But with respect to we don't dispute that theoretically, you could have domestic use like advertising in the United States that leads to some sort of foreign sale. [00:38:34] Speaker 01: But there really is not evidence that domestic advertising led to foreign sales. [00:38:39] Speaker 01: in this situation. [00:38:40] Speaker 01: These are foreign companies selling to foreign companies. [00:38:43] Speaker 01: It's going to be foreign uses of the marks, if anything, that's leading to these sales. [00:38:48] Speaker 01: And what I mostly heard about what was happening in the United States that might have led to foreign sales was things like FCC certifications and having a US distributor. [00:38:56] Speaker 01: But those are not using the protected mark in commerce in the United States. [00:39:00] Speaker 01: And FCC certification is just a license to use particular frequencies. [00:39:04] Speaker 01: And so that was necessary even for the very small amount of US sales that we did. [00:39:08] Speaker 01: make. [00:39:09] Speaker 01: So I think the attempt to sort of bootstrap a whole bunch of foreign sales by German and Austrian companies based on a website that was accessible in the United States or a US distributor that might have sold 16,000 total euros worth of products in the United States is pretty far-fetched. [00:39:27] Speaker 01: There's nothing that supports that as a basis for grabbing a whole bunch of foreign sales. [00:39:32] Speaker 01: With respect to Justice Jackson's concurrence, I think I understood Judge Phillips correctly saying you can't really take that as the controlling opinion. [00:39:42] Speaker 01: You can't stitch together her opinion in the four dissenting or concurring justices with Justice Sotomayor, because the four dissenting votes would have not relied on the domestic use in commerce. [00:39:55] Speaker 01: They would have gone on domestic effects or a likelihood of confusion. [00:39:57] Speaker 01: And that is just a theory that's off the table now, not that the majority, the five justices held that a domestic use in commerce is required. [00:40:04] Speaker 01: So Justice Jackson was just given an opinion as to what might then in the next case where the later stage of this case count as a domestic use in commerce. [00:40:11] Speaker 02: So when Justice Jackson says the court has no need to elaborate today on what it means to use a trademark in commerce, nor need to discuss how a meeting guides permissible domestic application, [00:40:26] Speaker 02: She's not saying you, Justice Alito, and others went beyond what you needed to say. [00:40:35] Speaker 02: She's saying you didn't discuss it all. [00:40:38] Speaker 02: You had no need to discuss it, but I'm going to tell you a few of my thoughts about that anyway. [00:40:43] Speaker 02: Is that understanding? [00:40:44] Speaker 01: I think that's right. [00:40:45] Speaker 01: In majority opinion, it's last footnote says essentially the same thing. [00:40:48] Speaker 01: That's just not something we need to decide today. [00:40:50] Speaker 01: It's a [00:40:51] Speaker 01: It's a later question. [00:40:52] Speaker 01: And for that, Justice Jackson spoke only for herself. [00:40:55] Speaker 01: And I think if you look closely at this question, a little bit more is needed than what Justice Jackson was talking about. [00:41:02] Speaker 01: I think you actually run into exactly the problems of international friction if you impose liability on a German handbag maker just because some student ends up reselling at a garage sale in the United States. [00:41:14] Speaker 01: I think that's the sort of thing the majority's opinion actually says. [00:41:18] Speaker 01: is why we have the presumption against extraterritoriality in the first place. [00:41:22] Speaker 01: And I think it's important to realize that use in commerce is a defined term in the Lanham Act and applies for a whole host of things, not just for infringement, but also for registration and maintenance of registered trademarks. [00:41:35] Speaker 01: That's section [00:41:36] Speaker 01: 1051 is where registration and use in commerce is required. [00:41:40] Speaker 01: And we showed in our supplemental brief that for a use in commerce to be considered attributable to a foreign seller, the mere fact the third party has resold a product in the United States that it bought abroad is not a use by that foreign seller unless the resale in the United States is on behalf of the foreign seller. [00:41:59] Speaker 01: And that just didn't happen here. [00:42:00] Speaker 01: These OEMs were acting for themselves. [00:42:02] Speaker 01: They were not acting on our behalf. [00:42:04] Speaker 01: And I think that's the rule that should govern here. [00:42:06] Speaker 01: And it actually makes things very simple because then we're left with just the US sales. [00:42:12] Speaker 01: And we know exactly what that number is. [00:42:14] Speaker 01: If you were, the questions that Judge Murphy had about how do we figure out what the numbers are, it's the plaintiff's burden to identify defendant's sales. [00:42:23] Speaker 01: That's under sections 11, 17. [00:42:26] Speaker 01: Plaintiff's burden is to show our sales that are, as they said, attributable to domestic use of the mark in commerce. [00:42:31] Speaker 01: And they have not shown that it could be anything more than the 1.7 million in foreign sales that may have had a United States destination. [00:42:40] Speaker 01: It's just it's just speculation and supposition for anything beyond that. [00:42:44] Speaker 01: And I think the toy pin. [00:42:47] Speaker 01: example that Petronic has raised again is a good example of this because the testimony says that sales going back to 2003-2004, that's well before Petronic International even existed. [00:42:59] Speaker 01: And so there's nothing more than complete speculation and that is not enough to justify reaching sales. [00:43:05] Speaker 01: I'd also note that in terms of equity and figuring out how much of today's scourge, they got all of our revenues because our expert was excluded in terms of showing what the costs were. [00:43:16] Speaker 01: And so if anything that amount greatly overstates what our profits actually were and going anything above those figures, I think would be end up being a penalty. [00:43:26] Speaker 01: But 1117 says it cannot be a penalty. [00:43:28] Speaker 01: It has to be compensation. [00:43:29] Speaker 01: And that 1.7 million, again, we don't think those foreign sales come in at all. [00:43:33] Speaker 01: But if they did, they would be definitely the ceiling in terms of what could be compensation for anything attributable to the United States use of the mark in commerce. [00:43:42] Speaker 01: One small thing on trouble damages, that actually applies to damages under 1117. [00:43:48] Speaker 01: Some people like their lost profits or out of pocket sales. [00:43:52] Speaker 01: We're talking about discouragement of profits, of our profits. [00:43:56] Speaker 01: 1117 says that you can be increased or decreased if that discouragement of profits is inadequate or excessive. [00:44:03] Speaker 01: And here we can't, I don't think it's possible to say that it's excessive. [00:44:05] Speaker 01: They got all of our revenues, not just our profits. [00:44:09] Speaker 01: I also think that Hetronic, in its supplemental brief to this court, pages 17 to 18, has abandoned any request for additional relief. [00:44:17] Speaker 01: They specifically referred, they do not ask for any remand or an ability to reopen that request. [00:44:23] Speaker 01: Instead, they say that in figuring out what the disgorgement of our profits should be, it should take into account compensation they say they were entitled to seek, but declined to pursue, such as attorney's fees and travel damages. [00:44:34] Speaker 01: And so I think that rules out the possibility of them being able to reopen that on [00:44:40] Speaker 01: On rebound. [00:44:42] Speaker 01: And I think, I think that covers the things that I wanted to get you on rebuttal but I'd certainly be happy to answer any additional questions. [00:44:51] Speaker 02: Any questions from the panel. [00:44:54] Speaker 02: Now, what is the tronic to do them sue in Germany, or the end. [00:45:01] Speaker 01: Yes, so I think it's two options. [00:45:04] Speaker 01: So it claims to have marks in Germany. [00:45:06] Speaker 01: In fact, the Nova mark was recently held to be was recently held to be unregisterable and by the European Patent Office. [00:45:15] Speaker 01: But yes, they could assert their European rights for any sales that we made in foreign countries. [00:45:19] Speaker 01: That's essentially what the United with the Supreme Court said. [00:45:22] Speaker 01: In terms of, if you want protection in other territories, you get protection from those other territories and you assert your rights there. [00:45:28] Speaker 01: They could also, if they think that sales in the United States are infringing, then it actually presents evidence of actual resales that were happening in the United States that we can at most infer that maybe some happened. [00:45:39] Speaker 01: But if they could go after people who are reselling in the United States, anyone who's using that mark in a way that violates the act can be sued and so that would be another way that they could get at it. [00:45:48] Speaker 01: There's also ways of preventing importation, which doesn't lead to civil action the way this does. [00:45:54] Speaker 01: But that's also another option I believe that section 1124 [00:45:58] Speaker 01: of the Lanham Act that allows for the importation ban. [00:46:01] Speaker 01: So they have a lot of other remedies that are out there. [00:46:04] Speaker 01: But here, the fact is we are foreign companies that were mostly selling to other foreign companies. [00:46:09] Speaker 01: We tried to break into the US market, but we're spectacularly unsuccessful at it. [00:46:13] Speaker 01: We sold 16,000 euros to some folks. [00:46:15] Speaker 01: And most of the things that we sold in the United States were the Hedronik itself. [00:46:19] Speaker 01: And so unless there were further questions, we'd asked that the court vacate the judgment and remand for further proceedings. [00:46:26] Speaker 02: All right. [00:46:27] Speaker 02: That ended almost with each of you receiving almost the same amount of time. [00:46:32] Speaker 02: So perfect. [00:46:33] Speaker 02: Although I see Judge Murphy's hand go up. [00:46:35] Speaker 03: Yeah, I was muted, so I had to raise my hand. [00:46:41] Speaker 03: I don't understand, Mr. Walker, your argument of why Ms. [00:46:45] Speaker 03: Berman's argument against waiver or forfeiture of troubled damages [00:46:50] Speaker 03: attorneys fees. [00:46:52] Speaker 03: I don't understand your argument why that's not a viable response to waiver or forfeiture. [00:47:00] Speaker 01: So I think with respect to any request by them for trouble, damages or attorneys fees, I think their supplemental brief, their latest submission to this court says we're not pursuing it. [00:47:11] Speaker 01: They didn't ask for that to be sent down to the district court. [00:47:13] Speaker 01: So I would view that as an abandonment of it. [00:47:16] Speaker 03: Oh, you say there's abandonment in this court. [00:47:19] Speaker 01: Yeah, it's pages 17 to 18 of their supplemental briefing. [00:47:22] Speaker 03: What do we disagree with you? [00:47:24] Speaker 03: I was asking about abandonment in the district court. [00:47:30] Speaker 03: Why is Ms. [00:47:32] Speaker 03: Berman's argument wrong that there was not a waiver or forfeiture in the district court? [00:47:39] Speaker 01: Yeah, I think in that situation, they did not pursue it. [00:47:42] Speaker 01: I mean, they haven't appealed the judgment themselves to seek additional relief beyond what they got. [00:47:48] Speaker 01: And I think at the end of the day, their submissions to this court are the clearest in terms of they're not pursuing that. [00:47:54] Speaker 04: I understand. [00:47:57] Speaker 02: Thank you, counsel, for your arguments.