Herman Miller, Inc v. Palazzetti Imports

Summarize
Check Treatment

Related Cases

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  +HUPDQ0LOOHU,QFY 1RV 3XUVXDQW WR 6L[WK &LUFXLW 5XOH  3DOD]]HWWL,PSRUWV (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU ([SRUWV,QF )LOH 1DPH DS LQMXQFWLRQ LW ZLOO EH IUHH WR VHHN D PRGLILFDWLRQ RI WKH 81,7('67$7(6&28572)$33($/6 LQMXQFWLRQIURPWKHGLVWULFWFRXUWDWWKDWWLPHl,ELG )257+(6,;7+&,5&8,7 8QOLNHLQ+HUHjVsRKQQ\,,3DOD]]HWWLLVDOUHDG\RSHUDWLQJ BBBBBBBBBBBBBBBBB LQ D VWDWH WKDW GRHV QRW UHFRJQL]H D SRVWPRUWHP ULJKW RI SXEOLFLW\0RUHRYHULWVSULQFLSDOSODFHRIEXVLQHVVLVLQWKDW VWDWH  ,W ZRXOG EH XQMXVW WR LPSRVH 0LFKLJDQ ODZ RQ 3DOD]]HWWLjVRSHUDWLRQVLQ1HZL@IWKHGHIHQGDQWVKRXOGKHUHDIWHUGHFLGH +HUPDQ0LOOHUDSSHDOVWKHGLVPLVVDORILWVWUDGHGUHVVDQG WKDWLWZDQWVWRXVHWKHSKUDVHLQDVWDWH RWKHUWKDQ0LFKLJDQ IDOVH DGYHUWLVLQJ FODLPV DV ZHOO WKH GDPDJHV OLPLWDWLRQ ZKHUH LW EHOLHYHV VXFK XVH ZRXOG EH OHJDO EXW IRU WKH LPSRVHGE\WKHGLVWULFWFRXUWRQ+HUPDQ0LOOHUjVWUDGHGUHVV FODLPV,QDGGLWLRQLWFKDOOHQJHVDSRUWLRQRIWKHSHUPDQHQW LQMXQFWLRQ HQWHUHG E\ WKH GLVWULFW FRXUW DJDLQVW 3DOD]]HWWL ZKLFKDOORZV3DOD]]HWWLWRmIDLUO\LGHQWLI\l&KDUOHVDQG5D\ (DPHVDVWKHRULJLQDOGHVLJQHUVRIWKHIXUQLWXUHUHSURGXFHGE\  ,Q DGGLWLRQ LQ (OYLVO\ W@KHRYHUZKHOPLQJPDMRULW\UXOH IXUQLWXUH GXULQJ WKHLU UHODWLRQVKLS ZLWK +HUPDQ 0LOOHU XQGHU HLWKHU VWDWXWH RU FRPPRQ ODZ LV WKDW WKH ULJKW RI LQFOXGLQJ D FKDLU NQRZQ FROORTXLDOO\ DV WKH mSRWDWR FKLS SXEOLFLW\ LV GHVFHQGLEOH SURSHUW\ DQG KDV DQ XQFRQGLWLRQDO FKDLUlDQGDWDEOHNQRZQDVWKHmVXUIERDUGWDEOHl,Q SRVWPRUWHPGXUDWLRQl0&$57+< VXSUDQDW† &KDUOHVDQG5D\(DPHVGHVLJQHGDORXQJHFKDLUDQGRWWRPDQ 0F&DUWK\QRWHVWKDWIRXUWHHQVWDWHVKDYHUHFRJQL]HGDSRVW RIOHDWKHUDQGZRRG+HUPDQ0LOOHUFODLPVWKDWWKLVLVmWKH PRUWHP ULJKW RI SXEOLFLW\ XQGHU VWDWXWH RU FRPPRQ ODZ PRVW IDPRXVl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mRYHUZKHOPLQJPDMRULW\UXOHl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mSULYDF\l VWDWXWH 1HEUDVND  7KHHGJHVRIHDFKPROGHGVKHOOEHLQJH[SRVHGIURP DQG 9LUJLQLD )RXU VWDWHV UHFRJQL]H D SRVWPRUWHP ULJKW RI SXEOLFLW\ XQGHU FRPPRQ ODZ *HRUJLD 1HZ sHUVH\ 7HQQHVVHH DQG 8WDK $00 WKHIURQWRIWKHORXQJHFKDLUDQGRWWRPDQ 0 &$57+< 8:57, Q DW †  7HQQHVVHH UHFRJQL]HV ERWK D VWDWXWRU\ DQG FRPPRQ ODZ ULJKW RI SXEOLFLW\   (DFK RI WKH PROGHG VKHOOV EHLQJ VKDSHG OLNH D  IODWWHQHGm8l 7KHVH VWDWHV DUH ,OOLQRLV 800  ,// &203 67$7 †  DQG 2KLR 800 2+,2 5(9 &2'( $11 †   (DFKPROGHGVKHOOZLWKFXVKLRQHGXSKROVWHU\  2XU UHYLHZ RI FDVHV DQG VWDWXWHV LQGLFDWHV RQO\ WZR VWDWHV WKDW KDYH   (DFK PROGHG VKHOO KDYLQJ mEXWWRQVl WKDW FUHDWH H[SOLFLWO\ UHIXVHG WR UHFRJQL]H D SRVWPRUWHP ULJKW RI SXEOLFLW\ 1HZ SHUPDQHQWFUHDVHVLQWKHXSKROVWHU\ K@LV QXPEHURIVWDWHVWKDWKDYHUHFRJQL]HGDSRVWPRUWHPULJKWRI PRVWIDPRXVGHVLJQZDVDVRIWOHDWKHUXSKROVWHUHGVZLYHOWLOW SXEOLFLW\,QGHHGm>D@VFDVHODZRQ>WKH@ULJKW>RISXEOLFLW\@ ORXQJHFKDLUDQGRWWRPDQl LV H[FHHGLQJO\ UDUH    DQG EHFDXVH RI WKH JHQHUDO FRQVWLWXWLRQDOSROLF\RIPDLQWDLQLQJXQLIRUPLW\LQLQWHOOHFWXDO +HUPDQ0LOOHUDOVRSUHVHQWVDIILGDYLWVRIGHVLJQH[SHUWV SURSHUW\ ODZV FRXUWV W\SLFDOO\ JLYH DWWHQWLRQ WR WKH HQWLUH KLVWRULDQV DXWKRUV DQG HPSOR\HHV RI +HUPDQ 0LOOHU  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF UHFRJQL]LQJ+HUPDQ0LOOHUDVWKHRQO\VRXUFHIRUWKHORXQJH QDPH DQG SHUVRQDOLW\l  +HUHjV sRKQQ\ ,  )G DW  FKDLUDQGRWWRPDQ7KHVHDIILGDYLWVDWWHVWWRWKHXQLTXHQDWXUH TXRWLQJ0HPSKLV'HY)GDW 7KHIDFWWKDWWKH DQGGHVLJQRIWKHORXQJHFKDLUDQGRWWRPDQDQGWKHIDFWWKDW FRXUWXVHGWKHZRUGVmGXULQJOLIHlGRHVQRWSUHYHQWXVIURP FXVWRPHUVDVVRFLDWHWKH(DPHVORXQJHFKDLUDQGRWWRPDQZLWK FRQFOXGLQJWKDWWKHGLVWULFWFRXUWGLGQRWHUULQFRQFOXGLQJWKDW +HUPDQ 0LOOHU  +HUPDQ 0LOOHU DOVR RIIHUV HYLGHQFH IURP WKHULJKWRISXEOLFLW\LVGHVFHQGLEOHXQGHU0LFKLJDQODZ YDULRXVSXEOLFDWLRQVUHJDUGLQJRZQHUVRIWKH(DPHVORXQJH FKDLUDQGRWWRPDQ,QRQHLQWHUYLHZ,QGLUD*DQGKLVWDWHGWKDW $OWKRXJKWKHULJKWRISXEOLFLW\LVDQRXWJURZWKRIWKHULJKW VKHZRXOGVLWLQKHUm(DPHVFKDLUlUHIHUULQJWRKHU+HUPDQ RISULYDF\WKHWZRULJKWVmSURWHFWIXQGDPHQWDOO\GLIIHUHQW 0LOOHU(DPHVORXQJHFKDLUDQGRWWRPDQ DOWKRXJKVKHGLGQRW LQWHUHVWV DQG PXVW EH DQDO\]HG VHSDUDWHO\l  6HH +HUHjV PHQWLRQ+HUPDQ0LOOHUVSHFLILFDOO\ 2WKHUDUWLFOHVGHVFULEH sRKQQ\ ,  )G DW   7KH ULJKW RI SULYDF\ ZKLFK FHOHEULWLHVVXFKDV%DUEDUD:DOWHUVZKRRZQ+HUPDQ0LOOHU SURWHFWVWKHULJKWWRDQLQGLYLGXDOjVVHOIHVWHHPDQGGLJQLW\ (DPHV FKDLUV DQG RWWRPDQV VRPH VSHFLILFDOO\ PHQWLRQ W\SLFDOO\ HQGV DW GHDWK  6HH HJ 0DULWRWH Y 'HVLOX +HUPDQ 0LOOHU DQG RWKHUV GR QRW   )XUWKHUPRUH +HUPDQ 3URGXFWLRQV ,QF  )G   WK &LU  0LOOHU RIIHUV DUWLFOHV PHQWLRQLQJ WKDW SURGXFHUV RI WZR UHMHFWLQJULJKWRISULYDF\FODLPEURXJKWXQGHU,OOLQRLVODZE\ WHOHYLVLRQVHULHVWKHKLJKO\UDWHG)UDVLHUDQGWKHOHVVKLJKO\ UHODWLYHVRI$O&DSRQHDQGVWDWLQJWKDWm>L@WLVDQRPDORXVWR UDWHG,W 7DNHV 7ZR DFTXLUHG +HUPDQ 0LOOHUPDQXIDFWXUHG VSHDN RI WKH SULYDF\ RI D GHFHDVHG SHUVRQl  /XJRVL Y (DPHVORXQJHFKDLUVDQGRWWRPDQVWRIXUQLVKWKHVHWVRIWKHLU 8QLYHUVDO3LFWXUHV3G &DO  m,WLVZHOO VKRZV VHWWOHGWKDWWKHULJKWRISULYDF\LVSXUHO\DSHUVRQDORQHLW FDQQRW EH DVVHUWHG E\ DQ\RQH RWKHU WKDQ WKH SHUVRQ ZKRVH )LQDOO\ +HUPDQ 0LOOHU RIIHUV HYLGHQFH RI VSHFLILF SULYDF\ KDV EHHQ LQYDGHG WKDW LV SODLQWLII PXVW SOHDG DQG UHFRJQLWLRQ RI WKH GLVWLQFWLYHQHVV RI WKH ORXQJH FKDLU DQG SURYH WKDW KLV SULYDF\ KDV EHHQ LQYDGHGl  5(67$7(0(17 RWWRPDQ,QWKH+HUPDQ0LOOHU(DPHVORXQJHFKDLUDQG 6(&21' 2) 72576 †    m([FHSW IRU WKH RWWRPDQ ZHUH GHFODUHG DPRQJ WKH m2QH +XQGUHG *UHDWHVW DSSURSULDWLRQRIRQH VQDPHRUOLNHQHVVDQDFWLRQIRULQYDVLRQ 3URGXFWVRI$OO7LPHlE\DJURXSRIGHVLJQHUV,QWKH RI SULYDF\ FDQ EH PDLQWDLQHG RQO\ E\ D OLYLQJ LQGLYLGXDO &RUSRUDWH 'HVLJQ )RXQGDWLRQ D QRQSURILW UHVHDUFK DQG ZKRVHSULYDF\LVLQYDGHGl  HGXFDWLRQDORUJDQL]DWLRQLQFOXGHGLQWKHSUHPLHUHLVVXHRILWV sRXUQDORI%XVLQHVV 'HVLJQDVLOKRXHWWHRIWKHORXQJHFKDLU 7KHULJKWRISXEOLFLW\KRZHYHULVDULJKWWKDWSURWHFWVWKH DV RQH RI VL[WHHQ GLVWLQFWLYH FRUSRUDWH mVKDSHVl  7KH SHFXQLDU\ULJKWDQGLQWHUHVWLQWKHFRPPHUFLDOH[SORLWDWLRQRI GHFODUDWLRQZDVPDGHLQWKHFRQWH[WRIDTXL]LQZKLFKUHDGHUV DFHOHEULW\jVLGHQWLW\6HH+HUHjVsRKQQ\,)GDW ZHUHDVNHGWRPDWFKWKHVKDSHZLWKLWVLGHQWLI\LQJFRPSDQ\ 7KHVHLQWHUHVWVUHIOHFWSURSHUW\ULJKWVDVRSSRVHGWRGLJQLWDU\ 7KHFRUUHFWPDWFKIRUWKHVLOKRXHWWHRIWKHORXQJHFKDLUZDV m(DPHVORXQJHFKDLUl([SODLQLQJWKHDEVHQFHRIm+HUPDQ 0LOOHUlIURPWKHDQVZHUWKHSXEOLVKHURIWKHTXL]VWDWHGm>L@Q  +HUHjV sRKQQ\ , IDFW WKH ($0(6 ORXQJH FKDLU DQG RWWRPDQ LV VR FORVHO\ :H QRWH WKDW DOWKRXJK WKH FRXUW XVHG WKH ZRUGV mGXULQJ OLIHl WKH FRXUW ZDV FRQVLGHULQJ WKH ULJKWV RI SXEOLFLW\ RI sRKQQ\ DVVRFLDWHG ZLWK +HUPDQ 0LOOHU ,QF WKDW WKH FKDLU ZDV &DUVRQ ZKR ZDV DQG LV VWLOO OLYLQJ DQG ZDV QRW VSHFLILFDOO\ FRQVLGHULQJ UHIHUUHG WR DV WKH ($0(6 ORXQJH FKDLU  7KLV V\PERO RI WKH TXHVWLRQ RI ZKHWKHU D SRVWPRUWHP ULJKW RI SXEOLFLW\ H[LVWV XQGHU +HUPDQ0LOOHUZDVVHOHFWHGRYHUWKHIDPRXV+HUPDQ0LOOHU 0LFKLJDQ ODZ ,Q DGGLWLRQ WKH FRXUW ZDV TXRWLQJ IURP 0HPSKLV m0l GHVLJQ DV DQ LGHQWLI\LQJ FRUSRUDWH V\PEROl  $OVR 'HYHORSPHQW  D FDVH LQWHUSUHWLQJ 7HQQHVVHH ODZ WKDW VXEVHTXHQWO\ ZDV UHMHFWHG E\ WKH 7HQQHVVHH FRXUWV  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF 0LFKLJDQ VKRXOG DSSO\  $OWKRXJK WKH GLVWULFW FRXUW LQFOXGHGLQWKHTXL]ZHUHWKH&%6H\HWKH&RFD&RODERWWOH UHFRJQL]HGWKDW0LFKLJDQFRXUWVKDGQRWDGGUHVVHGHLWKHUWKH WKH $SSOH FRPSXWHU DSSOH WKH 0F'RQDOGj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j LWHPV DQG DQWLTXHV DQG WKDW D VWURQJ VHFRQGDU\ DIIj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jPDUNHWIRUFKDLUV 3UHVOH\,QWjO0HPj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m(DPHVFKDLUlFRXOGUHIHUWRHLWKHU0RUHRYHUWKH DVNHG +HUPDQ 0LOOHU KRZ LW PLJKW VXEVHTXHQWO\ VHOO LWV WHVWLPRQ\LQGLFDWHVWKDW3DOD]]HWWLHPSOR\HHVWROGFXVWRPHUV UHSURGXFWLRQ RI WKH ORXQJH FKDLU DQG RWWRPDQ ZLWKRXW LQ WKHLU VKRZURRPV WKDW 3DOD]]HWWLjV SURGXFWV ZHUH LQIULQJLQJ RQ WKH ($0(6 WUDGHPDUN  +HUPDQ 0LOOHUjV UHSURGXFWLRQV  7KH RQO\ HYLGHQFH WKDW +HUPDQ 0LOOHU LQWHOOHFWXDOSURSHUW\FRXQVHOUHVSRQGHGµLWLVSURSHUWRUHIHU SURYLGHV WKDW LQGLFDWHVSRVVLEOH GHFHSWLRQ OHW DORQH DFWXDO WRDFKDLUGHVLJQHGE\&KDUOHV(DPHV$SSURSULDWHXVHRI0U GHFHSWLRQ RU D WHQGHQF\ WR GHFHLYH  LV WKH WHVWLPRQ\ RI D (DPHVj>VLF@QDPHZRXOGEHDVIROORZVm3DWWHUQHGDIWHUD +HUPDQ 0LOOHU HPSOR\HH DW +HUPDQ 0LOOHUjV /RV $QJHOHV FKDLU GHVLJQHG E\ &KDUOHV (DPHVjl  ,Q DGGLWLRQ WKHUH LV VKRZURRPZKRZDVDVNHGE\DFXVWRPHULI+HUPDQ0LOOHUjV HYLGHQFHRIOHWWHUVVHQWE\+HUPDQ0LOOHUjVFRXQVHOWRDWOHDVW (DPHV ORXQJH FKDLU DQG RWWRPDQ ZDV WKH VDPH DV RQH WKH WKUHH IXUQLWXUH PDQXIDFWXUHUV DQG RQH GLVWULEXWRU WKDW DOVR FXVWRPHU KDG VHHQ LQ 3DOD]]HWWLjV VKRZURRP  7KH GLVWULFW ZHUHNQRZQWREHVHOOLQJUHSURGXFWLRQVRIWKH(DPHVORXQJH FRXUW SURSHUO\ JUDQWHG MXGJPHQW DV D PDWWHU RI ODZ WR FKDLUDQGRWWRPDQ,QHDFKFDVH+HUPDQ0LOOHUDVNHGWKDW 3DOD]]HWWLDVWRWKLVLVVXH WKHHQWLW\QRWXVHWKH($0(6WUDGHPDUN ,9$QDO\VLV3DOD]]HWWLjV&URVV$SSHDO & 3DOD]]HWWLDQG,WV%XVLQHVV 3DOD]]HWWLUDLVHVWZRLVVXHVRQFURVVDSSHDOERWKUHODWLQJ 3DOD]]HWWL LV D 1HZ V@XFFHVVIXO ,Q +HUPDQ 0LOOHUjV ILUVW OHWWHU WR 3DOD]]HWWL +HUPDQ SODLQWLIIV XVXDOO\ >XVH VXUYH\V WR@ SUHVHQW HYLGHQFH RI WKH 0LOOHUjVFRXQVHOGHPDQGHGWKDW3DOD]]HWWLmLPPHGLDWHO\FHDVH SXEOLFjVUHDFWLRQl,ELG FLWLQJsRKQVRQ sRKQVRQ0HUFN DQGGHVLVWDOOIXUWKHUXVHRIWKHGHVLJQDWLRQ($0(6LQ &RQVXPHU 3KDUPV &R Y 5KRQH3RXOHQF 5RUHU 3KDUPV \RXU DGYHUWLVLQJ  :H DOVR GHPDQG WKDW \RX LPPHGLDWHO\ ,QF)G G&LU $SODLQWLIIVHHNLQJ FHDVH DQG GHVLVW IURP DOO IXUWKHU VDOH RI WKH JRRGV ZKLFK LQMXQFWLYHUHOLHIIRUIDOVHDGYHUWLVLQJIDFHVDORZHUVWDQGDUGRI VLPXODWHWKH($0(6GHVLJQVl$IWHUDUHVSRQVHIURP mVKRZLQJRQO\WKDWWKHGHIHQGDQWjVUHSUHVHQWDWLRQVDERXWLWV 3DOD]]HWWLLQGLFDWLQJWKDWLWZDVPDNLQJmIDLUXVHlRIWKHQDPH SURGXFWKDYHDWHQGHQF\WRGHFHLYHFRQVXPHUVl&HUWLILHG m(DPHVl+HUPDQ0LOOHUUHVSRQGHGZLWKDOHWWHUVWDWLQJWKDW 3RGLDWULF 3K\VLFLDQV  )G DW  TXRWLQJ 0D[ mLWPD\EHSRVVLEOHWRUHVROYHWKLVGLVSXWHVLPSO\E\KDYLQJ 'DHWZ\OHU&RUSY,QSXW*UDSKLFV,QF)6XSS \RXLQGLFDWHFOHDUO\LQ\RXUOLWHUDWXUHWKDW\RXUSURGXFWVDUHLQ  ('3D  LQWHUQDOTXRWDWLRQVRPLWWHG  QRZD\DVVRFLDWHGZLWK+HUPDQ0LOOHU,QFDQGDUHQRWWKH DXWKRUL]HG RU OLFHQVHG YHUVLRQV RI &KDUOHV (DPHVj >VLF@ 7KHGLVWULFWFRXUWSURSHUO\JUDQWHGMXGJPHQWDVDPDWWHURI GHVLJQVl ODZWR3DOD]]HWWLDVWR+HUPDQ0LOOHUjVFODLPVIRUGDPDJHV DQG LQMXQFWLYH UHOLHI IRU IDOVH DGYHUWLVLQJ  +HUPDQ 0LOOHU 3DOD]]HWWLjVFRXQVHOUHVSRQGHGWR+HUPDQ0LOOHUjVVHFRQG GRHVQRWSURYLGHDQ\FRQVXPHUVXUYH\VWRVXSSRUWLWVIDOVH OHWWHUE\VWDWLQJWKDW3DOD]]HWWLGLGQRWLQWHQGmWRFKDQJHLWV DGYHUWLVLQJFODLPV,QVWHDGLWUHOLHVRQWZRFXVWRPHUOHWWHUV SUDFWLFHVZKHUHLWLVQRWOHJDOO\UHTXLUHGWRGRVRl+HUPDQ WR 3DOD]]HWWL UHIHUULQJ WR 3DOD]]HWWLjV ORXQJH FKDLU DQG 0LOOHU WKHQ VHQW D WKLUG OHWWHU WR 3DOD]]HWWL UHTXHVWLQJ WKDW RWWRPDQ DV DQ m(DPHV FKDLU DQG RWWRPDQl RU DQ m(DPHV 3DOD]]HWWLLQGLFDWHLQLWVPDUNHWLQJPDWHULDOWKDWWKHmSURGXFW FKDLUl DV ZHOO DV WHVWLPRQ\ IURP +HUPDQ 0LOOHU DQG LVLQIDFWDUHSURGXFWLRQDQGQRWDSURGXFWPDQXIDFWXUHGE\ 3DOD]]HWWL HPSOR\HHV FRQFHUQLQJ UHSUHVHQWDWLRQV PDGH WR WKH RIILFLDO OLFHQVHH +HUPDQ 0LOOHU ,QFl  3DOD]]HWWL FXVWRPHUVZKRFDPHWR3DOD]]HWWLjVVKRZURRPVDWUDGHVKRZ UHVSRQGHG E\ D OHWWHU GDWHG sXQH   LQ ZKLFK LW DQGD+HUPDQ0LOOHUVKRZURRP7KLVHYLGHQFHIDOOVIDUVKRUW FRQWLQXHGWRUHIXVHWRDFFHGHWR+HUPDQ0LOOHUjVUHTXHVWV RIGHPRQVWUDWLQJWKDWDmVLJQLILFDQWSRUWLRQlRIWKHFRQVXPHU DQGUHSHDWHGWKDWLWZDVPDNLQJIDLUXVHRIWKHQDPHm(DPHVl SRSXODWLRQZDVGHFHLYHGE\3DOD]]HWWLjVDGYHUWLVLQJZKLFKLV QHFHVVDU\ IRU GDPDJHV  ,W DOVR IDLOV WR PHHW WKH ORZHU +HUPDQ0LOOHUGLGQRWUHVSRQGWR3DOD]]HWWLjVILQDOOHWWHURI VWDQGDUGRIVKRZLQJDWHQGHQF\WRGHFHLYHZKLFKLVQHFHVVDU\ sXQH7KLQNLQJWKDW+HUPDQ0LOOHUHLWKHUDEDQGRQHG IRULQMXQFWLYHUHOLHI LWVFODLPVRUUHFRJQL]HGWKHYDOLGLW\RI3DOD]]HWWLjVSRVLWLRQ 3DOD]]HWWLFRQWLQXHGWRVHOOWKHORXQJHFKDLUDQGRWWRPDQDQG 7KH OHWWHUV VLPSO\ PDNH JHQHUDO UHIHUHQFH WR DQ m(DPHV RWKHU(DPHVGHVLJQHGIXUQLWXUHDQGWRDGYHUWLVHWKHORXQJH FKDLUDQGRWWRPDQlDQGm(DPHVFKDLUlDQGJLYHQRLQGLFDWLRQ FKDLUDQGRWWRPDQLQ7KH1HZGHIHQGDQWjV@ LQIULQJHPHQW KDG ULSHQHG LQWR D SURYDEOH DPDWWHURIODZRQ+HUPDQ0LOOHUjVIDOVHDGYHUWLVLQJFODLP FODLPl  HPSKDVLVDGGHG +HUPDQ0LOOHUWDNHVLVVXHZLWK 7KHPRWLRQZDVJUDQWHGIURPWKHEHQFK WKH GLVWULFW FRXUWjV FRQFOXVLRQ WKDW mDQ\l LQYHVWLJDWLRQ  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF 2Q 2FWREHU   WKH MXU\ UHWXUQHG D YHUGLFW DJDLQVW GLVWULFWFRXUW6HH'DGG\jVsXQN\)GDW:KHQWKH 3DOD]]HWWLRQWKHLVVXHRIOLDELOLW\DVWRWKHUHPDLQLQJFODLPV UHFRUG EHIRUH WKH GLVWULFW FRXUW RQ D PRWLRQ IRU VXPPDU\ ILQGLQJWKDW  3DOD]]HWWLKDGLQIULQJHG+HUPDQ0LOOHUjV MXGJPHQWVKRZVIDFWXDOLVVXHVLQGLVSXWHWKDWFRXOGDIIHFWWKH ($0(6 WUDGHPDUN   3DOD]]HWWL KDG GLOXWHG +HUPDQ HTXLW\RIWKHDSSOLFDWLRQRIODFKHVWREDUWKHFODLPWKHGLVWULFW 0LOOHUjV ($0(6 WUDGHPDUN   3DOD]]HWWL KDG HQJDJHG LQ FRXUWPXVWGHQ\WKHPRWLRQDQGSHUPLWWKHSDUWLHVWRSUHVHQW XQIDLUFRPSHWLWLRQDQG  3DOD]]HWWLKDGYLRODWHG+HUPDQ WKHLU SURRI  6HH :DWNLQV Y 1RUWKZHVWHUQ 2KLR 7UDFWRU 0LOOHUjV ULJKW RI SXEOLFLW\ LQ WKH QDPHV DQG OLNHQHVVHV RI 3XOOHUV$VVjQ,QF)G WK&LU  &KDUOHV(DPHVDQG5D\(DPHV $QDO\VLV 2Q2FWREHUWKHGLVWULFWFRXUWLVVXHGDSHUPDQHQW LQMXQFWLRQHQMRLQLQJ3DOD]]HWWLIURP  XVLQJm(DPHVlm& 7KHGLVWULFWFRXUWJUDQWHG3DOD]]HWWLVXPPDU\MXGJPHQWDV (DPHVlm&KDUOHV(DPHVlRUm5D\(DPHVlDVDWUDGHPDUN WRODFKHVZLWKUHVSHFWWRDOORI+HUPDQ0LOOHUjVFODLPV7KLV  DFWVFDXVLQJGLOXWLRQRIWKH($0(6WUDGHPDUNDQG  ILQGLQJ EDUUHG +HUPDQ 0LOOHU IURP REWDLQLQJ SUHVXLW XVLQJWKHQDPHVDQGOLNHQHVVHVRI&KDUOHVRU5D\(DPHVLQ PRQHWDU\GDPDJHVUHODWHGWRWKHVHFODLPV+HUPDQ0LOOHU FRQQHFWLRQZLWK3DOD]]HWWLjVIXUQLWXUH7KHLQMXQFWLRQDSSOLHG RQO\ DSSHDOV WKH GLVWULFW FRXUWjV ILQGLQJ RI ODFKHV DV WR LWV QDWLRQZLGH7KHSHUPDQHQWLQMXQFWLRQSHUPLWWHG3DOD]]HWWLWR WUDGHGUHVVFODLPV mIDLUO\ LGHQWLI\l &KDUOHV DQG 5D\ (DPHV DV WKH RULJLQDO GHVLJQHUV RI IXUQLWXUH DIWHU ZKLFK 3DOD]]HWWL SDWWHUQHG RU /DFKHVLVWKHmQHJOLJHQWDQGXQLQWHQWLRQDOIDLOXUHWRSURWHFW UHSURGXFHGLWVRZQIXUQLWXUH RQHjV ULJKWVl  (OYLVO\ W@KH ULJKW WR SURKLELW XQDXWKRUL]HG FRPPHUFLDO H[SORLWDWLRQRIRQH VLGHQWLW\DOORZVDSHUVRQWRSUHYHQW KDUPIXORUH[FHVVLYHFRPPHUFLDOXVHWKDWPD\GLOXWHWKH YDOXH RI WKH LGHQWLW\ $OWKRXJK SURRI RI GHFHSWLRQ RU FRQIXVLRQ LV QRW DQ HOHPHQW RI OLDELOLW\ XQGHU WKLV  6HFWLRQ WKH ULJKW RI SXEOLFLW\ LQGLUHFWO\ DIIRUGV SURWHFWLRQDJDLQVWIDOVHVXJJHVWLRQVRIHQGRUVHPHQWRU 7UDGH GUHVV LVVXHV IROORZ WKH VDPH UXOHV DQG ODZV DV WUDGHPDUN LVVXHV 6HH 7ZR 3HVRV ,QF Y 7DFR &DEDQD ,QF  86    6WHYHQV s FRQFXUULQJ m>7@KH &RXUW LQWHUSUHWV >†  D @ DV VSRQVRUVKLS KDYLQJ FUHDWHG D IHGHUDO FDXVH RI DFWLRQ IRU LQIULQJHPHQW RI XQUHJLVWHUHG WUDGHPDUN RU WUDGH GUHVV DQG FRQFOXGHV WKDW VXFK D PDUN RU WUDGH GUHVV 5(67$7(0(17 7+,5' 2) 81)$,5 &203(7,7,21†FPWF VKRXOG UHFHLYH HVVHQWLDOO\ WKH VDPH SURWHFWLRQ DV WKRVH WKDW DUH   UHJLVWHUHGl  VHH DOVR s 7+20$6 0&&$57+< 0&&$57+< 21 75$'(0$5.6 81)$,5 &203(7,7,21 †  WK HG  m7KH FOHDU 7KHGLVWULFWFRXUWOLPLWHG3DOD]]HWWLjVULJKWVDSSURSULDWHO\ PHVVDJH RI WKH %,.4 ,s,3, FDVH LV WKDW WKH JHQHUDO UXOHV RI WUDGHPDUN YDOLGLW\ DQG LQIULQJHPHQW DUH WR EH DSSOLHG WR LQIULQJHPHQW FODLPV EURXJKW LQOLJKWRIWKHSXUSRVHVRIWKHULJKWRISXEOLFLW\E\SUHYHQWLQJ XQGHU /DQKDP $FW †  D l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jVUHSURGXFWLRQVRIWKHVH SURWHFWDELOLW\DQDO\VLVLQDWUDGHGUHVVFODLPEDVHGRQSURGXFW RWKHUSLHFHVRIIXUQLWXUH+HUPDQ0LOOHUKDVQRWDVVHUWHGWUDGH GHVLJQKDVFKDQJHGFRQVLGHUDEO\$WWKHWLPHRIWKHGLVWULFW GUHVV ULJKWV LQ WKHVH GHVLJQV  5HFRJQL]LQJ WKLV IDFW WKH FRXUWjVGHFLVLRQWUDGHGUHVVZDVSURWHFWDEOHLILWZDVSURYHQ GLVWULFWFRXUWDOORZHG3DOD]]HWWLDOLPLWHGDELOLW\WRDFFXUDWHO\ HLWKHU WR EH LQKHUHQWO\ GLVWLQFWLYH RU WR KDYH DFTXLUHG LGHQWLI\WKHVHSLHFHVRIIXUQLWXUHDVKDYLQJEHHQRULJLQDOO\ GLVWLQFWLYHQHVVWKURXJKVHFRQGDU\PHDQLQJ6HH7ZR3HVRV GHVLJQHGE\&KDUOHVDQG5D\(DPHV 86DW7KHGLVWULFWFRXUWGHWHUPLQHGWKDW+HUPDQ 0LOOHUjV (DPHV ORXQJH FKDLU DQG RWWRPDQ QHLWKHU ZHUH 7KHGLVWULFWFRXUWDOVRZDVIRUFHGWREDODQFH3DOD]]HWWLjV LQKHUHQWO\GLVWLQFWLYHQRUKDGDFTXLUHGVHFRQGDU\PHDQLQJ IDLUXVHULJKWVLQWUDGHPDUNZLWK+HUPDQ0LOOHUjVULJKWVRI 7KHUHIRUHWKHFRXUWJUDQWHGVXPPDU\MXGJPHQWWR3DOD]]HWWL SXEOLFLW\LQWKHQDPHVDQGOLNHQHVVHVRIWKH(DPHVHV8QGHU RQ+HUPDQ0LOOHUjVWUDGHGUHVVFODLP WKHGRFWULQHRImIDLUXVHlWKHKROGHURIDWUDGHPDUNFDQQRW SUHYHQWRWKHUVIURPXVLQJWKHZRUGWKDWIRUPVWKHWUDGHPDUN ,Q:DO0DUW6WRUHV,QFY6DPDUD%URWKHUV86 LQLWVSULPDU\RUGHVFULSWLYHVHQVH    WKH 6XSUHPH &RXUW KHOG WKDW mLQ DQ DFWLRQ IRU LQIULQJHPHQWRIXQUHJLVWHUHGWUDGHGUHVVXQGHU† D RIWKH 7KHRQO\ULJKWRIH[FOXVLRQWKDWWUDGHPDUNODZFUHDWHVLQ /DQKDP$FWDSURGXFWjVGHVLJQLVGLVWLQFWLYHDQGWKHUHIRUH DGHVFULSWLYHZRUGLVLQWKHVHFRQGDU\QHZmWUDGHPDUNl SURWHFWDEOH RQO\ XSRQ D VKRZLQJ RI VHFRQGDU\ PHDQLQJl PHDQLQJ RI WKH ZRUG WKDW SODLQWLII KDV FUHDWHG  7KH HPSKDVHVDGGHG 7KLVGHFLVLRQUHVROYHGDFLUFXLWVSOLWLQ RULJLQDOGHVFULSWLYHSULPDU\PHDQLQJLVDOZD\VDYDLODEOH ZKLFK WKH FLUFXLWV GLIIHUHG DV WR ZKLFK ODZ WR DSSO\ WR IRUXVHE\RWKHUVWRGHVFULEHWKHLUJRRGVLQWKHLQWHUHVWRI GHWHUPLQH ZKHWKHU WUDGH GUHVV ZDV LQKHUHQWO\ GLVWLQFWLYH IUHHFRPSHWLWLRQ 6RPHFRXUWVDSSOLHGGLIIHUHQWWHVWVGHSHQGLQJRQZKHWKHUWKH WUDGHGUHVVZDVIRUWKHSDFNDJHFRQWDLQLQJWKHSURGXFWRUIRU 0&&$57+<VXSUDQDW†&RXUWVKDYHUHFRJQL]HG WKHSURGXFWLWVHOI3DUWRIWKLVFRQIXVLRQZDVDUHVXOWRIWKH WKDW D GHIHQGDQW IRXQG OLDEOH IRU WUDGHPDUN YLRODWLRQV VWLOO IDFWWKDWLWZDVRQO\LQWKDWWKH6XSUHPH&RXUWKHOGWKDW UHWDLQVDULJKWmWRLGHQWLI\WKHSURGXFWLWKDVFRSLHGVRORQJ WUDGHGUHVVOLNHDWUDGHPDUNFRXOGEHLQKHUHQWO\GLVWLQFWLYH DVQRPLVUHSUHVHQWDWLRQLVPDGHDQGQRFRQIXVLRQLVJHQHUDWHG 6HH7ZR3HVRV86DW DVWRWKHVRXUFHVSRQVRUVKLSRULGHQWLI\RIWKHHUDWV]JRRGVl +\SHUWKHUP,QFY3UHFLVLRQ3URGV,QF)G ,Q 6DPDUD %URWKHUV WKH 6XSUHPH &RXUW QRWHG VHYHUDO VW &LU   VHH DOVR 3HEEOH %HDFK &R Y 7RXU  , UHDVRQV ZK\ WKH LQKHUHQWO\ GLVWLQFWLYH WHVW VKRXOG QRW EH /LPLWHG)G WK&LU 7KHUHIRUHm>D@V DSSOLHGLQWUDGHGUHVVFDVHVEDVHGRQSURGXFWGHVLJQ7KH ORQJ DV DQ LPLWDWLRQ LV PDUNHWHG DV VXFK LWV YRWDULVWV PD\ &RXUWQRWHGWKHIDFWWKDWSURGXFWGHVLJQmDOPRVWLQYDULDEO\ UHIHU GHVFULSWLYHO\ WR WKH RULJLQDO FRSLHG  SURGXFW WR VHUYHV SXUSRVHV RWKHU WKDQ VRXUFH LGHQWLILFDWLRQl VXFK DV PDNLQJSURGXFWVPRUHXVHIXORUDSSHDOLQJ86DW 7KH &RXUW DOVR VWDWHG WKDW DSSOLFDWLRQ RI WKH LQKHUHQWO\ GLVWLQFWLYH WHVW LQ SURGXFW GHVLJQ FDVHV FRXOG GHSULYH  FRQVXPHUVRImWKHEHQHILWVRIFRPSHWLWLRQZLWKUHJDUGWRWKH 2I FRXUVH LI +HUPDQ 0LOOHU LV XQDEOH WR SUHYDLO RQ LWV WUDGH GUHVV XWLOLWDULDQDQGHVWKHWLFSXUSRVHVWKDWSURGXFWGHVLJQRUGLQDULO\ FODLP 3DOD]]HWWL FDQ FRQWLQXH WR SURGXFH WKH ORXQJH FKDLU DQG RWWRPDQ DV VHUYHVl,ELG ZHOO  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF 7KH&RXUWWKHQGLIIHUHQWLDWHG6DPDUD%URWKHUVIURP7ZR SURKLELWLQJWKHGHIHQGDQWIURPXVLQJWKHSODLQWLIIjVWUDGHPDUN 3HVRV  6DPDUD %URWKHUV FRQFHUQHG D FODLP EURXJKW E\ D DQGSXEOLFLW\ULJKWVmIRUDQ\SXUSRVHZKDWVRHYHUl,ELG:H FKLOGUHQjVFORWKLQJGHVLJQHUDQGPDQXIDFWXUHUDOOHJLQJWKDW FRQFOXGHGWKDWWKHSURKLELWLRQ :DO0DUW ZDV VHOOLQJ mNQRFNRIIl FRSLHV RI WKH GHVLJQHUjV FORWKHV QDPHO\ mD OLQH RI VSULQJVXPPHU RQHSLHFH LV WRR EURDG LQVRIDU DV LW FRYHUV PRUH WKDQ WKH VHHUVXFNHURXWILWVGHFRUDWHGZLWKDSSOLTXHVRIKHDUWVIORZHUV XQDXWKRUL]HG FRPPHUFLDO XVH RU H[SORLWDWLRQ RI >WKH IUXLWVDQGWKHOLNHl86DW,Q7ZR3HVRVWKH SODLQWLIIjV@ULJKWV7KHUHDUHYDULRXVDFWLYLWLHVWKDW>WKH &RXUW KHOG WKDW WKH WUDGH GUHVV RI D FKDLQ RI 0H[LFDQ GHIHQGDQW@FRXOGHQJDJHLQWKDWZRXOGQRWYLRODWH>WKH UHVWDXUDQWVZKLFKWKHSODLQWLIIGHVFULEHGDVmDIHVWLYHHDWLQJ SODLQWLIIjV@ OHJLWLPDWH WUDGHPDUN DQG SXEOLFLW\ ULJKWV DWPRVSKHUHKDYLQJLQWHULRUGLQLQJDQGSDWLRDUHDVGHFRUDWHG VXFKDVZULWLQJDPDJD]LQHDUWLFOHRUERRNDERXW(OYLV ZLWKDQWLTXHVEULJKWFRORUVSDLQWLQJVDQGPXUDOVlLGDW 3UHVOH\ RU GHDOLQJ LQ SURSHUO\ OLFHQVHG SURGXFWV  7KH  TXRWLQJ7ZR3HVRV86DW FRXOGEHSURWHFWHG LQMXQFWLRQ VKRXOG EH OLPLWHG VR DV WR SURKLELW >WKH XQGHU †  D  ZLWKRXW D VKRZLQJ RI VHFRQGDU\ PHDQLQJ GHIHQGDQWjV@XQDXWKRUL]HGXVHRIWKHSXEOLFLW\ULJKWVRU 6DPDUD%URV86DW FLWLQJ7ZR3HVRV86DW WUDGHPDUNVRI>WKHSODLQWLII@IRUFRPPHUFLDOSXUSRVHV  7KH6DPDUD%URWKHUV&RXUWGLIIHUHQWLDWHG7ZR3HVRV RQ WKH EDVLV WKDW WKH mWUDGH GUHVV DW LVVXH WKH GHFRU RI D ,ELG7KH&RXUWLQ(OYLVO\WKH SODLQWLIIjV@ ULJKWVl  ,ELG VHH DOVR DNLQWRSURGXFWSDFNDJLQJDQGKDVQREHDULQJRQWKHSUHVHQW 5(67$7(0(17 7+,5' 2) 81)$,5 &203(7,7,21†FPWF FDVHl,ELG   m%HFDXVH RI WKH OLPLWHG VFRSH RI WKH ULJKW RI SXEOLFLW\ DQ LQMXQFWLRQ ZLOO RUGLQDULO\ SURKLELW RQO\ $IWHU6DPDUD%URWKHUVWUDGHGUHVVFODLPVEDVHGRQSURGXFW XQDXWKRUL]HGXVHRIWKHSODLQWLIIjVLGHQWLW\LQDGYHUWLVLQJRU SDFNDJLQJFDQEHSURYHQXSRQDVKRZLQJRIHLWKHULQKHUHQW PHUFKDQGLVLQJ DFWLYLWLHVl   7KHUHIRUH D SHUPDQHQW GLVWLQFWLYHQHVVRUVHFRQGDU\PHDQLQJEXWWUDGHGUHVVFODLPV LQMXQFWLRQ UHODWLQJ WR D ULJKW RI SXEOLFLW\ FODLP PXVW EH EDVHGRQSURGXFWGHVLJQFDQEHSURYHQRQO\XSRQDVKRZLQJ OLPLWHGLQVFRSHWRWKRVHDFWLYLWLHVWKDWWKHULJKWSURWHFWV RIVHFRQGDU\PHDQLQJ7KH&RXUWQRWHGWKDWWKLVGLVWLQFWLRQ FRXOGSURGXFHVRPHKDUGFDVHVmDWWKHPDUJLQl,ELG7KH 7KHGLVWULFWFRXUWLQWKLVFDVHZDVIDFHGZLWKWKHFKDOOHQJH &RXUWFLWHGRQHH[DPSOH RIEDODQFLQJVHYHUDOFRPSHWLQJOHJDOLQWHUHVWV)RURQHWKH GLVWULFWFRXUWZDVIRUFHGWREDODQFH+HUPDQ0LOOHUjVULJKWRI D FODVVLF JODVV &RFD&ROD ERWWOH IRU LQVWDQFH PD\ SXEOLFLW\LQWKHQDPHVDQGOLNHQHVVHV RIWKH(DPHVHVZLWK FRQVWLWXWHSDFNDJLQJIRUWKRVHFXVWRPHUVZKRGULQNWKH 3DOD]]HWWLjVULJKWWRUHSURGXFHIXUQLWXUHRULJLQDOO\GHVLJQHGE\ &RNHDQGWKHQGLVFDUGWKHERWWOHEXWPD\FRQVWLWXWHWKH WKH(DPHVHV(YHQLI+HUPDQ0LOOHUZHUHWRSUHYDLORQLWV SURGXFW LWVHOI IRU WKRVH FRQVXPHUV ZKR DUH ERWWOH WUDGH GUHVV FODLP UHODWHG WR WKH ORXQJH FKDLU DQG RWWRPDQ FROOHFWRUV RU SDUW RI WKH SURGXFW LWVHOI IRU WKRVH 3DOD]]HWWLZRXOGVWLOOKDYHDULJKWWRSURGXFHUHSURGXFWLRQVRI FRQVXPHUV ZKR EX\ &RNH LQ WKH FODVVLF JODVV ERWWOH WKH mSRWDWR FKLS FKDLUl WKH mVXUIERDUG WDEOHl DQG RWKHU  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF $QDO\VLV UDWKHUWKDQDFDQEHFDXVHWKH\WKLQNLWPRUHVW\OLVKWR GULQNIURPWKHIRUPHU +HUPDQ0LOOHUDUJXHVWKDWLWZDVLPSURSHUIRUWKHGLVWULFW FRXUWWRFUHDWHDmIDLUXVHlH[FHSWLRQLQLWV2FWREHU ,ELG7RWKHH[WHQWWKDWGLIILFXOWFDVHVH[LVWWKH&RXUWVWDWHG SHUPDQHQWLQMXQFWLRQLVVXHGSXUVXDQWWRWKHMXU\YHUGLFWLQ WKDW mFRXUWV VKRXOG HUU RQ WKH VLGH RI FDXWLRQ DQG FODVVLI\ IDYRURI+HUPDQ0LOOHURQLWVWUDGHPDUNXQIDLUFRPSHWLWLRQ DPELJXRXVWUDGHGUHVVDVSURGXFWGHVLJQWKHUHE\UHTXLULQJ DQGULJKW RISXEOLFLW\FODLPV6SHFLILFDOO\+HUPDQ0LOOHU VHFRQGDU\PHDQLQJl,ELG WDNHVLVVXHZLWKSDUDJUDSKRIWKHLQMXQFWLRQZKLFKDOORZV 3DOD]]HWWLWRmIDLUO\LGHQWLI\&KDUOHV(DPHVDQGRU5D\(DPHV 7KLVLVQRWDKDUGFDVHKRZHYHU+HUPDQ0LOOHUjVWUDGH DVWKHRULJLQDOGHVLJQHUVRIWKHIXUQLWXUHDIWHUZKLFK3DOD]]HWWL GUHVVFODLPVUHJDUGLQJWKH(DPHVORXQJHFKDLUDQGRWWRPDQ SDWWHUQHGRUUHSURGXFHGLWVRZQIXUQLWXUHl DUH EDVHG RQ SURGXFW GHVLJQ DQG FDQQRW EH FRQIXVHG ZLWK SURGXFWSDFNDJLQJ7KHUHIRUHRQDSSHDOZHPXVWDQDO\]H 7KHLQMXQFWLRQIRUELGV3DOD]]HWWLIURP  XVLQJWKHQDPHV +HUPDQ 0LOOHUjV WUDGH GUHVV FODLPV VROHO\ WR GHWHUPLQH LI m&KDUOHV(DPHVlm&(DPHVlm5D\(DPHVlDQGRUm(DPHVl +HUPDQ0LOOHUFDQGHPRQVWUDWHWKDWLWV(DPHVORXQJHFKDLU DV D WUDGHPDUN IRU IXUQLWXUH   FDXVLQJ GLOXWLRQ RI WKH DQGRWWRPDQKDYHDFTXLUHGVXIILFLHQWVHFRQGDU\PHDQLQJLQ GLVWLQFWLYHTXDOLW\RIWKH($0(6WUDGHPDUNDQG  XVLQJ WKH PDUNHWSODFH WKDW WKH\ KDYH EHFRPH DVVRFLDWHG LQ WKH WKHQDPHVRUOLNHQHVVHVRI&KDUOHV(DPHVRU5D\(DPHVLQ SXEOLFjV PLQG ZLWK +HUPDQ 0LOOHU  7KH GLVWULFW FRXUWjV FRQQHFWLRQZLWKWKHVDOHRIIXUQLWXUH7KHILUVWWZRSRUWLRQV LQKHUHQWO\ GLVWLQFWLYH DQDO\VLV LV QR ORQJHU UHOHYDQW WR WKLV RIWKHLQMXQFWLRQUHODWHWR+HUPDQ0LOOHUjVWUDGHPDUNFODLP FDVH LQ OLJKW RI WKH 6XSUHPH &RXUWjV KROGLQJ LQ 6DPDUD ZKLOH WKH WKLUG SRUWLRQ UHODWHV WR +HUPDQ 0LOOHUjV ULJKW RI %URWKHUV SXEOLFLW\FODLP+HUPDQ0LOOHUDVVHUWVWKDW3DOD]]HWWLPD\EH DEOHWRmIDLUO\LGHQWLI\lWKH(DPHVHVDVWKHRULJLQDOGHVLJQHUV E3URWHFWDEOH7UDGH'UHVVDQG$EDQGRQPHQW RILWVIXUQLWXUHXQGHUWKHmIDLUXVHlH[FHSWLRQWRWKHWUDGHPDUN SRUWLRQRIWKHLQMXQFWLRQ+RZHYHU+HUPDQ0LOOHUFODLPV %HIRUHDQDO\]LQJZKHWKHU+HUPDQ0LOOHUjV(DPHVORXQJH WKDW 3DOD]]HWWL FDQQRW EH DOORZHG WR mIDLUO\ LGHQWLI\l WKH FKDLU DQG RWWRPDQ KDYH EHFRPH SURWHFWDEOH WUDGH GUHVV E\ (DPHVHVXQGHUWKHULJKWRISXEOLFLW\SRUWLRQRIWKHLQMXQFWLRQ DFTXLULQJVHFRQGDU\PHDQLQJZHPXVWQRWHWKHSURFHGXUDO VLQFHWKDWSRUWLRQRIWKHLQMXQFWLRQIRUELGV3DOD]]HWWL IURP SRVWXUHRI+HUPDQ0LOOHUjVWUDGHGUHVVFODLPV3DOD]]HWWLjV XVLQJ WKH mQDPHV RU OLNHQHVVHV RI &KDUOHV (DPHV DQG 5D\ VXPPDU\MXGJPHQWPRWLRQDVWR+HUPDQ0LOOHUjVWUDGHGUHVV (DPHVLQFRQQHFWLRQZLWKWKHVDOHRIIXUQLWXUHl7KHUHIRUH FODLPVZDVEDVHGRQWKHDUJXPHQWWKDW+HUPDQ0LOOHUKDG +HUPDQ0LOOHUFODLPVWKDWWKHGLVWULFWFRXUWHUUHGLQDOORZLQJ DEDQGRQHG DQ\ WUDGH GUHVV ULJKWV LW PD\ KDYH KDG LQ WKH 3DOD]]HWWLWRmIDLUO\LGHQWLI\lWKH(DPHVHV (DPHV ORXQJH FKDLU DQG RWWRPDQ  ,W ZDV RQO\ LQ +HUPDQ 0LOOHUjVUHVSRQVHEULHIWKDW+HUPDQ0LOOHUUDLVHGWKHLVVXHV +HUPDQ0LOOHUGRHVQRWSHUVXDGHXVWKDWWKHGLVWULFWFRXUW RILQKHUHQWGLVWLQFWLYHQHVVDQGVHFRQGDU\PHDQLQJUHODWHGWR DEXVHG LWV GLVFUHWLRQ  ,Q(OYLV 3UHVOH\ (QWHUSULVHV ,QF Y WKHSURWHFWDELOLW\RILWVWUDGHGUHVV3DOD]]HWWLUHVSRQGHGWR (OYLVO\R@QO\ DEDQGRQPHQW FODLP RQ EDVLV WKDW mWKH HYLGHQFH EHORZ ZKHQDOOULJKWVRISURWHFWLRQDUHH[WLQJXLVKHGl:DOOSDSHU VXJJHVWVWKDW>SODLQWLIIjV@GHVLJQVFRQWLQXHWRLQGLFDWHWKHLU 0DQXIDFWXUHUV/WGY&URZQ:DOOFRYHULQJ&RUS)G VRXUFHDQGWKDW>SODLQWLII@YLJRURXVO\SXUVXHGPDQXIDFWXUHUV  &&3$ +HUPDQ0LOOHUXVHGWKHLQKHUHQWO\ RI NQRFNRII JRRGV LQ DQ HIIRUW WR SURWHFW LWV PDUNl  GLVWLQFWLYH DQG VHFRQGDU\ PHDQLQJ LQTXLULHV UHODWHG WR 6ZHHWKHDUW3ODVWLFV,QFY'HWURLW)RDPLQJ,QF)G SURWHFWDEOHWUDGHGUHVVDVDPHDQVRIDUJXLQJWRWKHGLVWULFW   WK &LU   m(YLGHQFH RI D WUDGHPDUN FRXUW WKDW LWV ORXQJH FKDLU DQG RWWRPDQ KDYH UHWDLQHG WKHLU RZQHUjV IDLOXUH WR SURVHFXWH LQIULQJHUV LV UHOHYDQW WR D mVWUHQJWKDVDQLQGLFDWRURIVRXUFHlDQGWKHUHIRUHKDYHQRW GHWHUPLQDWLRQRIWKHGHIHQVHRIDEDQGRQPHQWRQO\ZKHUHVXFK EHHQ DEDQGRQHG  +HUPDQ 0LOOHU DSSHDUV WR KDYH EHHQ IDLOXUH DPRXQWV WR WKH PDUNjV ORVLQJ VLJQLILFDQFH DV DQ FRQIODWLQJ WKH SURWHFWDEOH WUDGH GUHVV LQTXLU\ DQG WKH LQGLFDWLRQRIVRXUFHl  DEDQGRQPHQW LQTXLU\  7KH\ DUH VHSDUDWH DQG GLVWLQFW $FFRUGLQJWR6HFWLRQRIWKH/DQKDP$FWWUDGHGUHVVPD\ 7R VXPPDUL]H ZH UHYHUVH WKH GLVWULFW FRXUWjV GHFLVLRQ EHDEDQGRQHG JUDQWLQJ VXPPDU\ MXGJPHQW WR 3DOD]]HWWL DV WR +HUPDQ 0LOOHUjV WUDGH GUHVV FODLPV  +HUPDQ 0LOOHUjV WUDGH GUHVV ZKHQDQ\FRXUVHRIFRQGXFWRIWKHRZQHULQFOXGLQJDFWV LQIULQJHPHQW DQG GLOXWLRQ FODLPV DUH UHYLYHG  :H UHPDQG RIRPLVVLRQDVZHOODVFRPPLVVLRQFDXVHVWKHPDUNWR WKHVHFODLPVWRWKHGLVWULFWFRXUWZLWKLQVWUXFWLRQVWKDW  WKH EHFRPHWKHJHQHULFQDPHIRUWKHJRRGVRUVHUYLFHVRQRU LVVXHRISURWHFWDELOLW\LVSUHVHUYHGIRUWULDODQG  WKHGLVWULFW LQFRQQHFWLRQZLWKZKLFKLWLVXVHGRURWKHUZLVHWRORVH FRXUW PXVW DGGUHVV 3DOD]]HWWLjV DIILUPDWLYH GHIHQVH RI LWVVLJQLILFDQFHDVDPDUN DEDQGRQPHQW 86&†7KHUHIRUHWKHIDFWWKDWWUDGHGUHVVPD\EH % 3HUPDQHQW,QMXQFWLRQ(QDEOLQJ3DOD]]HWWLWRm)DLUO\ SURWHFWDEOHE\DFTXLULQJVHFRQGDU\PHDQLQJGRHVQRWPHDQLW ,GHQWLI\lWKH(DPHVHV LVDXWRPDWLFDOO\SURWHFWHGVLQFHWKHRZQHUjVWUDGHGUHVVULJKWV PLJKWKDYHEHHQDEDQGRQHGWKURXJKDFWLRQVRIWKHRZQHUWKDW 6WDQGDUGRI5HYLHZ FDXVHG WKH WUDGH GUHVV WR EHFRPH JHQHULF RU ORVH LWV VLJQLILFDQFHDVDPDUN 7KLVFRXUWUHYLHZVDGLVWULFWFRXUWj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jV 5HVWDXUDQWV ,QF Y (OE\jV %LJ %R\ RI LVVXH RI DEDQGRQPHQW VLQFH WKHUH ZDV QR WUDGH GUHVV WKDW 6WHXEHQYLOOH,QF)G WK&LU m7KH +HUPDQ0LOOHUFRXOGKDYHDEDQGRQHG VWURQJHUWKHPDUNWKHPRUHOLNHO\LWLVWKDWHQFURDFKPHQWRQ LWZLOOSURGXFHFRQIXVLRQl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jVPDUN,WLVSRVVLEOHWKDW LWVWUDGHGUHVV7KHUHIRUHLWKDVSUHVHUYHGWKLVLVVXHIRUWULDO WKHSODLQWLIIjVPDUNKDVEHHQµZHDNHQHGjE\ZLGHVSUHDG +RZHYHUWKHIDFWWKDW+HUPDQ0LOOHUKDVUDLVHGDJHQXLQH XVH LQ WKH PDUNHW DQG WKDW VXFK XVH UHVXOWHG IURP LVVXHRIPDWHULDOIDFWDVWRZKHWKHULWV(DPHVORXQJHFKDLUDQG SODLQWLIIjVIDLOXUHWRVXHLQIULQJHUV7KDWLVWKHRQO\ZD\ RWWRPDQ WUDGH GUHVV LV SURWHFWDEOH GRHVQRW GLVSRVH RI WKH WR SUHYHQW D PDUNHW IURP EHFRPLQJ µFURZGHGj ZLWK LVVXHRIDEDQGRQPHQWZKLFKZHZLOOUHPDQGWRWKHGLVWULFW VLPLODUPDUNVLVDSURJUDPRIDJJUHVVLYHHQIRUFHPHQW FRXUWIRUIXUWKHUFRQVLGHUDWLRQDVWKHGLVWULFWFRXUWGLGQRW FRQVLGHUWKLVLVVXHLQLWVVXPPDU\MXGJPHQWGHFLVLRQ 0&$57+<VXSUDQDW† F +DYH WKH /RXQJH &KDLU DQG 2WWRPDQ $FTXLUHG $WWKHVDPHWLPHWKHREVHUYHUKDVVWDWHGWKDWmLIWKURXJK 6HFRQGDU\0HDQLQJ" IDLOXUHWRSURVHFXWHDPDUNFRQWLQXDOO\ORVHVµVWUHQJWKjDQG µGLVWLQFWLYHQHVVjLWZLOOHYHQWXDOO\KHPRUUKDJHVRPXFKWKDW ,QFRQWUDVWWRWKHLQKHUHQWO\GLVWLQFWLYHWHVWWKHVHFRQGDU\ LWGLHVDVDPDUN7KDWZRXOGEHµDEDQGRQPHQWjWKURXJKDFWV PHDQLQJWHVWIRFXVHVRQDFTXLUHGGLVWLQFWLYHQHVV6HFRQGDU\ RIRPLVVLRQl,ELG+RZHYHUWKHREVHUYHUJRHVRQWRVWDWH PHDQLQJKDVEHHQGHILQHGDVIROORZV WKDWm>W@KHLVVXHLVKDUGO\HYHUµDEDQGRQPHQWjEHFDXVHWKDW UHTXLUHV SURRI WKDW WKH PDUN KDV ORVW DOO VLJQLILFDQFH DV DQ 7RDFTXLUHDVHFRQGDU\PHDQLQJLQWKHPLQGVRIWKH LQGLFDWLRQRIRULJLQl,ELG$OWKRXJKLWDSSHDUVXQOLNHO\WKDW EX\LQJSXEOLFDQDUWLFOHRIPHUFKDQGLVHZKHQVKRZQWR IDLOXUHWRSURVHFXWHE\LWVHOIFDQHVWDEOLVKWKDWWUDGHGUHVVKDV D SURVSHFWLYH FXVWRPHU PXVW SURPSW WKH DIILUPDWLRQ EHHQDEDQGRQHGLWLVSRVVLEOHWKDWLQH[WUHPHFLUFXPVWDQFHV m7KDWLVWKHDUWLFOH,ZDQWEHFDXVH,NQRZLWVVRXUFHlDQG IDLOXUH WR SURVHFXWH PD\ FDXVH WUDGH GUHVV ULJKWV WR EH QRWWKHQHJDWLYHLQTXLU\DVWRm:KRPDNHVWKDWDUWLFOH"l H[WLQJXLVKHGE\FDXVLQJDPDUNWRORVHLWVVLJQLILFDQFHDVDQ ,QRWKHUZRUGVWKHDUWLFOHPXVWSURFODLPLWVLGHQWLILFDWLRQ LQGLFDWLRQRIVRXUFH6HH+HUPHV,QWjOY/HGHUHUGH3DULV ZLWKLWVVRXUFHDQGQRWVLPSO\VWLPXODWHLQTXLU\DERXWLW )HUUDUL)GDWTXRWLQJ:HVW3RLQW0IJ&RY 'HWURLW 6WDPSLQJ &R  )G   WK &LU   LV DQ LVVXH RI YDOLGLW\ IRU QRQLQKHUHQWO\ GLVWLQFWLYH GHVLJQDWLRQV +HUPDQ0LOOHUPXVWGHPRQVWUDWHWKDWLWV(DPHVORXQJHFKDLU µVWUHQJWKj LV DQ HQTXLU\ LQWR D IDFWRU OHDGLQJ WR WKH GHWHUPLQDWLRQ RI LQIULQJHPHQW RI DQ\ NLQG RI PDUN 7KH FRPPRQ GHQRPLQDWRU DQGRWWRPDQKDYHEHFRPHLGHQWLILHGZLWK+HUPDQ0LOOHULQ LV WKH QDWXUH RI WKH HYLGHQFH XVHG WR VXSSRUW ERWK OHJDO FRQFHSWV WKHPLQGVRIWKHSRWHQWLDOFXVWRPHU 0 &$57+< 8:57, Q DW †   +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF 7KHGLVWULFWFRXUWDSSOLHGDVL[IDFWRUWHVWGHYLVHGE\WKH /DQKDP $FW YLRODWLRQ IRU WUDGH GUHVV LQIULQJHPHQW o 6HFRQG&LUFXLWLQDQDO\]LQJWKHLVVXHRIVHFRQGDU\PHDQLQJ OLNHOLKRRGRIFRQIXVLRQDQGQRQIXQFWLRQDOLW\oLVVXHVWKDW 6HH &HQWDXU &RPPXQLFDWLRQV /WG Y $60 QHLWKHU SDUW\ UDLVHG DW VXPPDU\ MXGJPHQW  ,Q DGGLWLRQ &RPPXQLFDWLRQV,QF)G G&LU  +HUPDQ 0LOOHUjV WUDGH GUHVV GLOXWLRQ FODLP LV UHYLYHG 6LQFHWKHGLVWULFWFRXUWjVGHFLVLRQWKLVFRXUWKDVDGRSWHGD )LQDOO\WKHGLVWULFWFRXUWPXVWVWLOODGGUHVVWKHRULJLQDOEDVLV VLPLODUEXWVOLJKWO\EURDGHUVHYHQIDFWRUWHVW6HH0DUNHWLQJ IRU 3DOD]]HWWLjV VXPPDU\ MXGJPHQW PRWLRQ DV WR +HUPDQ 'LVSOD\V,QFY7UDI)L['HYLFHV,QF)G WK 0LOOHUjVWUDGHGUHVVFODLPV3DOD]]HWWLjVGHIHQVHWKDW+HUPDQ &LU UHYj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jVWUDGH GUHVVIRUSXUSRVHVRIHVWDEOLVKLQJOLNHOLKRRGRIFRQIXVLRQDQG GLUHFWFRQVXPHUWHVWLPRQ\   ZKHWKHU +HUPDQ 0LOOHU KDV DEDQGRQHG LWV WUDGH GUHVV FRQVXPHUVXUYH\V ULJKWVLQWKHORXQJHFKDLUDQGRWWRPDQ H[FOXVLYLW\OHQJWKDQGPDQQHURIXVH DPRXQWDQGPDQQHURIDGYHUWLVLQJ 2QH RI WKH QHFHVVDU\ IDFWRUV WR DQDO\]H LQ GHWHUPLQLQJ DPRXQWRIVDOHVDQGQXPEHURIFXVWRPHUV OLNHOLKRRGRIFRQIXVLRQLVWKHVWUHQJWKRIWKHSODLQWLIIjVPDUN HVWDEOLVKHGSODFHLQWKHPDUNHWDQG SURRIRILQWHQWLRQDOFRS\LQJ  :KLOH WKH HYLGHQFH H[DPLQHG LV VLPLODU WKH GHWHUPLQDWLRQ RI 7UDI)L[)GDW1RVLQJOHIDFWRULVGHWHUPLQDWLYH mVHFRQGDU\ PHDQLQJl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jV JUDQW RI VXPPDU\ %HFDXVH WKH HYLGHQFH LV RI WKH VDPH QDWXUH VRPH FRXUWV MXGJPHQW LQ IDYRU RI WKH GHIHQGDQW RQ WKH JURXQGV WKDW WKH GLVWULFW FRXUW RFFDVLRQDOO\ PLVDSSO\ WKH OHJDO ODEHO mVHFRQGDU\ PHDQLQJl WR LPSURSHUO\ UXOHG WKDW WKHUH ZDV QR JHQXLQH LVVXH RI PDWHULDO IDFW DV WR GHQRWH WKH NLQG RI PDUNHWSODFH UHFRJQLWLRQ HYLGHQFH QHHGHG WR VHFRQGDU\ PHDQLQJ DQG WKDW WKH WUDGH GUHVV ZDV D IXQFWLRQDO SURGXFW GHWHUPLQH WKH GHJUHH RI VWUHQJWK IRU D PDUN 7KLV FDQ OHDG WR FRQILJXUDWLRQ 7UDI)L[  )G DW  7KH 6XSUHPH &RXUW UHYHUVHG GLVRULHQWDWLRQ IRU ERWK MXGJHV DQG DWWRUQH\V 7KH GLVWLQFWLRQ RQ WKH EDVLV WKDW WKH WUDGH GUHVV ZDV IXQFWLRQDO 7UDI)L[  6 &W DW EHWZHHQ WKH OHJDO FRQFHSWV RI µVHFRQGDU\ PHDQLQJj DQG  µVWUHQJWKj LV ERWK UHDO DQG FULWLFDO :KLOH µVHFRQGDU\ PHDQLQJj  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF ,QWjO.HQQHO&OXERI&KLFDJR,QFY0LJKW\6WDU,QF 'LUHFWFRQVXPHUWHVWLPRQ\ )G WK&LU  SUHOLPLQDU\LQMXQFWLRQIRU SODLQWLII XSKHOG EDVHG RQ LWV KDOIFHQWXU\ XVH RI QDPH +HUPDQ 0LOOHU SURYLGHV DIILGDYLW HYLGHQFH IURP GHVLJQ DGYHUWLVLQJ VXEVWDQWLDO IUHH SXEOLFLW\ DQG ZLGHUDQJLQJ H[SHUWV DXWKRUV KLVWRULDQV DQG SDVW DQG SUHVHQW +HUPDQ DFWLYLWLHVLQVXSSRUWRIGRJJURXSV $s&DQILHOG&RY9HVV 0LOOHU HPSOR\HHV WR VXSSRUW LWV FODLP WKDW FRQVXPHUV %HYHUDJHV ,QF  )G   WK &LU  DVVRFLDWHWKH(DPHVORXQJHFKDLUDQGRWWRPDQZLWK+HUPDQ SUHOLPLQDU\LQMXQFWLRQIRUSODLQWLIIXSKHOGEDVHGRQLWVXVHRI 0LOOHU,QDGGLWLRQ+HUPDQ0LOOHUSUHVHQWVPHGLDFRYHUDJH ZRUGV mFKRFRODWH IXGJHl LQ FRQQHFWLRQ ZLWK FKRFRODWH UHODWLQJWRLQGLYLGXDOVZKRVSHFLILFDOO\RZQ+HUPDQ0LOOHU IODYRUHGVRIWGULQNIRUWKLUWHHQ\HDUVQDWLRQZLGHSXEOLFLW\ (DPHV ORXQJH FKDLUV DQG RWWRPDQV DQG SURGXFHUV RI DQGQXPHURXVOHWWHUVDQGSKRQHFDOOVmDOOVHDUFKLQJIRUWKH WHOHYLVLRQVKRZVWKDWVSHFLILFDOO\SXUFKDVHG+HUPDQ0LOOHU HOXVLYHGLHWFKRFRODWHIXGJHGULQNl  (DPHV ORXQJH FKDLUV DQG RWWRPDQV IRU WKHLU VHWV  +HUPDQ 0LOOHUDOVRKDVSUHVHQWHGHYLGHQFHRIDH[WHQVLYHVHFRQGDU\ 7KH GLVWULFW FRXUW UHMHFWHG +HUPDQ 0LOOHUjV WUDGH GUHVV PDUNHW VSHFLILFDOO\ LQ (DPHV ORXQJH FKDLUV DQG RWWRPDQV FODLPSULQFLSDOO\RQWKHJURXQGVWKDWWKHUHZDVQRHYLGHQFH SURGXFHG E\ +HUPDQ 0LOOHU  )LQDOO\ +HUPDQ 0LOOHU KDV mWKDW WKH JHQHUDO SXEOLF DWWULEXWHV WKH ORXQJH FKDLU DQG SUHVHQWHGYDULRXVPDJD]LQHDQGQHZVSDSHUDUWLFOHVZDUQLQJ RWWRPDQWR>+HUPDQ0LOOHU@l7KHUHLVVXIILFLHQWHYLGHQFH WKHFRQVXPLQJSXEOLFVHHNLQJD+HUPDQ0LOOHU(DPHVORXQJH LQGLFDWLQJ WKH +HUPDQ 0LOOHU HVWDEOLVKHG D FRQQHFWLRQ FKDLUDQGRWWRPDQRIWKHH[LVWHQFHRIDPDUNHWIRUNQRFNRIIV EHWZHHQLWVHOIDQGWKH(DPHVORXQJHFKDLUDQGRWWRPDQLQmD RI(DPHVGHVLJQHGIXUQLWXUH VPDOOEXWYHU\ZHOOGHILQHGJURXSRISHRSOHlWKDWIRUPWKH FRQVXPLQJ SXEOLF LQ PRGHUQ IXUQLWXUH ,QWjO .HQQHO &OXE 'LUHFW FRQVXPHU WHVWLPRQ\ mQHHG QRW WDNH WKH IRUP RI  )G DW   $V D UHVXOW WKH GLVWULFW FRXUW HUUHG LQ H[SOLFLWWHVWLPRQ\IURPFRQVXPHUVVWDWLQJWKDWµ,FDUHWKDW; JUDQWLQJ3DOD]]HWWLVXPPDU\MXGJPHQWRQ+HUPDQ0LOOHUjV SURGXFHGWKLVSURGXFWjl7KRPDV %HWWV&RUSY3DQGXLW WUDGHGUHVVFODLPVRQWKHEDVLVWKDW+HUPDQ0LOOHUFRXOGQRW &RUS  )G   WK &LU    ,QVWHDG RI WKLV HVWDEOLVKWKHSURWHFWDELOLW\RILWVWUDGHGUHVV H[SOLFLWWHVWLPRQ\+HUPDQ0LOOHUKDVSUHVHQWHGDYDULHW\RI FLUFXPVWDQWLDOWHVWLPRQ\LQGLFDWLQJDOLQNEHWZHHQ+HUPDQ G&RQFOXVLRQ 0LOOHUDQGWKH(DPHVORXQJHFKDLUDQGRWWRPDQLQWKHPLQG RIWKHFRQVXPLQJSXEOLFIRUPRGHUQIXUQLWXUH,QFRQFOXGLQJ 7KHUH LV D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU WKDWWKHSODLQWLIISUHVHQWHGVXIILFLHQWHYLGHQFHRIVHFRQGDU\ +HUPDQ0LOOHUjVWUDGHGUHVVLQWKH(DPHVORXQJHFKDLUDQG PHDQLQJ LQ 7UDI)L[ WKLV FRXUW QRWHG WKH ODFN RI GLUHFW RWWRPDQ KDV DFTXLUHG VHFRQGDU\ PHDQLQJ  7KHUHIRUH WKH FXVWRPHU WHVWLPRQ\ EXW LQVWHDG UHOLHG XSRQ GHSRVLWLRQ LVVXHRIWKHSURWHFWDELOLW\RI+HUPDQ0LOOHUjVWUDGHGUHVVLV WHVWLPRQ\ RI HPSOR\HHV RI WKH GHIHQGDQW DQG IRUPHU SUHVHUYHGIRUWULDO HPSOR\HHVRIWKHSODLQWLIILQGLFDWLQJWKH\FRXOGUHFRJQL]HWKH SODLQWLIIjVVLJQZKLFKZDVWKHVXEMHFWRIWKHGLVSXWHGWUDGH :HQRWHKRZHYHUWKDWm>I@LQGLQJVHFRQGDU\PHDQLQJLVQRW GUHVV FODLP   )G DW   7KH HYLGHQFH LQ WKLV FDVH WKHHQGRIWKHHQTXLU\EXWRQO\WKHEHJLQQLQJl0&$57+< UHODWLQJ WR D FRQQHFWLRQ EHWZHHQ +HUPDQ 0LOOHU DQG WKH VXSUDQDW2QUHPDQGVHYHUDOLVVXHVPXVWVWLOOEH (DPHVORXQJHFKDLUDQGRWWRPDQDPRQJWKHFRQVXPLQJSXEOLF UHVROYHGE\WKHGLVWULFWFRXUW7KHVHLQFOXGHWKHUHPDLQLQJ LVHYHQPRUHH[WHQVLYH HOHPHQWV WKDW +HUPDQ 0LOOHU PXVW HVWDEOLVK WR SURYH D  +HUPDQ0LOOHU,QFY 1RV 1RV +HUPDQ0LOOHU,QFY  3DOD]]HWWL,PSRUWV 3DOD]]HWWL,PSRUWV ([SRUWV,QF ([SRUWV,QF &RQVXPHUVXUYH\V WKDWVHFRQGDU\PHDQLQJZDVGHPRQVWUDWHGE\HYLGHQFHWKDW WKHGHIHQGDQWLQWHQWLRQDOO\FRSLHG)HUUDULjVFDUGHVLJQDVZHOO 7KH GLVWULFW FRXUW SDUWLFXODUO\ QRWHG WKH DEVHQFH RI DVDIILGDYLWVIURPWZRPDJD]LQHHGLWRUVDQGFRQVXPHUVXUYH\V FRQVXPHU VWXGLHV RU VXUYH\V OLQNLQJ WKH ORXQJH FKDLU DQG VXSSRUWLQJWKHSURSRVLWLRQWKDWWKHFDUGHVLJQZDVDVVRFLDWHG RWWRPDQZLWK+HUPDQ0LOOHUm%HFDXVHWKHGHWHUPLQDWLRQRI ZLWK )HUUDUL   )G DW   $OWKRXJK +HUPDQ 0LOOHU ZKHWKHUDPDUNKDVDFTXLUHGVHFRQGDU\PHDQLQJLVSULPDULO\ GRHVQRWSUHVHQWFRQVXPHUVXUYH\VLWGRHVSURYLGHWKHRWKHU DQHPSLULFDOLQTXLU\VXUYH\HYLGHQFHLVWKHPRVWGLUHFWDQG HYLGHQFH UHOLHG XSRQ LQ )HUUDUL DQG DQ DEXQGDQFH RI SHUVXDVLYHHYLGHQFH6XUYH\HYLGHQFHLVQRWWKHRQO\UHOHYDQW DGGLWLRQDO HYLGHQFH  0RUHRYHU FRQVXPHU VXUYH\V ZKLOH HYLGHQFHKRZHYHUl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l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mXQVROLFLWHGPHGLDFRYHUDJHl +HUPDQ0LOOHU(DPHVORXQJHFKDLUVDQGRWWRPDQV 6HH&HQWDXU)GDW4XRWLQJ'XUDFR3URGXFWV DQG  FRQWLQXRXVSURGXFWLRQRIWKH+HUPDQ0LOOHU(DPHV ,QFYsR\3ODVWLF(QWHUSULVHV/WG)G G ORXQJHFKDLUDQGRWWRPDQVLQFH &LU   WKH GLVWULFW FRXUW UHMHFWHG WKLV HYLGHQFH RQ WKH EDVLVWKDWLWmUHIOHFW>V@LQWHUHVWPRUHLQDQXQXVXDOSURGXFW>RU 7DNHQ WRJHWKHU +HUPDQ 0LOOHU KDV SURGXFHG VXIILFLHQW LQGLYLGXDO@WKDQLQWKHVRXUFHRIWKHSURGXFWl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mDQ (DPHVl +HUPDQ0LOOHUDQGWKH(DPHVHV,QWKLVVHQVHWKHGHVLJQ EXW QRW QHFHVVDULO\ DV mD +HUPDQ 0LOOHUl +HUPDQ 0LOOHU FODLPV WKDW WKLV SDUWQHUVKLS EHWZHHQ +HUPDQ 0LOOHU DQG WKH (DPHVHV PDNHV QR GLIIHUHQFH VLQFH DOO WKDW LV VLJQLILFDQW LV WKDW SXUFKDVHUV DVVRFLDWH WKH WUDGH GUHVV ZLWK mD VLQJOH VRXUFHl 6HH &DQ $P (QJjJ &R Y +HQGHUVRQ *ODVV ,QF  ) 6XSS   (' 0LFK   DIIj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mDVFORVHO\DVSRVVLEOHlWKH WKHLQWURGXFWLRQRIWKHORXQJHFKDLUDQGRWWRPDQLQ7KH mRULJLQDOl+HUPDQ0LOOHUGHVLJQ,QDGGLWLRQ+HUPDQ0LOOHU GLVWULFWFRXUWGLVFRXQWHGWKLVHYLGHQFHRQWKHEDVLVWKDWVDOHV SRLQWV WR HYLGHQFH IURP 3DOD]]HWWL SXEOLFDWLRQV LQFOXGLQJ VXFFHVV DORQH GRHV QRW HVWDEOLVK WKH QHFHVVDU\ FRQVXPHU m(DPHVlLQWKHLGHQWLILFDWLRQRIWKHORXQJHFKDLUDQGRWWRPDQ DVVRFLDWLRQ EHWZHHQ WKH IXUQLWXUH DQG LW VRXUFH  6HH 7KLVHYLGHQFHLVHVSHFLDOO\KHOSIXOWRHVWDEOLVKLQJVHFRQGDU\ $SSDODFKLDQ/RJ)GDW m6DOHVYROXPHWKRXJK PHDQLQJmEHFDXVHµWKHUHLVQRORJLFDOUHDVRQIRUWKHSUHFLVH UHOHYDQWLVQRWQHFHVVDULO\VXIILFLHQWWRLQGLFDWHUHFRJQLWLRQ FRS\LQJVDYHDQDWWHPSWWRUHDOL]HXSRQDVHFRQGDU\PHDQLQJ RIWKHPDUNE\SXUFKDVHUVDVDQLQGLFDWLRQRIWKHVRXUFHl  WKDW LV LQ H[LVWHQFHjl )HUUDUL  )G DW  TXRWLQJ 7KH FRXUW VWDWHG WKDW HYLGHQFH RI VDOHV VXFFHVV LV QRW $XGLR )LGHOLW\ ,QF Y +LJK )LGHOLW\ 5HFRUGLQJV ,QF  SDUWLFXODUO\XVHIXOLQWKHDEVHQFHRIRWKHUHYLGHQFHEHFDXVH )G   WK &LU   VHH DOVR 2VHP )RRG VDOHVVXFFHVVFRXOGEHUHODWHGWRIDFWRUVRWKHUWKDQVHFRQGDU\ ,QGXVWULHV/WGY6KHUZRRG)RRGV,QF)G PHDQLQJVXFKDVJRRGGHVLJQRUDHVWKHWLFHGLILFDWLRQ6HH WK&LU  m:KHQDQHZFRPHUWRWKHPDUNHWFRSLHVD 'XUDFR3URGV)GDW7KHIDFWVLQGLFDWHKRZHYHU FRPSHWLWRU VWUDGHGUHVVLWVLQWHQWPXVWEHWREHQHILWIURPWKH WKDW+HUPDQ0LOOHUSUHVHQWHGDYDULHW\RIHYLGHQFHVXSSRUWLQJ JRRGZLOO RI WKH FRPSHWLWRU V FXVWRPHUV E\ JHWWLQJ WKHP WR VHFRQGDU\ PHDQLQJ LQ DGGLWLRQ WR WKH DPRXQW RI (DPHV EHOLHYHWKDWWKHQHZSURGXFWLVHLWKHUWKHVDPHRURULJLQDWHV ORXQJHFKDLUVDQGRWWRPDQVLWKDVVROG7KHUHIRUHWKLVILJXUH IURPWKHVDPHVRXUFHDVWKHSURGXFWZKRVHWUDGHGUHVVZDV FDQQRW EH GLVPLVVHG DQG DGGV VXSSRUW WR +HUPDQ 0LOOHUjV FRSLHGl  FODLP   (VWDEOLVKHGSODFHLQWKHPDUNHW +HUPDQ0LOOHUKDVSUHVHQWHGVXIILFLHQWHYLGHQFHWRFUHDWH 7KHUHLVQRPDUNHWVKDUHLQIRUPDWLRQSUHVHQWHG+HUPDQ DJHQXLQHLVVXHRIPDWHULDOIDFWDVWRZKHWKHUWKHORXQJHFKDLU 0LOOHUSUHVHQWVHYLGHQFHIURPDIILGDYLWVERRNVPDJD]LQHV DQGRWWRPDQKDYHDFTXLUHGVHFRQGDU\PHDQLQJ6HFRQGDU\ DQGDQHQF\FORSHGLDHQWU\VSHFLILFDOO\VWDWLQJWKDW +HUPDQ PHDQLQJLVSURYHQZKHQE\DSUHSRQGHUDQFHRIWKHHYLGHQFH 0LOOHULVWKHVRXUFHIRUWKH(DPHVORXQJHFKDLUDQGRWWRPDQ mLW FDQ EH GHWHUPLQHG WKDW WKH DWWLWXGH RI WKH FRQVXPLQJ ,QDGGLWLRQ+HUPDQ0LOOHUSUHVHQWVHYLGHQFHWKDWWKHUHLVD SXEOLFWRZDUGWKHPDUNGHQRWHVDVLQJOHWKLQJFRPLQJIURPD VWURQJ VHFRQGDU\ PDUNHW IRU XVHG +HUPDQ 0LOOHU (DPHV VLQJOHVRXUFHl$SSDODFKLDQ/RJ)GDW FLWDWLRQ ORXQJH FKDLUV DQG RWWRPDQV DQG WKDW FXVWRPHUV ZLWKLQ WKLV DQG LQWHUQDO TXRWDWLRQV RPLWWHG   +HUPDQ 0LOOHU KDV VHFRQGDU\PDUNHWUHFRJQL]HWKDW+HUPDQ0LOOHULVWKHRQO\ SUHVHQWHG VXIILFLHQW HYLGHQFH WR UDLVH D JHQXLQH LVVXH RI