6OLS2S20188 81,7('67$7(6&28572),17(51$7,21$/75$'( 3/(;86&253 3ODLQWLII %HIRUH 7LPRWK\05HLI-XGJH Y &RXUW1R 81,7('67$7(6 'HIHQGDQW 23,1,21 >*UDQWLQJGHIHQGDQW¶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ecember 22, 2020 0\URQ3%DUORZ%DUORZ &RPSDQ\//&RI:DVKLQJWRQ'&DUJXHGIRU SODLQWLII3OH[XV&RUS %HYHUO\$)DUUHOO7ULDO$WWRUQH\&LYLO'LYLVLRQ&RPPHUFLDO/LWLJDWLRQ%UDQFK 86'HSDUWPHQWRI-XVWLFHRI1HZS@DUWV´XQGHU +HDGLQJ ³VXLWDEOHIRUXVHVROHO\RUSULQFLSDOO\ZLWK´³>W@UDQVPLVVLRQ DSSDUDWXVIRUUDGLREURDGFDVWLQJRUWHOHYLVLRQ´XQGHU+HDGLQJRUSDUWVIRU ³RWKHUDSSDUDWXVIRUWKHWUDQVPLVVLRQRIYRLFHLPDJHVRURWKHUGDWD´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¶VPRWLRQWRGLVPLVVDVWR(QWU\ 1R836 %$&.*5281' ,7KH,PSRUWHG0HUFKDQGLVH 86&,75XOH D UHTXLUHVWKDWWKHFRXUWJUDQWVXPPDU\MXGJPHQWLIDPRYLQJ SDUW\FDQVKRZWKDW³WKHUHLVQRJHQXLQHGLVSXWHDVWRDQ\PDWHULDOIDFWDQGWKHPRYDQW LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ´0RYDQWVVKRXOGSUHVHQWPDWHULDOIDFWVDV VKRUWDQGFRQFLVHVWDWHPHQWVLQQXPEHUHGSDUDJUDSKVDQGFLWHWR³SDUWLFXODUSDUWVRI PDWHULDOVLQWKHUHFRUG´DVVXSSRUW86&,75XOH F $ 7KHRSSRQHQWPXVWLQ UHVSRQVH³LQFOXGHFRUUHVSRQGLQJO\QXPEHUHGSDUDJUDSKVUHVSRQGLQJWRWKHQXPEHUHG SDUDJUDSKVLQWKHVWDWHPHQWRIWKHPRYDQW´86&,75XOH E 7KHSDUWLHVVXEPLWWHGVHSDUDWHVWDWHPHQWVRIIDFWVZLWKWKHLUUHVSHFWLYHVXPPDU\ MXGJPHQWPRWLRQVSee generally 3O¶V6WDWHPHQWRI0DWHULDO)DFWVDVWR:KLFK7KHUH $UH1R*HQXLQH,VVXHVWREH7ULHG(&)1R ³3O6WPW)DFWV´ 'HI¶V6WDWHPHQW RI0DWHULDO)DFWVDVWR:KLFK7KHUH$UH1R*HQXLQH,VVXHVWREH7ULHG(&)1R ³'HI6WPW)DFWV´ 7KHPDMRULW\RIWKHUHVSRQVHVWRSODLQWLII¶VDQGGHIHQGDQW¶V VWDWHPHQWVUHVSHFWLYHO\ZHUHDGPLVVLRQVEXWPDQ\UHVSRQVHVLQFOXGHGDGGLWLRQDO FODLPVSee generally 'HI¶V5HVSRQVHWR3O¶V6WDWHPHQWRI0DWHULDO)DFWV(&)1R ³'HI5HVS3O6WPW)DFWV´ 3O¶V5HVSRQVHWR'HI¶V6WDWHPHQWRI0DWHULDO)DFWV (&)1R ³3O5HVS'HI6WPW)DFWV´ 8SRQWKHFRXUW¶VUHYLHZRIWKHSDUWLHV¶ UHVSHFWLYHVWDWHPHQWVRIIDFWVDQGVXSSRUWLQJGRFXPHQWVWKHFRXUWGHWHUPLQHVWKDWWKH IROORZLQJPDWHULDOIDFWVUHJDUGLQJWKHVXEMHFWPHUFKDQGLVHDQGWKH+DUPRQLF(05VDUH XQGLVSXWHG )URPWRSODLQWLIILPSRUWHGWKHVXEMHFWPHUFKDQGLVHLQWRWKH8QLWHG 6WDWHVWKURXJKSRUWVLQ&DOLIRUQLD:DVKLQJWRQ2KLRDQG.HQWXFN\3O%UDW 'HI%U DW7KHUHZHUH HQWULHVFRYHUHGE\SURWHVWV'HI%UDW7KHVXEMHFW DUWLFOHVDUHSULQWHGFLUFXLWERDUGDVVHPEOLHV 3&%$V DQGFKDVVLVXVHGLQHQFRGHUV PXOWLSOH[HUVDQGUHPXOWLSOH[HUVGHVLJQHGDQGPDUNHWHGE\+DUPRQLF,QF ³+DUPRQLF (05V´ -RLQW6WPW)DFWV+DUPRQLF,QF ³+DUPRQLF´ DQG3OH[XV HQWHUHGLQWRDFRQWUDFWXQGHUZKLFK3OH[XVPDQXIDFWXUHGSURGXFWVGHVLJQHGDQG PDUNHWHGE\+DUPRQLFId.%DVHGRQ6HFWLRQ;9,1RWH E RIWKH+7686 GLVFXVVHGinfraSURSHUFODVVLILFDWLRQRIWKH3&%$VDQGFKDVVLVGHSHQGVRQWKH FODVVLILFDWLRQRIWKHPDFKLQHVZLWKZKLFKWKH\DUHXVHG 7KHVXEMHFW3&%$VDQGFKDVVLVDUHXVHGLQ+DUPRQLF(05VWKDWDUHLGHQWLILHG E\WKHIROORZLQJPRGHOQDPHVDQGQXPEHUV $XGLR(QFRGHU HQFRGHU 'LYL&RP(OHFWUD HQFRGHU 'LYL&RP(OHFWUD HQFRGHU 'LYL&RP(OHFWUD HQFRGHU 'LYL&RP(OHFWUD HQFRGHU 'LYL&RP(OHFWUD HQFRGHU 'LYL&RP,RQ HQFRGHU 3UR6WUHDP PXOWLSOH[HU 3UR6WUHDPZLWK$&( UHPXOWLSOH[HU Id. 7KHIXQFWLRQRIHQFRGHUVLVWRFRPSUHVVDXGLRDQGYLGHRGLJLWDOGDWDUHSUHVHQWLQJ LPDJHVDQGVRXQGLQFOXGLQJYRLFHId.(QFRGHUVDUHXVHGVRWKDWWKHGDWDWKDW DUHFRPSUHVVHGE\WKHHQFRGHURFFXS\OHVVVSDFHLQVWRUDJHDQGOHVVEDQGZLGWK GXULQJWUDQVPLVVLRQId.7KHGDWDRXWSXWIURPWKH+DUPRQLFHQFRGHUVJRHVWR VZLWFKHVDQGURXWHUVDQGRUWRPXOWLSOH[HUVId.0XOWLSOH[HUVWDNHRXWSXWGDWD IURPPXOWLSOHHQFRGHUVDQGFRPELQHWKHPLQWRDVLQJOHVWUHDPVRWKDWPRUHGDWDFDQEH WUDQVPLWWHGZLWKWKHDYDLODEOHEDQGZLGWKId.5HPXOWLSOH[HUVIXOILOODQLGHQWLFDO SXUSRVHIRUGDWDIURPPXOWLSOHPXOWLSOH[HUVId. +DUPRQLF(05VDUHQRWQHFHVVDU\IRUWKHWUDQVPLVVLRQRIDGDWDVLJQDO3O 6WPW)DFWV 'HI5HVS3O6WPW)DFWV+RZHYHU+DUPRQLFFXVWRPHUVFRXOG QRWSURYLGHGDWDVLJQDOVLQDFRVWHIIHFWLYHPDQQHUZLWKRXWWKHXVHRI+DUPRQLF(05V 7UDQVFULSWRI2UDO$UJXPHQW ³7U2UDO$UJ´ DW7KH+DUPRQLF(05VGRQRW WKHPVHOYHVVHQGVLJQDOVWRUHFHSWLRQGHYLFHVIRUOLVWHQLQJDQGYLHZLQJE\SHRSOH KRZHYHUWKH\DUHXVHGLQWKHQHWZRUNVWKDWVHQGVLJQDOVRXWWRYLHZLQJGHYLFHVIRU OLVWHQLQJDQGYLHZLQJ3O6WPW)DFWV 'HI5HVS3O6WPW)DFWV $ ',&7,21$5<2)&20387(56&,(1&( WKHG GHILQHV³QHWZRUN´DVD³V\VWHPWKDW FRQVLVWVRIWHUPLQDOVQRGHVDQGLQWHUFRQQHFWLRQPHGLDWKDWFDQLQFOXGHOLQHVRUWUXQNV VDWHOOLWHVPLFURZDYHPHGLXPDQGORQJZDYHUDGLRHWF,QJHQHUDODQHWZRUNLVD FROOHFWLRQRIUHVRXUFHVXVHGWRHVWDEOLVKDQGVZLWFKFRPPXQLFDWLRQSDWKVEHWZHHQLWV WHUPLQDOV´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³>S@ULPDULO\DERXWUHGXFLQJWKH EDQGZLGWKRIYLGHRWKHDPRXQWRIVSDFHLWZRXOGRFFXS\RQDVWRUDJHGHYLFHRUWKH DPRXQWRIEDQGZLGWKLWZRXOGRFFXS\DVWKHYLGHRLVWUDQVPLWWHGIRUD79VHUYLFH´ 'HI6WPW)DFWV FLWLQJ'HI([ 'HSRVLWLRQRI(ULF$UPVWURQJ ³$UPVWURQJ 'HS´ DW 3ODLQWLIIQRWHVWKDWWKHGDWDFRPSUHVVLRQIXQFWLRQRI+DUPRQLF(05VPD\ EHXVHGDOVRLQWKHWUDQVPLVVLRQRIGDWDIRUQRQWHOHYLVLRQDQGQRQUDGLRFRQWHQW3O 5HVS'HI6WPW)DFWV +DUPRQLF(05VDUHQRWQHFHVVDU\IRUWKHWUDQVPLVVLRQRIDGDWDVLJQDO3O6WPW )DFWVEXW³SHUPLWWKHGHOLYHU\RIWKHEHVWSRVVLEOHTXDOLW\IRUWKHPLQLPDO EDQGZLGWKWKHUHE\VDYLQJPRQH\DQGUHGXFLQJH[SHQVHVLQSURYLGLQJFKDQQHOVIRU YLHZLQJ´'HI5HVS3O6WPW)DFWV)RUWKLVUHDVRQSXUFKDVHUVRI+DUPRQLF (05VZRXOGQRWSURYLGHGDWDVLJQDOVZLWKRXWWKHP7U2UDO$UJDW +DUPRQLF(05VGRQRWDFWXDOO\WUDQVPLWWKHVLJQDOWRWKHILQDOUHFHLYLQJGHYLFH VXFKDVDWHOHYLVLRQ WKH\DUHSDUWRIWKHFKDLQRIHTXLSPHQWWKDWDOORZVIRU WUDQVPLVVLRQRIWKHVLJQDO3O6WPW)DFWV 'HI5HVS3O6WPW)DFWV ,, 6XEMHFW0DWWHU-XULVGLFWLRQ 7KLV&RXUWKDVMXULVGLFWLRQXQGHU86& D ZKLFKSURYLGHVWKDW ³>W@KH&RXUWRI,QWHUQDWLRQDO7UDGHVKDOOKDYHH[FOXVLYHMXULVGLFWLRQRIDQ\FLYLODFWLRQ FRPPHQFHGWRFRQWHVWWKHGHQLDORIDSURWHVWLQZKROHRULQSDUWXQGHU 86& ´7KH&RXUW¶VGHWHUPLQDWLRQRIVXEMHFWPDWWHUMXULVGLFWLRQLVDWKUHVKROGLQTXLU\ Steel Co. v. Citizens For A Better Environment86 . ³,WLV IXQGDPHQWDOWKDWWKHH[LVWHQFHRIDMXULVGLFWLRQDOSUHGLFDWHLVDWKUHVKROGLQTXLU\LQ ZKLFKSODLQWLIIEHDUVWKHEXUGHQRISURRI´ CR Industries v. United States&,7 ³:KHQDIHGHUDOFRXUWFRQFOXGHVWKDWLWODFNVVXEMHFWPDWWHUMXULVGLFWLRQWKH FRXUWPXVWGLVPLVVWKH>FODLP@LQLWVHQWLUHW\´Arbaugh v. Y & H Corp.86 3OH[XVEURXJKWWKLVWKLVDFWLRQRQ2FWREHUE\ILOLQJDFRPSODLQWWKDW FRYHUHG HQWULHV3OH[XVFODLPVWKDWWKHFRXUWKDVMXULVGLFWLRQRYHUWKLVDFWLRQ SXUVXDQWWR86& D &RPSO(&)1R8QGHUVHFWLRQ D WKLV &RXUWKDV³H[FOXVLYHMXULVGLFWLRQRIDQ\FLYLODFWLRQFRPPHQFHGWRFRQWHVWWKHGHQLDORID SURWHVWLQZKROHRULQSDUW´SXUVXDQWWR 86&6HFWLRQUHTXLUHVDQ DJJULHYHGSDUW\WRILOHDSURWHVWXQGHU 86& 3XUVXDQWWR 86& D DQG F FHUWDLQGHFLVLRQVRI&XVWRPV EHFRPHILQDODQGFRQFOXVLYHDVWRDOOSHUVRQVXQOHVVDSURWHVWLVILOHGZLWKLQGD\V DIWHUWKHGDWHRIOLTXLGDWLRQ³7KHFRXUWODFNVMXULVGLFWLRQRYHUSURWHVWVWKDWGRQRWVDWLVI\ WKHUHTXLUHPHQWVRI 86& F DQG &)5 D ´Koike Aronson, Inc. v. United States)G )HG&LU 7KHUHIRUHDSUHUHTXLVLWHWR WKLV&RXUW¶VMXULVGLFWLRQLVDWLPHO\ILOHGSURWHVW²VSHFLILFDOO\RQHILOHGZLWKLQGD\V RIOLTXLGDWLRQ 'HIHQGDQWREMHFWVWRWKHFRXUW¶VVXEMHFWPDWWHUMXULVGLFWLRQRYHU(QWU\1R836 EHFDXVHWKHSURWHVWFRYHULQJWKLVHQWU\ZDVILOHGPRUHWKDQGD\VDIWHU OLTXLGDWLRQSee 'HI0RWWR'LVPLVV(&)1R7KHHQWU\ZDVOLTXLGDWHGRQ0DUFK KRZHYHUWKHSURWHVWFRYHULQJWKLVHQWU\ZDVILOHGRQ6HSWHPEHU GD\VODWHUSee 'HI([ 3URWHVW1R $YDOLGSURWHVWZDVQRW WLPHO\ILOHGIRUWKLVHQWU\VRWKHFRXUWODFNVVXEMHFWPDWWHUMXULVGLFWLRQIRUWKHHQWU\ 7KHUHIRUHSODLQWLII¶VFODLPDVWRWKLVHQWU\LVGLVPLVVHG 7KHSURWHVWVIRUWKHRWKHU HQWULHVZHUHWLPHO\ILOHGDQGWKHWLPHOLQHVVRI WKRVHHQWULHVKDVQRWEHHQGLVSXWHGE\GHIHQGDQW'HI%UDW 67$1'$5'2)5(9,(: 7KHFRXUWZLOOJUDQWVXPPDU\MXGJPHQWLI³WKHPRYDQWVKRZVWKDWWKHUHLVQR JHQXLQHGLVSXWHDVWRDQ\PDWHULDOIDFWDQGWKHPRYDQWLVHQWLWOHGWRMXGJPHQWDVD PDWWHURIODZ´86&,75XOH D see also Anderson v. Liberty Lobby, Inc.86 ,QFRQVLGHULQJZKHWKHUPDWHULDOIDFWVDUHLQGLVSXWHWKHFRXUWPXVW FRQVLGHUHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\GUDZLQJDOO UHDVRQDEOHLQIHUHQFHVLQLWVIDYRUSee Adickes v. S.H. Kress & Co. 86 Anderson86DWQ:KHQDVKHUHFURVVPRWLRQVIRUVXPPDU\ MXGJPHQWDUHEHIRUHWKHFRXUW³HDFKSDUW\FDUULHVWKHEXUGHQRQLWVRZQPRWLRQWRVKRZ HQWLWOHPHQWWRMXGJPHQWDVDPDWWHURIODZDIWHUGHPRQVWUDWLQJWKHDEVHQFHRIDQ\ JHQXLQHGLVSXWHVRYHUPDWHULDOIDFWV´Am. Fiber & Finishing, Inc. v. United States &,7BBBBBB)6XSSG TXRWLQJMassey v. Del Labs. )G )HG&LU ³$JHQXLQHIDFWXDOGLVSXWHLVRQHSRWHQWLDOO\ DIIHFWLQJWKHRXWFRPHXQGHUWKHJRYHUQLQJODZ´Anderson86DW ³7KHFRXUWPD\QRWUHVROYHRUWU\IDFWXDOLVVXHVRQDPRWLRQIRUVXPPDU\ MXGJPHQW´Phone-Mate, Inc. v. United States&,7 )6XSS ,QSODLQWLII V5HSO\%ULHISODLQWLIIFRQVHQWVWRGHIHQGDQW VPRWLRQWRGLVPLVVWKLVHQWU\ 3O5HS%UDW ³3ODLQWLIIDJUHHVWKDWHQWU\QXPEHU836VKRXOGEH GLVPLVVHGIRUODFNRIMXULVGLFWLRQEHFDXVHLWZDVSURWHVWHGPRUHWKDQGD\VDIWHU OLTXLGDWLRQ´ FLWDWLRQRPLWWHG aff'd)G )HG&LU )XUWKHU³VXPPDU\ MXGJPHQWLQDFODVVLILFDWLRQFDVHLVDSSURSULDWHRQO\LIµWKHPDWHULDOIDFWVRIZKDWWKH PHUFKDQGLVHLVDQGZKDWLWGRHVDUHQRWDWLVVXH¶´Roche Vitamins, Inc. v. United States&,7)6XSSG FLWLQJDiachem Indus. Ltd. v. United States&,7 7KH&RXUWUHYLHZVFODVVLILFDWLRQFDVHVde novosee 86& D DQG RQ³WKHEDVLVRIWKHUHFRUGPDGHEHIRUHWKHFRXUW´Id. D ³7KHSODLQWLIIKDVWKHEXUGHQRIHVWDEOLVKLQJWKDWWKHJRYHUQPHQW VFODVVLILFDWLRQ RIWKHVXEMHFWPHUFKDQGLVHZDVLQFRUUHFW´Lerner New York, Inc. v. United States &,7 )6XSSG ³>3ODLQWLII@GRHVQRWEHDUWKH EXUGHQRIHVWDEOLVKLQJWKHFRUUHFWFODVVLILFDWLRQ LQVWHDGLWLVWKHFRXUW VLQGHSHQGHQW GXW\WRDUULYHDWµWKHFRUUHFWUHVXOW¶´Id FLWDWLRQVRPLWWHG ³7KHXOWLPDWHTXHVWLRQLQDFODVVLILFDWLRQFDVHLVZKHWKHUWKHPHUFKDQGLVHLV SURSHUO\FODVVLILHGXQGHURQHRUDQRWKHUFODVVLILFDWLRQKHDGLQJ´ZKLFKLV³DTXHVWLRQRI ODZ´Bausch & Lomb v. United States)G )HG&LU (YHU\ QHZHQWU\RIJRRGVLQWRWKH8QLWHG6WDWHVFRQVWLWXWHVDQHZFDXVHRIDFWLRQEHFDXVH HYHU\FODVVLILFDWLRQLQYROYHVERWKWKHLQWHUSUHWDWLRQRIWKHUHOHYDQWVWDWXWHDVZHOODV TXHVWLRQVRIIDFWUHJDUGLQJWKHPHUFKDQGLVHUnited States v. Mercantil Distribuidora S.A.&&3$&$' 0HUFKDQGLVHLVWREHFODVVLILHGEDVHGRQWKHFRQGLWLRQLQZKLFKLWLVLPSRUWHG See Mita Copystar Am. v. United States)G )HG&LU $WZR VWHSSURFHVVJXLGHVWKHFRXUWLQGHWHUPLQLQJWKHSURSHUFODVVLILFDWLRQRIPHUFKDQGLVH Sports Graphics, Inc. v. United States)G )HG&LU )LUVWWKH FRXUWPXVW³DVFHUWDLQ>@WKHSURSHUPHDQLQJRIVSHFLILFWHUPVZLWKLQWKHWDULIISURYLVLRQ´ BenQ America Corp. v. United States)G )HG&LU 7KLVLVD TXHVWLRQRIODZ6HFRQGWKHFRXUWPXVWGHWHUPLQH³ZKHWKHUWKHPHUFKDQGLVHDWLVVXH FRPHVZLWKLQWKHGHVFULSWLRQRIVXFKWHUPVDVSURSHUO\FRQVWUXHG´Id.7KLVLVD TXHVWLRQRIIDFW³>:@KHQWKHUHLVQRGLVSXWHDVWRWKHQDWXUHRIWKHPHUFKDQGLVHWKHQ WKHWZRVWHSFODVVLILFDWLRQDQDO\VLVµFROODSVHVHQWLUHO\LQWRDTXHVWLRQRIODZ¶´Link Snacks, Inc. v. United States)G ± )HG&LU TXRWLQJCummins Inc. v. United States)G )HG&LU ,QWKLVFDVHWKHUHDUH PDWHULDOIDFWVLQGLVSXWHVXFKWKDWVXPPDU\MXGJPHQWLVQRWDSSURSULDWHSeeBausch & Lomb)GDW KROGLQJVXPPDU\MXGJPHQWLVSURSHURQO\ZKHQWKHUHLVQR JHQXLQHGLVSXWHDVWRWKHXQGHUO\LQJIDFWXDOLVVXHRIH[DFWO\ZKDWWKHPHUFKDQGLVHLV Cf. Jedwards Int'l, Inc. v. United States&,7BBBBBB)6XSSG 7KLVLVVXFKDFDVHDQGVXPPDU\MXGJPHQWLVDSSURSULDWH /(*$/)5$0(:25. 7KH+7686LVFRGLILHGDW 86&DQGKDVWKHIRUFHRIVWDWXWRU\ODZ Aves. In Leather, Inc. v. United States)G )HG&LU 7KH *HQHUDO5XOHVRI,QWHUSUHWDWLRQ ³*5,V´ RIWKH+7686JRYHUQWKHSURSHUFODVVLILFDWLRQ RIPHUFKDQGLVHHQWHULQJWKH8QLWHG6WDWHV7KH*5,V³DUHDSSOLHGLQQXPHULFDORUGHU´ ABB, Inc. v. United States)G )HG&LU 7KH*5,VFRQVLVWRI VL[UXOHVEXW³LIDQHDUOLHUUXOHUHVROYHVWKHFODVVLILFDWLRQTXHVWLRQWKHFRXUWGRHVQRW ORRNWRVXEVHTXHQWUXOHV´CamelBak Prods., LLC v. United States )G )HG&LU ³7KH+7686LVGHVLJQHGVRWKDWPRVWFODVVLILFDWLRQTXHVWLRQVFDQEHDQVZHUHG E\*5,´Telebrands Corp. v. United States&,7)6XSSG aff'd )HG$SS[ )HG&LU *5,VWDWHVWKDW ³FODVVLILFDWLRQVKDOOEHGHWHUPLQHGDFFRUGLQJWRWKHWHUPVRIWKHKHDGLQJVDQGDQ\ UHODWLYH6HFWLRQRU&KDSWHU1RWHV´*5,7KHUHIRUH³DFRXUWILUVWFRQVWUXHVWKH ODQJXDJHRIWKHKHDGLQJDQGDQ\VHFWLRQRUFKDSWHUQRWHVLQTXHVWLRQ´Orlando Food Corp. v. United States)G )HG&LU 3XUVXDQWWR*5, SURSHUFODVVLILFDWLRQRIWKHVXEMHFWPHUFKDQGLVHLVLQWKHKHDGLQJWKDWGHVFULEHVWKH SURGXFWDWLVVXHFRPSOHWHO\DQGVSHFLILFDOO\ $EVHQWFRQWUDU\OHJLVODWLYHLQWHQW+7686WHUPVDUHFRQVWUXHGDFFRUGLQJWRWKHLU FRPPRQDQGFRPPHUFLDOPHDQLQJVLen–Ron Mfg. Co. v. United States)G )HG&LU :KHQLQWHUSUHWLQJDWDULIIWHUPWKHFRXUWPD\UHO\RQLWV RZQXQGHUVWDQGLQJRIWKHWHUPDQGRQVHFRQGDU\VRXUFHVVXFKDVVFLHQWLILFDXWKRULWLHV DQGGLFWLRQDULHVNorth Am. Processing Co. v. United States)G )HG &LU FLWLQJCarl Zeiss, Inc. v. United States, )G )HG&LU )RUDGGLWLRQDOGLUHFWLRQRQWKHVFRSHDQGPHDQLQJRIWDULIIKHDGLQJVDQGFKDSWHU DQGVHFWLRQQRWHVWKHFRXUWPD\DOVRFRQVXOWWKH([SODQDWRU\1RWHVWRWKH+DUPRQL]HG &RPPRGLW\'HVFULSWLRQDQG&RGLQJ6\VWHP ³(1V´ GHYHORSHGE\WKH:RUOG&XVWRPV 2UJDQL]DWLRQ :&2 (1VDUHQRWOHJDOO\ELQGLQJRQWKHFRXUWEXWPD\EHFRQVXOWHGIRU JXLGDQFHDQGDUHJHQHUDOO\LQGLFDWLYHRIWKHSURSHULQWHUSUHWDWLRQRIDWDULIISURYLVLRQ Degussa Corp. v. United States, )G )HG&LU FLWLQJMotorola, Inc. v. United States)G )HG&LU +RZHYHU³WKH([SODQDWRU\ 1RWHVDUHSHUVXDVLYHDXWKRULW\IRUWKHFRXUWZKHQWKH\VSHFLILFDOO\LQFOXGHRUH[FOXGHDQ LWHPIURPDWDULIIKHDGLQJ´H.I.M./Fathom Inc. v. United States&,7 ) 6XSS see also BASF Corp. v. United States&,7) 6XSSG aff’d )G )HG&LU 6LPLODUO\RSLQLRQVSXEOLVKHGE\WKH:&2PD\DOVRSURYLGHJXLGDQFH$:&2 RSLQLRQLVQRWELQGLQJDQGLVHQWLWOHGDWPRVWWR³UHVSHFWIXOFRQVLGHUDWLRQ´Cummins )GDW,WLVQRWDSUR[\IRULQGHSHQGHQWDQDO\VLVId ',6&866,21 ,&RPSHWLQJ7DULII3URYLVLRQV 7KH+7686GRHVQRWSURYLGHDVSHFLILFFODVVLILFDWLRQIRUWKHVXEMHFWPHUFKDQGLVH viz3&%$VDQGFKDVVLVLPSRUWHGE\3OH[XV3O%UDW$VVWDWHGE\GHIHQGDQW EDVHGRQ6HFWLRQ;9,1RWH E RIWKH+7686³WKHSURSHUFODVVLILFDWLRQRIWKH3&%$V DQGFKDVVLVKLQJHVRQWKHFODVVLILFDWLRQRIWKHHQFRGHUVPXOWLSOH[HUVDQG UHPXOWLSOH[HUVZLWKZKLFKWKH\DUHXVHG´'HI%UDW 6HFWLRQ;9,1RWH E SURYLGHV 6XEMHFWWRQRWHWRWKLVVHFWLRQQRWHWRFKDSWHUDQGWRQRWHWRFKDSWHU SDUWVRIPDFKLQHV QRWEHLQJSDUWVRIWKHDUWLFOHVRIKHDGLQJ>VLF@ RU DUHWREHFODVVLILHGDFFRUGLQJWRWKHIROORZLQJUXOHV « E 2WKHUSDUWVLIVXLWDEOHIRUXVHVROHO\RUSULQFLSDOO\ZLWKDSDUWLFXODUNLQGRI PDFKLQHRUZLWKDQXPEHURIPDFKLQHVRIWKHVDPHKHDGLQJ LQFOXGLQJD PDFKLQHRIKHDGLQJ RU DUHWREHFODVVLILHGZLWKWKHPDFKLQHVRIWKDW NLQGRULQKHDGLQJ>VLF@ RU DVDSSURSULDWH+RZHYHUSDUWVZKLFKDUHequally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other than transmission or reception apparatus of heading8525RU SDUWVWKHUHRI 7HOHSKRQH VHWV LQFOXGLQJ WHOHSKRQHV IRU FHOOXODU QHWZRUNV RU IRU RWKHUZLUHOHVVQHWZRUNV 3DUWV (PSKDVLVVXSSOLHG +HDGLQJVDQG LQWXUQSURYLGHLQUHOHYDQWSDUWV 7UDQVPLVVLRQDSSDUDWXVIRUUDGLREURDGFDVWLQJRUWHOHYLVLRQZKHWKHURU QRWLQFRUSRUDWLQJUHFHSWLRQDSSDUDWXVRUVRXQGUHFRUGLQJRUUHSURGXFLQJ DSSDUDWXV WHOHYLVLRQFDPHUDVGLJLWDOFDPHUDVDQGYLGHRFDPHUD UHFRUGHUV Parts VXLWDEOH IRU XVH VROHO\ RU SULQFLSDOO\ ZLWK WKH DSSDUDWXV RI headings 8525WR 2WKHU 3ULQWHG &LUFXLW $VVHPEOLHV 2I WHOHYLVLRQ DSSDUDWXV 2WKHU 2IUDGDUUDGLRQDYLJDWLRQDODLGRUUDGLRUHPRWHFRQWURO DSSDUDWXV 2WKHU (PSKDVLVVXSSOLHG ,QWKHSUHVHQWFDVHFODVVLILFDWLRQLQ+HDGLQJ ILUVWUHTXLUHVFODVVLILFDWLRQLQ +HDGLQJZKLFKFRYHUVLQUHOHYDQWSDUW³7UDQVPLVVLRQDSSDUDWXVIRUUDGLR EURDGFDVWLQJRUWHOHYLVLRQZKHWKHURUQRWLQFRUSRUDWLQJUHFHSWLRQDSSDUDWXVRUVRXQG UHFRUGLQJRUUHSURGXFLQJDSSDUDWXV´+HDGLQJFRYHUVLQUHOHYDQWSDUW ³DSSDUDWXVIRUWKHWUDQVPLVVLRQRUUHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWDLQFOXGLQJ DSSDUDWXVIRUFRPPXQLFDWLRQLQDZLUHGRUZLUHOHVVQHWZRUN VXFKDVDORFDORUZLGH DUHDQHWZRUN ´ ,, 3RVLWLRQVRIWKH3DUWLHV 3ODLQWLIIVHHNVFODVVLILFDWLRQRIWKH3&%$VDQGFKDVVLVXQGHUVXEKHDGLQJ DV³SDUWV´RIDUWLFOHVRI+HDGLQJ3O%UDW$VVXFKSODLQWLII DUJXHVWKDWWKH+DUPRQLF(05VZLWKZKLFKWKH3&%$VDQGFKDVVLVDUHXVHGDUH SURSHUO\FODVVLILHGLQ+HDGLQJUDWKHUWKDQLQ+HDGLQJSee id.DW 3ODLQWLIIILUVWDUJXHVWKDWWKHWHUP³transmission apparatusIRUUDGLREURDGFDVWLQJ RUWHOHYLVLRQ´LQ+HDGLQJ HPSKDVLVVXSSOLHG KDVDGLIIHUHQWPHDQLQJWKDQWKH WHUP³apparatus for the transmissionRUUHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWD´LQ +HDGLQJ HPSKDVLVVXSSOLHG Id6SHFLILFDOO\SODLQWLIIDUJXHVWKDWWKHIRUPHU UHIHUVWR³HTXLSPHQWWKDWsends signals outWRUDGLRVDQGWHOHYLVLRQV´Id. HPSKDVLV VXSSOLHG ZKLOHWKHODWWHU³LQFOXGHVHTXLSPHQWWKDWSHUIRUPVDIXQFWLRQthat is not the sending out of signals but that supportsWUDQVPLVVLRQ´Id. HPSKDVLVVXSSOLHG 7KH GLVWLQFWLRQLQSODLQWLII¶VYLHZLVRQHEHWZHHQ³SURGXFWVWKDWµWUDQVPLW¶PHDQLQJ>WKH\@ VHQGVLJQDOVWRRWKHUORFDWLRQVDQGSURGXFWVWKDWGRQRWµWUDQVPLW¶EXWWKDWGRVRPHWKLQJ WKDWVXSSRUWVWUDQVPLVVLRQ´3O%UDW 3ODLQWLIIVWDWHVWKDWLWUHDFKHGWKLV FRQFOXVLRQ³>E@DVHGXSRQWKHFRPPRQFRPPHUFLDODQGWHFKQLFDOPHDQLQJ´RIWKHZRUGV RI+HDGLQJId 2QWKLVEDVLVSODLQWLIIFRQFOXGHVWKDWWKH+DUPRQLF(05VZLWKZKLFKWKH3&%$V DQGFKDVVLVDUHXVHGFDQQRWEHFODVVLILHGLQ+HDGLQJEHFDXVHWKH\³GRQRWVHQG VLJQDOVWRUDGLRVRUWHOHYLVLRQV´ Id.DW5DWKHUDFFRUGLQJWRSODLQWLIIWKH+DUPRQLF (05VDUHSURSHUO\FODVVLILHGLQ+HDGLQJ³>E@HFDXVHWKH>+DUPRQLF(05V@VKULQN WKHVL]HRIGLJLWDODXGLRYLGHRGDWDLQRUGHUWRHQKDQFHWKHVWRUDJHDQGHYHQWXDO WUDQVPLVVLRQRIWKDW>VLF@GDWDE\RWKHUHTXLSPHQW´ Id. &ODVVLILFDWLRQLQ+HDGLQJ LVIXUWKHUVXSSRUWHGSODLQWLIIDGGVE\WKH([SODQDWRU\1RWHVDQGD:&2&ODVVLILFDWLRQ 2SLQLRQSee id. 'HIHQGDQWDUJXHVWKDWWKH3&%$VDUHFODVVLILDEOHLQVXEKHDGLQJ DQG WKHFKDVVLVDUHFODVVLILDEOHLQVXEKHDGLQJ See 'HI%UDW&ODVVLILFDWLRQ DW+HDGLQJ DVXUJHGE\GHIHQGDQWILUVWUHTXLUHVFODVVLILFDWLRQRIWKH+DUPRQLF (05VLQ+HDGLQJ'HIHQGDQWDVVHUWVWKDWWKHFRPPRQPHDQLQJRI³WUDQVPLVVLRQ DSSDUDWXVIRUWHOHYLVLRQ´VXSSRUWVFODVVLILFDWLRQRIWKH+DUPRQLF(05VLQ+HDGLQJ See id.DW$FFRUGLQJWRGHIHQGDQW³WUDQVPLVVLRQPHDQVWRFRQYH\RUWUDQVIHU LQIRUPDWLRQVLJQDOVRUGDWDIURPRQHORFDWLRQWRDQRWKHU´Id.DW LQWHUQDOFLWDWLRQV RPLWWHG %HFDXVHWKHGDWDVLJQDOVWKDWHQWHUWKH+DUPRQLF(05V³GRQRWUHVLGHWKHUH LQSHUSHWXLW\´id.DWEXWUDWKHUDUH³PRYH>G@DORQJWKHWUDQVPLVVLRQSDWK´WKH +DUPRQLF(05VFDQEHGHVFULEHGDV³WUDQVPLVVLRQDSSDUDWXV´ZLWKLQWKHPHDQLQJRI +HDGLQJId.DW,QEULHIGHIHQGDQWDUJXHVWKDWWKHVFRSHRI³>+@HDGLQJ LVQRWOLPLWHGWRDGHYLFHWKDWLVDQDFWXDOWUDQVPLWWHU´Id.DW ,QDGGLWLRQGHIHQGDQWDUJXHVWKDWWKH+DUPRQLF(05VDUHSURSHUO\FODVVLILHGLQ +HDGLQJEHFDXVH³WKHUHLVQRGLVSXWHWKDW>(05V@DUHXVHGLQWKHSURFHVVWKDW UHVXOWVLQWKHWUDQVPLVVLRQRIWHOHYLVLRQSURJUDPPLQJ´Id.DW0RUHRYHUWKH H[FOXVLRQLQ+HDGLQJRI³WUDQVPLVVLRQRUUHFHSWLRQDSSDUDWXVRIKHDGLQJ´ IURP+HDGLQJVXJJHVWVWKDW³ZKHQWHOHYLVLRQVLJQDO>VLF@DUHLQYROYHGKHDGLQJ FRQWUROV´Id.DW )XUWKHUGHIHQGDQWGLVDJUHHVZLWKSODLQWLII¶VSURSRVHGLQWHUSUHWDWLRQRI+HDGLQJ DVHTXLSPHQWWKDWWUDQVPLWVDQGRI+HDGLQJDVHTXLSPHQWWKDWVXSSRUWV WUDQVPLVVLRQSee id'HIHQGDQWFRQWHQGVWKDW³DVDPDWWHURIVHQWHQFHVWUXFWXUHDQG JUDPPDUDSKUDVHµWUDQVPLVVLRQDSSDUDWXVIRUWHOHYLVLRQ¶KDVWKHVDPHPHDQLQJDV µDSSDUDWXVIRUWKHWUDQVPLVVLRQRIWHOHYLVLRQ¶´Id.DW/DVWO\LQDGGUHVVLQJSODLQWLII¶V DUJXPHQWVGHIHQGDQWSRLQWVRXWWKDWWKH:&2&ODVVLILFDWLRQ2SLQLRQWRZKLFKSODLQWLII UHIHUVLVQRWELQGLQJDQGWKDWSODLQWLII¶VUHOLDQFHRQWKH([SODQDWRU\1RWHVWREROVWHULWV FODVVLILFDWLRQDUJXPHQWLVPLVSODFHGSee id.DW± ,,, &ODVVLILFDWLRQRIWKH6XEMHFW0HUFKDQGLVH 7RDVVHVVZKHWKHUWKHFRXUWPD\GHWHUPLQHWKHDSSURSULDWHFODVVLILFDWLRQRIWKH VXEMHFWPHUFKDQGLVHWKHFRXUWILUVWFRQVLGHUVVL[NH\LVVXHVUDLVHGE\WKHSDUWLHV FRQFHUQLQJWKHPHDQLQJRI+HDGLQJVDQG WKHGHILQLWLRQVRIWKHWHUPV ³WUDQVPLVVLRQ´³DSSDUDWXV´DQG³WHOHYLVLRQ´ WKHDSSURSULDWHQHVVRIDSULQFLSDOXVH DQDO\VLVZLWKUHVSHFWWRWKHKHDGLQJVDWLVVXH WKHUHOHYDQFHRI([SODQDWRU\1RWH * WR+HDGLQJ WKHPHDQLQJRIWKHDPHQGPHQWVWR+HDGLQJ &XVWRPV¶WUDQVPLVVLRQSDWKWKHRU\DQGGHIHUHQFHWRSULRUUXOLQJOHWWHUV DQG WKH UHOHYDQFHRIWKH&RXUWRI&XVWRPVDQG3DWHQW$SSHDOV¶GHFLVLRQLQUnited States v. Ampex Corp. &&3$)G $IWHUGHWHUPLQLQJWKH DQVZHUVWRWKHVHVL[NH\LVVXHVWKHFRXUWWKHQWXUQVWRWKHFODVVLILFDWLRQLVVXHDWKDQG LQOLJKWRIWKHPHDQLQJRIWKHKHDGLQJVDQGPDNHVDQDVVHVVPHQWDVWRZKHWKHUWKHUHLV DJHQXLQHGLVSXWHDVWRDQ\PDWHULDOIDFW7KHFRXUWFRQFOXGHVWKDWWKHUHLVDQG WKHUHIRUHGHQLHVSODLQWLII V5XOHPRWLRQIRUVXPPDU\MXGJPHQWGHQLHVGHIHQGDQW V 5XOHFURVVPRWLRQIRUVXPPDU\MXGJPHQWDQGJUDQWVSDUWLDOVXPPDU\MXGJPHQWRQ WKHLVVXHVDGGUHVVHGEHORZ $ 0HDQLQJRI+HDGLQJVDQG 7RXQGHUVWDQGDQGDSSO\SURSHUO\WKHODQJXDJHRI+HDGLQJVDQGWKH FRXUWEHJLQVE\GHILQLQJWKHWHUPVLQHDFKKHDGLQJ%RWKKHDGLQJVFRQWDLQWKHZRUGV ³DSSDUDWXV´DQG³WUDQVPLVVLRQ´ KRZHYHUDVQRWHGDERYHWKHKHDGLQJVXVHWKHZRUGV GLIIHUHQWO\DQGWKHSDUWLHVGLVSXWHWKHFRQWH[WDQGPHDQLQJRIWKHZRUGVLQWKH UHVSHFWLYHKHDGLQJV 'HILQLWLRQVRI.H\7HUPV²7UDQVPLVVLRQ$SSDUDWXVDQG 7HOHYLVLRQ D 7UDQVPLVVLRQDQG$SSDUDWXV 7KHFRXUWEHJLQVZLWKWKHZRUG³WUDQVPLVVLRQ´7KH+7686GRHVQRWGHILQH ³WUDQVPLVVLRQ´7KHUHIRUHWKHFRXUWWXUQVWRGLFWLRQDU\GHILQLWLRQVWRGHWHUPLQHWKH SURSHUPHDQLQJ:KHQLQWHUSUHWLQJDWDULIIWHUPWKHFRXUWPD\UHO\RQLWVRZQ XQGHUVWDQGLQJRIWKHWHUPDQGRQVHFRQGDU\VRXUFHVVXFKDVVFLHQWLILFDXWKRULWLHVDQG GLFWLRQDULHVNorth Am. Processing Co.)GDW FLWLQJCarl Zeiss, )GDW 'LFWLRQDULHVRQZKLFKERWKSDUWLHVUHO\GHILQHWKHWHUP³WUDQVPLVVLRQ´DVIROORZV ³ WKHSURFHVVRIWUDQVIHUULQJDVLJQDOPHVVDJHSLFWXUHRURWKHUIRUPRILQWHOOLJHQFH IURPRQHORFDWLRQWRDQRWKHUORFDWLRQE\PHDQVRIZLUHOLQHVUDGLROLJKWEHDPVLQIUDUHG EHDPVRURWKHUFRPPXQLFDWLRQVV\VWHPV´0&*5$:+,//',&7,21$5<2)6&,(17,),&$1' 7(&+1,&$/7(506 WKHG ³ &RQYH\DQFHRUWUDQVIHUIURPRQHSHUVRQRUSODFH WRDQRWKHU« &RQYH\DQFHRUSDVVDJHWKURXJKDPHGLXPDVRIOLJKWKHDWVRXQG HWF$OVRspec., WKHVHQGLQJRXWRIHOHFWURQLFVLJQDOVRUHOHFWURPDJQHWLFZDYHV WKH EURDGFDVWLQJRIUDGLRRUWHOHYLVLRQSURJUDPV ´6+257(52;)25'(1*/,6+ ',&7,21$5<21+,6725,&$/35,1&,3/(6 WKHG ³7KHVHQGLQJRIDVLJQDOSLFWXUH RURWKHULQIRUPDWLRQIURPDWUDQVPLWWHU´7+($0(5,&$1+(5,7$*(',&7,21$5<2)7+( (1*/,6+/$1*8$*( WKHG ³7KHSDVVDJHRIUDGLRZDYHVLQWKHVSDFH EHWZHHQWUDQVPLWWLQJDQGUHFHLYLQJVWDWLRQV also WKHDFWRUSURFHVVRIWUDQVPLWWLQJE\ UDGLRRUWHOHYLVLRQ´0(55,$0:(%67(521/,1(',&7,21$5<3O%UDW 'HI%UDW ,QVXPGLFWLRQDU\GHILQLWLRQVLQGLFDWHWKDWDWUDQVPLVVLRQSURGXFWVHQGVDVLJQDO IURPRQHORFDWLRQWRDQRWKHUORFDWLRQ 6LPLODUO\WKH+7686GRHVQRWGHILQH³DSSDUDWXV´ KRZHYHUWKH&RXUWKDV FRQVWUXHGWKDWWHUPRQDQXPEHURIRFFDVLRQVSee, e.g., Photonetics, Inc. v. United States&,7 )6XSSG ITT Thompson Industries, Inc. v. United States&,7)6XSS In re Alappat)G )HG &LU ,QITT ThompsonWKHFRXUWFRQFOXGHGWKDWWKHWHUPLV³LQWHQGHGWR HQFRPSDVVDJURXSRIGHYLFHVRUDFROOHFWLRQRUVHWRIPDWHULDOVLQVWUXPHQWVRU DSSOLDQFHVWREHXVHGIRUDSDUWLFXODUSXUSRVHRUDJLYHQHQG´ITT Thompson,) 6XSSDW3ODLQWLIIGRHVQRWRIIHUDQ\GHILQLWLRQVRI³DSSDUDWXV´ZKLOHGHIHQGDQW SURYLGHVWKUHHGLFWLRQDU\GHILQLWLRQV7KRVHGHILQLWLRQVDUHVLPLODUWRWKHRQHXVHGE\ WKHFRXUWLQITT ThompsonSee 'HI5HS%UDW7KHUHIRUHWKHFRPPRQPHDQLQJ 'HIHQGDQWSUHVHQWVWKHIROORZLQJGHILQLWLRQV ³DVHWRIPDWHULDOVRUHTXLSPHQW GHVLJQHGIRUDSDUWLFXODUXVH´0(55,$0:(%67(521/,1(',&7,21$5< ³7KHWHFKQLFDO HTXLSPHQWRUPDFKLQHU\QHHGHGIRUDSDUWLFXODUDFWLYLW\RUSXUSRVH´/(;,&2 ³DJURXS RUFRPELQDWLRQRILQVWUXPHQWVPDFKLQHU\WRROVPDWHULDOVHWFKDYLQJDSDUWLFXODU IXQFWLRQRULQWHQGHGIRUDVSHFLILFXVH´',&7,21$5<&207KHVHGHILQLWLRQVLQGLFDWHWKDW ³DSSDUDWXV´UHIHUVJHQHUDOO\WRDGHYLFHGHVLJQHGIRUDSDUWLFXODUXVHRUSXUSRVH RIWKHWHUPV³WUDQVPLVVLRQ´DQG³DSSDUDWXV´LQGLFDWHVGHYLFHVGHVLJQHGIRUWKHSXUSRVH RIVHQGLQJVLJQDOVIURPRQHORFDWLRQWRDQRWKHU 3ODLQWLIIDUJXHVWKDW³WUDQVPLVVLRQDSSDUDWXV´LQ+HDGLQJUHIHUVWR HTXLSPHQWWKDWVHQGVVLJQDOVRXWWRDfinal UHFHSWLRQGHYLFHZKLFKIRU+HDGLQJ ZRXOGEHHLWKHUDUDGLRRUDWHOHYLVLRQ3O%UDW3ODLQWLIIPDLQWDLQVWKDWLQFRQWUDVW WKHPHDQLQJRIWKHWHUP³DSSDUDWXVIRUWKHWUDQVPLVVLRQ´LQ+HDGLQJHQFRPSDVVHV SURGXFWVWKDWsupport WUDQVPLVVLRQSee 3O%UDW 7KLVDUJXPHQWLVQRWVXSSRUWHGE\WKHWH[WRIWKH+7686)LUVWWKHUHLVQR LQGLFDWLRQLQWKHWH[W([SODQDWRU\1RWHVRURWKHULQWHUSUHWDWLYHPDWHULDOVWKDWWKHXVHRI WKHWZRQHDUO\LGHQWLFDOWHUPV²³WUDQVPLVVLRQDSSDUDWXV´LQ+HDGLQJDQG ³DSSDUDWXVIRUWKHWUDQVPLVVLRQ´LQ+HDGLQJ²ZDVLQWHQGHGWRFRQYH\GLIIHUHQW PHDQLQJV6HFRQGWKHFRPPRQPHDQLQJRIWKHWHUP³WUDQVPLVVLRQDSSDUDWXV´GRHV QRWUHTXLUHDVSODLQWLIIZRXOGKDYHLWWKDWWKHVXEVHTXHQWORFDWLRQEHWKHfinal UHFHSWLRQ GHYLFHSee GLFWLRQDU\GHILQLWLRQVGLVFXVVHGsupra S 6LPLODUO\WKHUHLVQR LQGLFDWLRQIURPWKHWH[WWKDW³WUDQVPLVVLRQDSSDUDWXV´UHIOHFWVWKHQDUURZGHILQLWLRQWKDW SODLQWLIIVHHNVWRLPSRVHRQLW,QIDFWWKHGLFWLRQDU\GHILQLWLRQVFLWHGDERYHE\ERWK SDUWLHVVXSSRUWDFRPPRQPHDQLQJRI³WUDQVPLVVLRQ´WKDW³PHDQVWRFRQYH\RUWUDQVIHU LQIRUPDWLRQVLJQDOVRUGDWDIURPRQHORFDWLRQWRDQRWKHU´See3O5HS%UDW 3ODLQWLIIFLWHV([SODQDWRU\1RWH $ WR+HDGLQJDVVXSSRUWIRULWVQDUURZGHILQLWLRQ RI³WUDQVPLVVLRQDSSDUDWXV´DV³WKHDSSDUDWXVWKDWSHUIRUPVWKHDFWRIVHQGLQJDVLJQDO RXW´3O%UDW([SODQDWRU\1RWH $ SURYLGHVDOLVWRIH[HPSODUVRIPHUFKDQGLVH WKDWPHHWWKLVGHILQLWLRQZKLFK³VKDUHWKHFRPPRQSXUSRVHRISHUIRUPLQJWKHDFWRI VHQGLQJVLJQDOVIURPRQHORFDWLRQWRDQRWKHU´3O%UDW3ODLQWLIIWKHQPDNHVWKH ORJLFDOOHDSWKDW³>L@QFRQWUDVWWKH+DUPRQLFSURGXFWVGRQRWVHQGVLJQDOVRXWWRDQRWKHU ORFDWLRQ´Id 'HI%UDW)LQDOO\WKHXVHRIWKHPRUHJHQHUDOWHUP³WUDQVPLVVLRQ´DOVRFRQWUDVWV ZLWKWKHZRUG³WUDQVPLWWHU´ZKLFKLVQRWXVHGLQ+HDGLQJDQGFRQQRWHVDQDUURZHU PHDQLQJDORQJWKHOLQHVRIWKDWRIIHUHGE\SODLQWLII'HI%UDW ,QDGGLWLRQWRLQFOXGLQJWKHWHUPV³WUDQVPLVVLRQ>@DSSDUDWXV´DQG³DSSDUDWXVIRU WKHWUDQVPLVVLRQ´WKHSODLQODQJXDJHRI+HDGLQJSURYLGHVWKDWZKHQWHOHYLVLRQ VLJQDOVDUHLQYROYHG+HDGLQJFRQWUROV+HDGLQJ see also'HI%UDW %DVHGRQWKLVWH[WWKHGUDIWHUVRIWKH+7686DSSDUHQWO\UHFRJQL]HGWKDWLWHPVPD\EH FODVVLILDEOHLQERWK+HDGLQJVDQGDPRQJRWKHUVUHJDUGOHVVRIWKH FRQVWUXFWLRQRIWKHZRUGV³WUDQVPLVVLRQ´DQG³DSSDUDWXV´:HUHLWRWKHUZLVHWKH GUDIWHUVZRXOGQRWKDYHH[SUHVVO\H[FOXGHGWHOHYLVLRQVLJQDOVIURP+HDGLQJ 3ODLQWLIIPDLQWDLQVWKDW+HDGLQJFRYHUVRQO\LWHPVWKDWVXSSRUW WUDQVPLVVLRQZKLOH+HDGLQJHQFRPSDVVHVRQO\LWHPVWKDWIXQFWLRQDVDFWXDO WUDQVPLWWHUV3O%UDW 7KLVDUJXPHQWLVLQFRUUHFW([SODQDWRU\1RWH * WR+HDGLQJ QDPHV³WUDQVPLWWHUV´DVDQH[DPSOHRIOLQHHTXLSPHQWUHODWHGWRPXOWLSOH[HUV(1 * ,I+HDGLQJFRQVLVWHGRQO\RILWHPVWKDWsupport WUDQVPLVVLRQUDWKHU WKDQLWHPVWKDWDFWXDOO\transmit VLJQDOV³WUDQVPLWWHUV´ZRXOGQRWEHOLVWHGLQWKH 3ODLQWLIIDOVRUHOLHVRQDQRSLQLRQRIWKH:RUOG&XVWRPV2UJDQL]DWLRQ :&2 WKDW FODVVLILHGGLJLWDOHQFRGHUVPXOWLSOH[HUVDQGUHPXOWLSOH[HUVLQ+HDGLQJ3O%UDW $FFRUGLQJWRSODLQWLIIWKH:&2RSLQLRQGHWHUPLQHGWKDWWKHLWHPVDUHFODVVLILHG LQ+HDGLQJDQGQRWLQ+HDGLQJEHFDXVHWKH\GRQRWSHUIRUPWKHIXQFWLRQRI WUDQVPLWWLQJVLJQDOVIdDW3ODLQWLIIDUJXHVWKDWWKH:&2RSLQLRQWKXVSURYLGHV JXLGDQFH³WKDW+HDGLQJµWUDQVPLVVLRQDSSDUDWXV¶FRYHUVLWHPVWKDWWUDQVPLWD VLJQDODQGWKDW+HDGLQJ¶VµDSSDUDWXVIRUWKHWUDQVPLVVLRQ¶FRYHUVLWHPVWKDWGRQRW WUDQVPLWEXWWKDWSHUIRUPDIXQFWLRQLQVXSSRUWRIWUDQVPLVVLRQ´Id$VQRWHGDERYHWKH ODQJXDJHRIWKH+7686GRHVQRWVXSSRUWWKLVFRQFOXVLRQSee GLVFXVVLRQsupra 6HFWLRQ,,,$$FFRUGLQJO\WKH:&2RSLQLRQLVHQWLWOHGWR³UHVSHFWIXOFRQVLGHUDWLRQ´E\ WKHFRXUW KRZHYHUWKHFRXUWGRHVQRWILQGWKHRSLQLRQSHUVXDVLYHCummins,)G DW ([SODQDWRU\1RWHV+HDGLQJWKHUHIRUHGHVFULEHVERWKGHYLFHVWKDWDFWXDOO\ WUDQVPLWDQGRQHVWKDWVXSSRUWWUDQVPLVVLRQ 3ODLQWLIIQH[WDUJXHVWKDW([SODQDWRU\1RWH $ PDNHVFOHDUWKDW+HDGLQJ DSSOLHVRQO\WRDFWXDOWUDQVPLWWHUVWKHUHE\H[FOXGLQJWKHVXEMHFW+DUPRQLF(05VDW LVVXHLQWKLVFDVH7KHFRUHSUHPLVHRISODLQWLII¶VDUJXPHQWLVWKDW([SODQDWRU\1RWH $ WR+HDGLQJVKRXOGEHLQWHUSUHWHGEDVHGRQWKHSULQFLSOHRIejusdem generisVXFK WKDWLWLQFOXGHVRQO\GHYLFHVWKDWDFWXDOO\SHUIRUPWKHDFWRIVHQGLQJVLJQDOVIURPRQH ORFDWLRQWRDQRWKHU3O%UDW'HIHQGDQWDUJXHVWKDWWKHSULQFLSOHRIejusdem generisGRHVQRWDSSO\WRWKHSURYLVLRQDQGWKDWSODLQWLII¶VSURIIHUHGLQWHUSUHWDWLRQZRXOG LPSURSHUO\QDUURZWKHSODLQPHDQLQJRI+HDGLQJ ([SODQDWRU\1RWH $ WR+HDGLQJSURYLGHV ³WKLVJURXS>RIWUDQVPLVVLRQDSSDUDWXVIRUUDGLREURDGFDVWLQJRUWHOHYLVLRQ@includes ³ 7UDQVPLWWHUIRUUDGLREURDGFDVWLQJRUWHOHYLVLRQ 5HOD\DSSDUDWXVXVHGWRSLFNXSDEURDGFDVWIRUWUDQVPLVVLRQDQG UHWUDQVPLWLWWRDQGVRLQFUHDVHWKHUDQJH LQFOXGLQJWHOHYLVLRQUHOD\DSSDUDWXV IRUPRXQWLQJLQDLUFUDIW 5HOD\WHOHYLVLRQWUDQVPLWWHUVIRUWUDQVPLVVLRQE\PHDQVRIDQDHULDODQG SDUDEROLFUHIOHFWRUIURPWKHVWXGLRRUVLWHRIDQRXWVLGHEURDGFDVWWRWKHPDLQ WUDQVPLWWHU 7HOHYLVLRQWUDQVPLWWHUVIRULQGXVWULDOXVH HJIRUUHDGLQJLQVWUXPHQWVDWD GLVWDQFHRUIRUREVHUYDWLRQLQGDQJHURXVORFDOLWLHV :LWKWKLVDSSDUDWXVWKH WUDQVPLVVLRQLVRIWHQE\OLQH´ ([SODQDWRU\1RWH $ WR+HDGLQJ HPSKDVLVVXSSOLHG *HQHUDOO\, ejusdem generisDQDO\VLVLVD³FDQRQRIFRQVWUXFWLRQKROGLQJWKDW ZKHQDJHQHUDOZRUGRUSKUDVHIROORZVDOLVWRIVSHFLILFVWKHJHQHUDOZRUGRUSKUDVHZLOO EHLQWHUSUHWHGWRLQFOXGHRQO\LWHPVRIWKHVDPHFODVVDVWKRVHOLVWHG´%/$&.¶6/$: ',&7,21$5< WKHG See also0(55,$0:(%67(5/$:',&7,21$5< GHILQLQJ ejusdem generisDV³DUXOHRIFRQVWUXFWLRQ JHQHUDOZRUGV DVLQDVWDWXWH WKDWIROORZ VSHFLILFZRUGVLQDOLVWPXVWEHFRQVWUXHGDVUHIHUULQJRQO\WRWKHW\SHVRIWKLQJV LGHQWLILHGE\WKHVSHFLILFZRUGV´ 6SHFLILFDOO\³,QFODVVLILFDWLRQFDVHVejusdem generis UHTXLUHVWKDWIRUDQ\LPSRUWHGPHUFKDQGLVHWRIDOOZLWKLQWKHVFRSHRIWKHJHQHUDOWHUP RUSKUDVHWKHPHUFKDQGLVHPXVWSRVVHVVWKHVDPHHVVHQWLDOFKDUDFWHULVWLFVRU SXUSRVHVWKDWXQLWHWKHOLVWHGH[HPSODUVSUHFHGLQJWKHJHQHUDOWHUPRUSKUDVH´ Avenues In Leather, Inc. v. United States)G )HG&LU 7KHVH GHILQLWLRQVWKHUHIRUHEXWWUHVVWKHGHILQLWLRQRI³ejusdem generis´DUJXHGE\GHIHQGDQW 7KHOLVWLQTXHVWLRQLVQRWDQH[KDXVWLYHOLVWZLWKDFDWFKDOOWHUP UDWKHULWLVOLVWRI H[HPSODUVLQWURGXFHGE\WKHZRUG³LQFOXGLQJ´7KHPHDQLQJRIWKHZRUG³LQFOXGLQJ´ YDULHVZLWKFRQWH[W,QDVWDWXWHLWPD\VHUYHWR FRQQRWHDQLOOXVWUDWLYHDSSOLFDWLRQRI WKHJHQHUDOGHVFULSWLRQZLWKRXWOLPLWLQJWKHJHQHUDOGHVFULSWLRQUDWKHUWKDQWRSURYLGHDQ DOOHPEUDFLQJGHILQLWLRQ ³DGGSURGXFWVWRWKHKHDGLQJWKDWIDOORXWVLGHWKHJHQHUDO GHVFULSWLRQ´ DUUHVWDQ\GRXEWDVWRZKHWKHUWKHH[HPSODUVDUHLQFOXGHGZLWKLQWKH FODVV RU ³GHPDUFDWHWKHERXQGDU\EHWZHHQZKDWIDOOVZLWKLQWKHJHQHUDOFODVVIURP WKDWZKLFKIDOOVZLWKRXWWKHUHE\OLPLWLQJWKHVFRSHRIWKHJHQHUDOFODVV´Cummins Inc. v. United States, &,7)6XSSG 7RGHFLGHZKLFKLIDQ\RIWKHVHSRVVLELOLWLHVDSSOLHVLQWKHLQVWDQWFDVH³WKH >F@RXUWQHHGVWRUHDGWKHµLQFOXGLQJ¶ODQJXDJHLQOLJKWRIWKHFRQWH[WDQGSXUSRVHRILWV XVHRUDVWKHOHJLVODWLYHKLVWRU\PD\VXJJHVW´Id LQWHUQDOFLWDWLRQVRPLWWHG ,QWKLV FDVHWKHPRVWDSSURSULDWHLQWHUSUHWDWLRQRIWKHXVHRILQFOXGLQJIRU([SODQDWRU\1RWH $ WR+HDGLQJLVWKHILUVWLQWHUSUHWDWLRQ$VWUXFWXUDODQDO\VLVRI([SODQDWRU\1RWH $ WR+HDGLQJVXJJHVWVWKDWWKHOLVWLQWKH([SODQDWRU\1RWHLVLOOXVWUDWLYH7KH ([SODQDWRU\1RWHEHJLQVE\GHVFULELQJWKHW\SHVRIWUDQVPLVVLRQVIRUZKLFKWKH DSSDUDWXVLVXVHGWKDWIDOOLQWRWKHKHDGLQJ7KH([SODQDWRU\1RWHVWDWHVWKDWWKH ³DSSDUDWXVIRUUDGLREURDGFDVWLQJIDOOLQJLQWKLVJURXSPXVWEHIRUWKHWUDQVPLVVLRQRI VLJQDOVE\PHDQVRIHOHFWURPDJQHWLFZDYHVWUDQVPLWWHGWKURXJKWKHHWKHUZLWKRXWDQ\ OLQHFRQQHFWLRQ2QWKHRWKHUKDQGWHOHYLVLRQDSSDUDWXVIDOOVKHUHZKHWKHUWKH WUDQVPLVVLRQLVE\HOHFWURPDJQHWLFZDYHVRUE\OLQH´+7686(1 $ ([SODQDWRU\1RWH $ SURFHHGVWROLVWZKDW³WKLVJURXS´LQFOXGHVId7KHUHIRUHWKLV VWUXFWXUHLQGLFDWHVDQLQWHQWWRSURYLGHH[DPSOHVZLWKRXWOLPLWLQJWKHJHQHUDOGHVFULSWLRQ $GGLWLRQDOO\%/$&.¶6/$:',&7,21$5< WKHG VXSSRUWVWKLVLQWHUSUHWDWLRQ E\VWDWLQJ³>W@KHSDUWLFLSOHLQFOXGLQJW\SLFDOO\LQGLFDWHVDSDUWLDOOLVW´7KLVGHILQLWLRQRI ³LQFOXGLQJ´LVDFFHSWHGLQPDQ\FRXUWGHFLVLRQVE.g., Bloate v. United States, 86 Amanda Foods (Vietnam) Ltd. v. United States&,7)6XSS G 7KLV&RXUWGRHVQRWDSSO\WKHSULQFLSOHRIejusdem generis WRDQLOOXVWUDWLYHOLVW ZLWKRXWDJHQHUDO³FDWFKDOO´WHUP,QGHHGDOOIRXUFDVHVFLWHGE\SODLQWLIILQVXSSRUWRI LWVDUJXPHQWDSSO\ejusdem generisWROLVWVWKDWHQGZLWKVXFKDJHQHUDOWHUPSee Otter Prod., LLC v. United States)G )HG&LU ³DQGVLPLODU FRQWDLQHUV´ Victoria’s Secret Direct, LLC v. United States )G )HG &LU ³DQGVLPLODUDUWLFOHV´ Avenues in Leather, Inc. v. United States)G )HG&LU ³VLPLODUFRQWDLQHUV´DQG³VLPLODUDUWLFOHV´ Sports Graphics, Inc. v. United States)G )HG&LU ³KRXVHKROGDUWLFOHVQRW VSHFLILFDOO\SURYLGHGIRU´ 7KHUHIRUHQRQHRIWKHFDVHVSUHVHQWHGE\SODLQWLIILV DSSRVLWHWRWKHFXUUHQWFDVH 7KHFRXUWWKHUHIRUHGHWHUPLQHVEDVHGRQWKHODQJXDJHRI([SODQDWRU\1RWH $ WR +HDGLQJWKDWWKHejusdem generis SULQFLSOHGRHVQRWDSSO\ (YHQDVVXPLQJarguendoWKDWejusdem generisZHUHWRDSSO\WRWKHOLVWLQ ([SODQDWRU\1RWH $ SODLQWLII¶VDUJXPHQWRQWKLVSRLQWZRXOGIDLO7KDWLVEHFDXVH SODLQWLIIKHUHDWWHPSWVWRXVHDQ(1WR+HDGLQJWRGHILQH³WUDQVPLVVLRQDSSDUDWXV´ PRUHQDUURZO\WKDQWKHSODLQPHDQLQJRIWKHZRUGVLQWKHKHDGLQJ7KLV&RXUWDQGWKH 86&RXUWRI$SSHDOVIRUWKH)HGHUDO&LUFXLW ³)HGHUDO&LUFXLW´ KDYHUHMHFWHGVLPLODU DWWHPSWVWRXVH(1VWRLQWHUSUHWDKHDGLQJDVQDUURZHUWKDQLWVSODLQPHDQLQJ LQWHUSUHWDWLRQSee Rubie’s Costume Co. v. United States )G )HG &LU Apple Inc. v. United States&,7BB)6XSSG aff'd )G )HG&LU )RUH[DPSOHLQRubie’s CostumeWKH)HGHUDO&LUFXLW UHMHFWHGVXFKDQLQWHUSUHWDWLRQVWDWLQJWKDW³>D@OWKRXJKWKHH[DPSOHVLQWKH(1VDUH SUREDWLYHDQGVRPHWLPHVLOOXPLQDWLQJZHVKDOOQRWHPSOR\WKHLUOLPLWLQJFKDUDFWHULVWLFV WRWKHH[WHQWWKHUHDUHDQ\WRQDUURZWKHODQJXDJHRIWKHFODVVLILFDWLRQKHDGLQJLWVHOI´ )GDW $FFRUGLQJO\WKHFRXUWUHMHFWVSODLQWLII¶VWZRSDUWDUJXPHQWFRQFHUQLQJ WKHDSSOLFDWLRQRI([SODQDWRU\1RWH $ WR+HDGLQJ E 7HOHYLVLRQ 7KHFRXUWWXUQVQH[WWRWKHPHDQLQJRIWKHWHUP³WHOHYLVLRQ´LQ+HDGLQJ 7KH+7686GRHVQRWGHILQHWKHWHUP³WHOHYLVLRQ´LQ+HDGLQJ7KH&RXUWKDV GHILQHGWHOHYLVLRQDV³YLVLRQDWDGLVWDQFH KHQFHWKHWUDQVPLVVLRQDQGUHSURGXFWLRQRI DYLHZRUVFHQHHVS>VLF@DYLHZRISHUVRQVRUREMHFWVLQPRWLRQE\DQ\GHYLFHZKLFK FRQYHUWVOLJKWUD\VLQWRHOHFWULFDOZDYHVDQGUHFRQYHUWVWKHVHLQWRYLVLEOHOLJKWUD\V´ Sears Roebuck & Co. v. United States&,7 )6XSS FLWLQJ:(%67(5¶61(:,17(51$7,21$/',&7,21$5<2)7+((1*/,6+/$1*8$*( GHG 7RGHWHUPLQHWKHFRUUHFWPHDQLQJRIWHOHYLVLRQWKHFRXUWFRQVXOWVWKHVDPH GLFWLRQDULHVWKDWWKHFRXUWXVHGWRFODULI\WKHGHILQLWLRQRI³WUDQVPLVVLRQ´7KHVH GLFWLRQDULHVGHILQH³WHOHYLVLRQ´DVIROORZV ³$V\VWHPIRUFRQYHUWLQJDVXFFHVVLRQRI YLVXDOLPDJHVLQWRFRUUHVSRQGLQJHOHFWULFVLJQDOVDQGWUDQVPLWWLQJWKHVHVLJQDOVE\UDGLR RURYHUZLUHVWRLQVWDQWUHFHLYHUVDWZKLFKWKHVLJQDOVFDQEHXVHGWRUHSURGXFHWKH RULJLQDOLPDJHV´ 0&*5$:+,//',&7,21$5<2)6&,(17,),&$1'7(&+1,&$/7(506WKHG 6LPLODUO\WKH6+257(52;)25'(1*/,6+',&7,21$5<21+,6725,&$/35,1&,3/(6 WKHG GHILQHVWHOHYLVLRQDVD ³ $V\VWHPIRUUHSURGXFLQJRQDVFUHHQYLVXDO LPDJHVWUDQVPLWWHG XVXZLWKVRXQG E\UDGLRVLJQDOV « 7KHPHGLXPDUWIRUPRU RFFXSDWLRQRIEURDGFDVWLQJRQWHOHYLVLRQ ZLWKVSHFLI\LQJZRUG DSDUWLFXODUWHOHYLVLRQ VHUYLFHRUFRPSDQ\1RZDOVRWHOHYLVHGHQWHUWDLQPHQWWKHFRQWHQWRIWHOHYLVLRQ SURJUDPPHV $GHYLFHZLWKDVFUHHQIRUUHFHLYLQJWHOHYLVLRQVLJQDOV´ +HDGLQJSURYLGHV³WUDQVPLVVLRQDSSDUDWXVIRUWHOHYLVLRQRUUDGLR EURDGFDVWLQJZKHWKHURUQRWLQFRUSRUDWLQJUHFHSWLRQDSSDUDWXVRUVRXQGUHSURGXFLQJ See also7+($0(5,&$1+(5,7$*(',&7,21$5<2)7+((1*/,6+/$1*8$*( ³D$Q HOHFWURQLFEURDGFDVWV\VWHPLQZKLFKVSHFLDOSURYLGHUVWUDQVPLWDFRQWLQXRXVSURJUDPRI YLGHRFRQWHQWWRWKHSXEOLFRUVXEVFULEHUVE\ZD\RIDQWHQQDFDEOHRUVDWHOOLWHGLVK RIWHQRQPXOWLSOHFKDQQHOV E9LGHRFRQWHQWHVSHFLDOO\VKRUWSURJUDPVFUHDWHGIRU RUGLVWULEXWHGWKURXJKVXFKDV\VWHP F$QHOHFWURQLFGHYLFHIRUYLHZLQJWHOHYLVLRQ SURJUDPVDQGPRYLHVFRQVLVWLQJRIDGLVSOD\VFUHHQDQGVSHDNHUV 7KHLQGXVWU\ RISURGXFLQJDQGEURDGFDVWLQJWHOHYLVLRQSURJUDPV ´ DQG0(55,$0:(%67(5 21/,1(',&7,21$5< ³ DQHOHFWURQLFV\VWHPRIWUDQVPLWWLQJWUDQVLHQWLPDJHVRIIL[HGRU PRYLQJREMHFWVWRJHWKHUZLWKVRXQGRYHUDZLUHRUWKURXJKVSDFHE\DSSDUDWXVWKDW FRQYHUWVOLJKWDQGVRXQGLQWRHOHFWULFDOZDYHVDQGUHFRQYHUWVWKHPLQWRYLVLEOHOLJKWUD\V DQGDXGLEOHVRXQG DWHOHYLVLRQUHFHLYLQJVHW D WKHWHOHYLVLRQEURDGFDVWLQJLQGXVWU\ E WHOHYLVLRQDVDPHGLXPRIFRPPXQLFDWLRQ F SURJUDPPLQJGLVWULEXWHGRYHUWKH ,QWHUQHWWKDWLVGHVLJQHGWREHYLHZHGLQWKHVDPHIRUPDWDVEURDGFDVWWHOHYLVLRQ´ DSSDUDWXV´7KHTXDOLILHULQ+HDGLQJGHVFULEHVLWHPVLQ+HDGLQJDQG1RWH E RI6HFWLRQ;9,RIWKH+7686VWDWHVWKDWDSURGXFWWKDWLVequally FODVVLILDEOHLQ ERWK+HDGLQJDQG+HDGLQJVKRXOGEHFODVVLILHGLQ+HDGLQJ7KHUHIRUH FODVVLILFDWLRQXQGHU+HDGLQJLVSURSHURQO\IRULQVWDQFHVLQZKLFKDSURGXFWLV primarily FODVVLILDEOHLQ+HDGLQJE\ZD\RILWVSULQFLSDOXVHLQWHOHYLVLRQRUUDGLR EURDGFDVWLQJ 3ULQFLSDO8VH$QDO\VLV 7KHFRXUWFRQVLGHUVQH[WZKHWKHUDSULQFLSDOXVHDQDO\VLVLVDSSURSULDWHLQWKH LQVWDQWFDVH+HDGLQJ LVDXVHSURYLVLRQDVLWLQFOXGHVSDUWVWKDWDUH³VXLWDEOHIRU usesolely or principallyZLWKWKHDSSDUDWXVRIKHDGLQJVWR´ (PSKDVLV VXSSOLHG SeeSamsung Int'l, Inc. v. United States&,7)6XSSG aff'd)$SS [ )HG&LU FRQILUPLQJ+HDGLQJ LV DXVHSURYLVLRQ 5HOHYDQWLQWKHSUHVHQWFDVH+HDGLQJ FRYHUVDPRQJRWKHU WKLQJVSDUWVRI³WUDQVPLVVLRQDSSDUDWXVIRUUDGLREURDGFDVWLQJRUWHOHYLVLRQ´XQGHU +HDGLQJ %HFDXVH+HDGLQJ LVDXVHSURYLVLRQZKHWKHUWKHVXEMHFW3&%$VDQG FKDVVLVDUHFRUUHFWO\FODVVLILHGXQGHUWKLVKHDGLQJGHSHQGVRQZKHWKHUWKH+DUPRQLF (05VZLWKZKLFKWKH\DUHXVHGDUHFRUUHFWO\FODVVLILHGXQGHU+HDGLQJRU+HDGLQJ $FFRUGLQJO\WKHFRXUWPXVWGHWHUPLQHLIWKHVXEMHFWPHUFKDQGLVHLVSULQFLSDOO\ XVHGDVDFRQVWLWXHQWSDUWRIPHUFKDQGLVHWKDWDUH³WUDQVPLVVLRQDSSDUDWXVIRUUDGLR EURDGFDVWLQJRUWHOHYLVLRQ´XQGHU+HDGLQJRULQVWHDG³RWKHUDSSDUDWXVIRUWKH WUDQVPLVVLRQRUUHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWDLQFOXGLQJDSSDUDWXVIRU FRPPXQLFDWLRQLQDZLUHGRUZLUHOHVVQHWZRUN´XQGHU+HDGLQJ7KHUHIRUHWKH ZD\VLQZKLFK+DUPRQLFFXVWRPHUVXVH+DUPRQLF(05VDUHUHOHYDQWWRFODVVLI\LQJWKH VXEMHFW3&%$VDQGFKDVVLV 'HIHQGDQWDVVHUWVWKDWWKHPRVWIUHTXHQWSXUFKDVHUVRIWKHVXEMHFW+DUPRQLF (05VIURPWRZHUHWHOHYLVLRQFRQWHQWSURYLGHUVWKDWXVHGWKHPIRUWKH WUDQVPLVVLRQRIGDWDVLJQDOVIRUWHOHYLVLRQFRQWHQW'HI6WPW)DFWV FLWLQJ'HI([ $UPVWURQJ'HS DW 3ODLQWLIIGRHVQRWDGGUHVVGLUHFWO\WKHTXHVWLRQRIWKHPRVW IUHTXHQWSXUFKDVHUV+DUPRQLFWHVWLILHGWKDWLWVFXVWRPHUVEX\WKHLU(05VEHFDXVH +DUPRQLFRIIHUVGLJLWDOFDEOHDQGGHOLYHUVPRUHFKDQQHOVRYHUWKHVDPHEDQGZLGWK SUHYLRXVO\XVHGWRWUDQVPLWDQDORJXHFKDQQHOV'HI([ $UPVWURQJ'HS DW +RZHYHUKDYLQJFRQFHGHGWKDWWKH+DUPRQLF(05VSHUIRUPWKHVHIXQFWLRQV SODLQWLIIDUJXHVWKDW+HDGLQJGRHVQRWGHVFULEHWKHVHSURGXFWVEHFDXVHWKH\KDYH ³FDSDELOLW\WKDWLVgreater thanMXVWVXSSRUWLQJ79DQGUDGLRSURJUDPPLQJ´7U2UDO$UJ DW HPSKDVLVVXSSOLHG )XUWKHUSODLQWLIIFRQWHQGVWKDW³WKHZLGHUDQJHRI DXGLRYLGHRFRQWHQWWKDWLVFRPSUHVVHGE\+DUPRQLF(05VLVQRWGHVFULEHGE\WKH ODQJXDJHµIRUUDGLREURDGFDVWLQJRU79¶´Id3ODLQWLIIFLWHV*5,DVVXSSRUWLQJWKH LQWHUSUHWDWLRQWKDW³DGHYLFHWKDWKDVDXVHand capability´GLIIHUHQWWKDQWKDWGHVFULEHG E\+HDGLQJVKRXOGQRWEHFODVVLILHGLQ+HDGLQJId HPSKDVLVVXSSOLHG 7KHUHFRUGGHPRQVWUDWHVDJURZLQJWUHQGLQWKHWUDQVPLVVLRQRIFRPSUHVVHG GDWDWRGHYLFHVRWKHUWKDQWHOHYLVLRQV3O([) :ULWWHQ5HSRUWE\([SHUW'DQ 6FKRQIHOG ³6FKRQIHOG([SHUW5HSRUW´ DW7KLVUHSRUWH[SODLQVWKHGLJLWDOL]DWLRQRI FRPPXQLFDWLRQV\VWHPVLQFOXGLQJWHOHSKRQHDQGWHOHYLVLRQQHWZRUNVLQWRPXOWLPHGLD FRPPXQLFDWLRQQHWZRUNVRIIHULQJWHOHSKRQHWHOHYLVLRQDQG,QWHUQHWVHUYLFHVIdDW 6LPLODUO\WKHUHSRUWGHVFULEHVWKHULVHRIFRPSXWHUVDVPXOWLPHGLDSODWIRUPVId +DUPRQLF(05VKDYHWKHFDSDELOLW\WREHXVHGLQWKHVHPXOWLPHGLDFRPPXQLFDWLRQ V\VWHPV )XUWKHULWLVFRUUHFWWKDW+DUPRQLFHQFRGHUVDUHVXLWHGIRUFRPSUHVVLQJDQ\ LPDJH LQDGGLWLRQWRVRXQG See3O([$ -RLQW6WPWRI)DFWV1RWLQ'LVSXWH DW ³7KH+DUPRQLFHQFRGHUVFRPSUHVVDXGLRDQGYLGHRGLJLWDOGDWDUHSUHVHQWLQJLPDJHV DQGVRXQGVLQFOXGLQJYRLFH´ see also3O([( 'HFODUDWLRQRI(ULF$UPVWURQJ DW ³+DUPRQLFHQFRGHUVDUHGHVLJQHGDQGXVHGVROHO\IRUWKHFRPSUHVVLRQRIGLJLWDOGDWD DQGUHSUHVHQWLQJVRXQGVDQGLPDJHV´ 7KHPXOWLSOH[HUVDQGUHPXOWLSOH[HUVIXUWKHU FRPSUHVVWKHVHGDWDRXWSXWVRILPDJHVDQGVRXQGIdDW 7KH³>V@XVFHSWLELOLW\FDSDELOLW\DGHTXDF\RUDGDSWDELOLW\RIWKHLPSRUWWRWKH FRPPRQXVHRIWKHFODVVLVQRWFRQWUROOLQJ´USR Optonix, Inc. v. United States &,7 )6XSSG FLWLQJU.S. v. the Carborundum Co &&3$ )G 7KH&RXUWLQOptonixDOVRDSSOLHG$GGLWLRQDO 865XOHRI,QWHUSUHWDWLRQ D ZKLFK³SURYLGHVWKDWµ>L@QWKHDEVHQFHRIVSHFLDO ODQJXDJHRUFRQWH[WZKLFKRWKHUZLVHUHTXLUHV²DWDULIIFODVVLILFDWLRQFRQWUROOHGE\XVH RWKHUWKDQDFWXDOXVH LVWREHGHWHUPLQHGLQDFFRUGDQFHZLWKWKHXVHLQWKH8QLWHG :KHQPDNLQJDSULQFLSDOXVHGHWHUPLQDWLRQWKHFRXUWPDNHV³DGHWHUPLQDWLRQDVWR WKHJURXSRIJRRGVWKDWDUHFRPPHUFLDOO\IXQJLEOHZLWKWKHLPSRUWHGJRRGV´BenQ Am. Corp. v. United States)GDW LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG ,QGRLQJVRWKHFRXUWPD\H[DPLQHWKHCarborundum IDFWRUVZKLFKLQFOXGH ³ WKH JHQHUDOSK\VLFDOFKDUDFWHULVWLFVRIWKHPHUFKDQGLVH WKHH[SHFWDWLRQRIWKHXOWLPDWH SXUFKDVHUV WKHFKDQQHOVRIWUDGHLQZKLFKWKHPHUFKDQGLVHPRYHV WKH HQYLURQPHQWRIWKHVDOH e.g.,WKHPDQQHULQZKLFKWKHPHUFKDQGLVHLVDGYHUWLVHGDQG GLVSOD\HGRUWKHDFFRPSDQ\LQJDFFHVVRULHV WKHXVDJHRIWKHVXEMHFWPHUFKDQGLVH DQGZKHWKHUWKDWXVHFRUUHVSRQGVWRWKHXVHRIFODVVGHILQLQJPHUFKDQGLVH WKH HFRQRPLFSUDFWLFDOLW\RIXVLQJWKHLPSRUWLQWKDWPDQQHU DQG WKHUHFRJQLWLRQLQWKH WUDGHRIWKLVXVH´Optonix)6XSSGDW FLWLQJ Carborundum)GDW 6WDWHVDWRULPPHGLDWHO\SULRUWRWKHGDWHRILPSRUWDWLRQ´Optonix &,7DW see also$GGLWLRQDO865XOHRI,QWHUSUHWDWLRQ D +76867KH5XOHIXUWKHUFODULILHVWKDW ³WKHFRQWUROOLQJXVHLVWKHSULQFLSDOXVH´Id3ULQFLSDOXVHDQDO\VLV³FRQVLGHUVDYDULHW\ RIIDFWRUVLQFOXGLQJDFWXDOXVHµWRFODVVLI\SDUWLFXODUPHUFKDQGLVHDFFRUGLQJWRWKH RUGLQDU\XVHRIVXFKPHUFKDQGLVHHYHQWKRXJKSDUWLFXODULPSRUWHGJRRGVPD\EHSXWWR VRPHDW\SLFDOXVH¶´Apple Inc. v. United States )G )HG&LU FLWLQJAromont USAIncvUnited States)G )HG&LU LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG ,QWKLVFDVHWKHUHLVDJHQXLQHIDFWXDOGLVSXWHEHWZHHQWKHSDUWLHVDVWRWKH SULQFLSDOXVHRIWKHVXEMHFW+DUPRQLF(05VIURPWR'HIHQGDQWDVVHUWVWKDW WKHSULQFLSDOXVHUVRIWKHVXEMHFWPHUFKDQGLVHZHUHWHOHYLVLRQFRQWHQWSURYLGHUVWKDW XVHG+DUPRQLF(05VWRWUDQVPLWGDWDVLJQDOVIRUWHOHYLVLRQFRQWHQW'HI6WPW)DFWV FLWLQJ'HI([ $UPVWURQJ'HS DW %\FRQWUDVWSODLQWLIIFHQWHUVLWVDUJXPHQWV RQWKHsuitabilityDQGLQFUHDVLQJXVHRIWKH+DUPRQLF(05VIRUQRQWHOHYLVLRQUHODWHG XVHV3O%UDW 7U2UDO$UJDWSee also 3O5HVS'HI6WPW)DFWV $FFRUGLQJO\JHQXLQHLVVXHVRIPDWHULDOIDFWUHPDLQDVWRZKHWKHUWKH3&%$VDQG FKDVVLVDWLVVXHKHUHDUHFRQVWLWXHQWSDUWVRIPHUFKDQGLVHSULQFLSDOO\XVHG³IRUUDGLR EURDGFDVWLQJRUWHOHYLVLRQ´RUIRUWKH³UHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWDLQD ZLUHGRUZLUHOHVVQHWZRUN´See Roche Vitamins)6XSSGDW 7KHIXOOWH[WRI$GGLWLRQDO865XOHRI,QWHUSUHWDWLRQ D UHDGV ³,QWKHDEVHQFHRI VSHFLDOODQJXDJHRUFRQWH[WZKLFKRWKHUZLVHUHTXLUHV² D DWDULIIFODVVLILFDWLRQ FRQWUROOHGE\XVH RWKHUWKDQDFWXDOXVH LVWREHGHWHUPLQHGLQDFFRUGDQFHZLWKWKHXVH LQWKH8QLWHG6WDWHVDWRULPPHGLDWHO\SULRUWRWKHGDWHRILPSRUWDWLRQRIJRRGVRIWKDW FODVVRUNLQGWRZKLFKWKHLPSRUWHGJRRGVEHORQJDQGWKHFRQWUROOLQJXVHLVWKHSULQFLSDO XVH´ 7KH5HOHYDQFHRI([SODQDWRU\1RWH * WR+HDGLQJ 3ODLQWLIIDOVRDVNVWKHFRXUWWRFRQVLGHU([SODQDWRU\1RWH * WR+HDGLQJDV SHUVXDVLYHDXWKRULW\IRUWKHSURSRVLWLRQWKDWWKHVXEMHFWPHUFKDQGLVHVKRXOGEH FODVVLILHGLQWKDWKHDGLQJ)RUWKHUHDVRQVHODERUDWHGEHORZWKHFRXUWFRQFOXGHVWKDW WKHSHUVXDVLYHDXWKRULW\RI([SODQDWRU\1RWH * LVOLPLWHG ([SODQDWRU\1RWH * VWDWHVWKDWHTXLSPHQWRI+HDGLQJLQFOXGHVDSSDUDWXV IRUWKHWUDQVPLVVLRQRI³VSHHFKRURWKHUVRXQGVLPDJHVRURWKHUGDWD´ZLWKLQ ³FRPPXQLFDWLRQQHWZRUNVWKDWPD\EHFRQILJXUHGDVSXEOLFVZLWFKHGWHOHSKRQH QHWZRUNV/RFDO$UHD1HWZRUNV /$1V 0HWURSROLWDQ$UHD1HWZRUNV 0$1V DQG:LGH $UHD1HWZRUNV :$1V ´([SODQDWRU\1RWH * WKHQSURYLGHVDOLVWRIZKDWWKLVJURXS PD\LQFOXGH([SODQDWRU\1RWH * VSHFLILFDOO\OLVWVPXOWLSOH[HUVRQHRIWKHWKUHH SURGXFWVWKDWFRPSULVHWKH+DUPRQLF(05VDWLVVXH([SODQDWRU\1RWH * DOVROLVWV ³FRGHFV´DQGGHVFULEHVFRGHFVDV³GDWDFRPSUHVVRUVGHFRPSUHVVRUV´7KHHQFRGHUV RIWKH+DUPRQLFHTXLSPHQWFRPSUHVVGDWDVR([SODQDWRU\1RWH * GHVFULEHVWKHLU IXQFWLRQ 'HIHQGDQWUHVSRQGVWRWKLVDUJXPHQWLQWKUHHZD\V'HIHQGDQWDUJXHVWKDW UDWKHUWKDQGHPRQVWUDWLQJWKDWWKHVXEMHFWPHUFKDQGLVHSURYLGHV³IRUWKHFRQQHFWLRQWR DZLUHGRUZLUHOHVVFRPPXQLFDWLRQQHWZRUNRUUHFHSWLRQRIVSHHFKRURWKHUVRXQGV LPDJHVRURWKHUGDWDZLWKLQVXFKDQHWZRUN´DVUHTXLUHGE\([SODQDWRU\1RWH * WKH VXEMHFWPHUFKDQGLVHLV³SULPDULO\XVHG´E\79SURYLGHUVWRFRPSUHVVGDWDWRUHOD\WR FRQVXPHUWHOHYLVLRQV'HI%UDW see also'HI5HS%UDW'HIHQGDQW DOVRDUJXHVWKDWSODLQWLII¶VUHOLDQFHRQWKH(1VLV³PLVSODFHG´EHFDXVH WKH\DUHQRW OHJDOO\ELQGLQJDQG SODLQWLIILVXVLQJejusdem generisWROLPLWLPSHUPLVVLEO\WKH PHDQLQJRIWKHKHDGLQJEDVHGRQDQRQH[KDXVWLYHOLVW'HI5HS%UDW)LQDOO\ GHIHQGDQWQRWHVWKDW&RQJUHVVVSHFLILFDOO\H[FOXGHG³WUDQVPLVVLRQDSSDUDWXV´WKDWIDOO XQGHU+HDGLQJIURP+HDGLQJ,QVXPGHIHQGDQWDUJXHVWKDWWKH PXOWLSOH[HUVDQGFRGHFVOLVWHGLQ([SODQDWRU\1RWH * PLJKWEHSURSHUO\FODVVLILHGDW +HDGLQJEXWWKDWWKHVHSURGXFWVFRXOGDOVRIDOOXQGHU+HDGLQJ DVWKH VXEMHFWPHUFKDQGLVHVSHFLILFDOO\ZDUUDQWV 'HI5HS%UDW :KHQWKH(1V³VSHFLILFDOO\LQFOXGHRUH[FOXGHDQLWHPIURPDWDULIIKHDGLQJ´WKH\ VHUYHDVSHUVXDVLYHDXWKRULW\IRUWKHFRXUWH.I.M./Fathom, Inc. v. United States ) 6XSSDW +RZHYHUQRWDEO\WKH(1VWR+HDGLQJGRQRWVSHFLILFDOO\ QDPHHLWKHUHQFRGHUVRUUHPXOWLSOH[HUV)XUWKHU([SODQDWRU\1RWH * OLVWV ³FRGHFVZKLFKKDYHWKHFDSDELOLW\RIWUDQVPLVVLRQDQGUHFHSWLRQRIGLJLWDO LQIRUPDWLRQ´$WRUDODUJXPHQWSODLQWLIIFRQFHGHGWKDW([SODQDWRU\1RWH * GRHVQRW UHIOHFWIXOO\WKHVXEMHFW+DUPRQLFHQFRGHUVEHFDXVHDFFRUGLQJWRSODLQWLIIWKHHQFRGHUV LQFOXGHGLQWKHVXEMHFWPHUFKDQGLVH³GRQRWWUDQVPLW´7U2UDO$UJDW7KHUHIRUHWKH SHUVXDVLYHDXWKRULW\RI([SODQDWRU\1RWH * LVOLPLWHG 0HDQLQJRIWKH$PHQGPHQWV 3ODLQWLIIDOVRDUJXHVWKDWWKHDPHQGPHQWVWR+HDGLQJVXSSRUW SODLQWLII¶VLQWHUSUHWDWLYHSRVLWLRQV ,Q+HDGLQJZDVDPHQGHGLQWZRVLJQLILFDQWUHVSHFWV )LUVW &RQJUHVVDPHQGHG+HDGLQJWRLQFOXGHWKHODQJXDJH³DSSDUDWXVIRUWKH 7KHDPHQGPHQWVWR+7686DWLVVXHKHUHZHUHPDGHSXUVXDQWWR 3URFODPDWLRQ1R )HG5HJ -DQ 7KHVXSHUVHGLQJODQJXDJHWR LVOLVWHGLQ0RGLILFDWLRQVWRWKH+DUPRQL]HG7DULII6FKHGXOHRIWKH8QLWHG6WDWHV WUDQVPLVVLRQ´6HFRQG&RQJUHVVDGGHGH[FOXVLRQDU\ODQJXDJHFODULI\LQJWKDWDQ\ DSSDUDWXVIRUWUDQVPLVVLRQRUUHFHSWLRQWKDWLVSURSHUO\FODVVLILHGXQGHU+HDGLQJLV H[FOXGHGIURP+HDGLQJ 3ODLQWLIIDUJXHVWKDWWKHILUVWDPHQGPHQWGHPRQVWUDWHVDQLQWHQWLRQ³WRFRYHU HTXLSPHQWVXFKDVWKH+DUPRQLFHQFRGHUVPXOWLSOH[HUVDQGUHPXOWLSOH[HUVWKDWGLGQRW H[LVWLQ ´3O5HS%UDW'HIHQGDQW¶VSRVLWLRQLVWKDWWKLVLQWHUSUHWDWLRQZRXOG KDYHWKHHIIHFWRILQFRUSRUDWLQJLQWR+HDGLQJLWHPVGHVFULEHGLQRWKHUKHDGLQJV LQFOXGLQJ+HDGLQJ7U2UDO$UJDW'HIHQGDQWDGGVWKDWWKHH[FOXGLQJ ODQJXDJHLQ+HDGLQJLVPHDQWWRDGGUHVVWKLVSRWHQWLDOFRQIOLFWId. 7KHSUHDPHQGPHQWWH[WRI+HDGLQJZDV ³(OHFWULFDODSSDUDWXVIRUOLQH WHOHSKRQ\RUOLQHWHOHJUDSK\LQFOXGLQJOLQHWHOHSKRQHVHWVZLWKFRUGOHVVKDQGVHWVDQG WHOHFRPPXQLFDWLRQDSSDUDWXVIRUFDUULHUFXUUHQWOLQHV\VWHPVRUIRUGLJLWDOOLQHV\VWHPV YLGHRSKRQHV SDUWVWKHUHRI´3RVWDPHQGPHQWWKHWH[WRI+HDGLQJVWLOOEHJLQV ZLWKDIRFXVRQWHOHSKRQHVSURYLGLQJ ³7HOHSKRQHVHWVLQFOXGLQJWHOHSKRQHVIRUFHOOXODU QHWZRUNVRUIRURWKHUZLUHOHVVQHWZRUNV RWKHUapparatus for the transmission RU UHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWDLQFOXGLQJDSSDUDWXVIRUFRPPXQLFDWLRQLQD ZLUHGRUZLUHOHVVQHWZRUN VXFKDVDORFDORUZLGHDUHDQHWZRUN other than WUDQVPLVVLRQRUUHFHSWLRQDSSDUDWXVRIKHDGLQJRU SDUWV WKHUHRI´+HDGLQJ HPSKDVLVVXSSOLHG ,QDGGLWLRQ&RQJUHVVDGGHGQHZ VXEKHDGLQJODQJXDJHDW IRU³RWKHUDSSDUDWXVIRUWUDQVPLVVLRQRUUHFHSWLRQ 8QGHU6HFWLRQRIWKH2PQLEXV7UDGHDQG&RPSHWLWLYHQHVV$FWRI 86,7& 3XE 'HF RIYRLFHLPDJHVRURWKHUGDWD´DQG³PDFKLQHVIRUWKHUHFHSWLRQFRQYHUVLRQDQG WUDQVPLVVLRQRUUHJHQHUDWLRQRIYRLFHLPDJHVRURWKHUGDWD´ ,QWHUHVWLQJO\QHLWKHUSDUW\DGGUHVVHVH[SUHVVO\WKHDGGLWLRQRIH[FOXVLRQDU\ ODQJXDJHLQWKHDPHQGPHQWV KRZHYHUERWKSDUWLHVDGGUHVVWKHH[FOXVLRQLQ PRUHJHQHUDOWHUPV'HIHQGDQWPHQWLRQVWKDW³WKHODQJXDJHGLGQRWGRDQ\WKLQJ´ WRUHPRYHWKHH[FOXVLRQ³VRWKHH[FOXVLRQVWLOOVWDQGV´7U2UDO$UJDW+RZHYHUDQ H[DPLQDWLRQRIWKHDUFKLYHGSUHDPHQGPHQWVWH[WRI+HDGLQJPDNHVFOHDU WKDWWKLVH[FOXVLRQZDVaddedLQ LWGLGQRWVLPSO\JRXQFKDQJHG 'HIHQGDQWDUJXHVWKDWEXWIRUWKHH[FOXVLRQDU\FODXVH³WUDQVPLVVLRQDSSDUDWXV IRUWHOHYLVLRQ´FRXOGSRWHQWLDOO\EHFRQVLGHUHGDQ³DSSDUDWXVIRUWKHWUDQVPLVVLRQRI YRLFHLPDJHVRURWKHUGDWD´XQGHU+HDGLQJ7KXVGHIHQGDQWDUJXHVWKDW³WKH SODLQODQJXDJHRIKHDGLQJ>VLF@HVWDEOLVKHVWKDWZKHQWHOHYLVLRQVLJQDO>VLF@DUH LQYROYHGKHDGLQJ>VLF@FRQWUROV´'HI%UDW 3ODLQWLIIVHHNVWREXWWUHVVLWVDUJXPHQWZLWKUHVSHFWWRWKHLPSDFWRIWKH DPHQGPHQWVRQWKHODQJXDJHRI+HDGLQJE\QRWLQJWKDWQHZVXEKHDGLQJ ODQJXDJHZDVDOVRLQVHUWHGDWVXEKHDGLQJ IRU³RWKHUDSSDUDWXVIRU WUDQVPLVVLRQRUUHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWD´DQG³PDFKLQHVIRUWKH UHFHSWLRQFRQYHUVLRQDQGWUDQVPLVVLRQRUUHJHQHUDWLRQRIYRLFHLPDJHVRURWKHUGDWD´ 3O%UDW 7KHODQJXDJHSULRUWRWKHDPHQGPHQWVZKLFKGLGQRWFRQWDLQWKHH[FOXVLRQDU\ ODQJXDJHLVLQFOXGHGLQWKHSUHOLPLQDU\YHUVLRQRIWKH+7686See+7686 3UHOLP 7KHH[FOXVLRQDU\FODXVHILUVWDSSHDUHGDIWHUWKHDPHQGPHQWVLQ WKHEDVLFHGLWLRQSee+7686 7KLVVXJJHVWVWKDWWKHH[FOXVLRQDU\ ODQJXDJHZDVDGGHGEHWZHHQWKHSXEOLFDWLRQRIWKH3UHOLPLQDU\DQG%DVLFHGLWLRQVRI WKH+7686 3XUVXDQWWR*5,ZKHQPDNLQJFODVVLILFDWLRQGHFLVLRQVWKHFRXUWWDNHVDWRS GRZQDSSURDFKEHJLQQLQJ³DVLWPXVWZLWKWKHODQJXDJHRIWKHKHDGLQJV´DQGHQGLQJ ZLWKWKHODQJXDJHRIWKHVXEKHDGLQJVOrlando Food Corp.)GDW$VWKH )HGHUDO&LUFXLWVWDWHGLQWKDWFDVH ³>:@KHQGHWHUPLQLQJZKLFKKHDGLQJLVWKHPRUH VSHFLILFDQGKHQFHWKHPRUHDSSURSULDWHIRUFODVVLILFDWLRQDFRXUWVKRXOGFRPSDUHRQO\ WKHODQJXDJHRIWKHKHDGLQJVDQGQRWWKHODQJXDJHRIWKHVXEKHDGLQJV2QO\DIWHU GHWHUPLQLQJWKDWDSURGXFWLVFODVVLILDEOHXQGHUWKHKHDGLQJVKRXOGWKHFRXUWORRNWRWKH VXEKHDGLQJVWRILQGWKHFRUUHFWFODVVLILFDWLRQIRUWKHPHUFKDQGLVH´See alsoGerson Co. v. United States&,7BBBB)6XSSG aff'd )G )HG&LU FLWLQJOrlando Food Corp.)GDW ,QWKLVUHJDUGSODLQWLII¶VSURIIHUHGLQWHUSUHWDWLRQRIWKHDPHQGPHQWVWR +HDGLQJLVLQFRQVLVWHQWZLWKERWKWKHH[FOXVLRQDU\FODXVHDGGHGE\WKRVH DPHQGPHQWVDQGSULQFLSOHVRIVWDWXWRU\LQWHUSUHWDWLRQ8QGHUWKHSUHDPHQGPHQW WH[WRI+HDGLQJWKHFRXUWFODULILHGWKDW³+HDGLQJFRYHUVWHOHJUDSKLF IXQFWLRQV´ David W. Shenk & Co. v. United States&,7 )6XSS *LYHQWKLVKLVWRU\WKHSUHVHUYDWLRQRIDIRFXVRQWHOHSKRQHVLQWKHSRVW DPHQGPHQWWH[WDQGWKHDGGLWLRQRIODQJXDJHWKDWH[SUHVVO\H[FOXGHV PHUFKDQGLVHFODVVLILDEOHXQGHU+HDGLQJSODLQWLII¶VLQWHUSUHWDWLRQLVQRWDSW &XVWRPV¶7UDQVPLVVLRQ3DWK7KHRU\DQG'HIHUHQFHWR3ULRU 5XOLQJ/HWWHUV 3ODLQWLIIQH[WDUJXHVWKDW&XVWRPV¶+4+ 'HI([ ZKLFKFRQFHUQHG WKHFODVVLILFDWLRQRIWKHVXEMHFWPHUFKDQGLVHLVXQSHUVXDVLYHDQGWKHUHIRUHVKRXOGQRW EHJLYHQGHIHUHQFHE\WKLVFRXUWSee3O%UDW,QSDUWLFXODUSODLQWLIIFKDOOHQJHV WKHXVHE\&XVWRPVLQ+4+ RIDFODVVLILFDWLRQDSSURDFKWKDW&XVWRPVKDV ODEHOHGWKH³WUDQVPLVVLRQSDWKWKHRU\´DVXQIRXQGHGDQGLQFRQVLVWHQWO\DSSOLHGIdDW 7KHFRXUWGHWHUPLQHVWKDWWKH³WUDQVPLVVLRQSDWKWKHRU\´XVHGE\&XVWRPVLQLWV +4+ OHWWHU 'HI([ LVSHUVXDVLYHDQGGHVHUYLQJRIGHIHUHQFHLQUHODWLRQWR WKHFRQWH[WRIWKHLQVWDQWFDVH+RZHYHUWKHFRXUWUHVHUYHVMXGJPHQWDVWRWKH DSSOLFDELOLW\RIWKHVHUXOLQJOHWWHUVWRWKHSUHVHQWFDVHSHQGLQJWKHUHVROXWLRQRIWKH LVVXHRISULQFLSDOXVH $VQRWHGWKHFRXUWUHYLHZVFODVVLILFDWLRQFDVHVde novoSee 86& D &XVWRPV¶UXOLQJOHWWHUVDVH[SODQDWLRQVRIFODVVLILFDWLRQGHFLVLRQVDUH HQWLWOHGWRDOHYHORI³UHVSHFWSURSRUWLRQDOWRWKHLUSRZHUWRSHUVXDGH´United States v. Mead Corp.86 FLWLQJSkidmore v. Swift & Co.86 )DFWRUVWKDWLQIOXHQFHWKHSHUVXDVLYHSRZHURIDUXOLQJOHWWHULQFOXGHWKH DJHQF\¶VWKRURXJKQHVVORJLFDQGH[SHUWQHVVDQGFRQVLVWHQF\ZLWKSULRULQWHUSUHWDWLRQV Mead Corp., 86DW. &RQVLVWHQF\LQSDUWLFXODULQ&XVWRPV LQWHUSUHWDWLRQRID SURYLVLRQ³HQKDQFHVWKHSHUVXDVLYHSRZHURIWKDWLQWHUSUHWDWLRQ´Dell Prods. LP v. United States)G )HG&LU 7KHUHYHUVHDOVRDSSOLHV$ODFN RIFRQVLVWHQF\LQWKHXVHRIDQDSSURDFK³LQGLFDWHVWKDW&XVWRPVKDVQRWWKRURXJKO\ 'HIHQGDQWGRHVQRWVHHNGHIHUHQFHIRU&XVWRPV¶5XOLQJ/HWWHU+4+ 3O5HS %UDW see also'HI5HS%UDW ³3OH[XVDSSHDUVWRVXJJHVWWKDWVRPHPHDQLQJ VKRXOGEHDVFULEHGWRRXUGHFLVLRQQRWWRVHHNGHIHUHQFHIRU&XVWRPV¶5XOLQJ/HWWHU+4 + 1RVXFKPHDQLQJH[LVWV$VZHGHPRQVWUDWHGLQRXUEULHILQJ&XVWRPV¶ FODVVLILFDWLRQRIWKHLPSRUWHGPHUFKDQGLVHLVWKHFRUUHFWRQHWKHGLVSXWHUHPDLQLQJ KHUHLVWKHFRUUHFWVWDWXWRU\PHDQLQJRIµWUDQVPLVVLRQDSSDUDWXVIRUWHOHYLVLRQ¶LQ +HDGLQJZKLFKLVVXEMHFWWRWKLV&RXUW¶Vde novoUHYLHZ´ FRQVLGHUHGDSDUWLFXODUFODVVLILFDWLRQDQGXQGHUPLQHVWKHSHUVXDVLYHSRZHURILWV FRQFOXVLRQV´Sony Elecs., Inc. v. United States&,7 &XVWRPV¶WUDQVPLVVLRQSDWKWKHRU\LQEULHIVXJJHVWVWKDWSURGXFWVUHODWHGWR WHOHYLVLRQWUDQVPLVVLRQV\VWHPV³ZKLFKOLHLQWKHWUDQVPLVVLRQSDWKDUHFODVVLILHGLQ KHDGLQJ+7686DVWUDQVPLVVLRQDSSDUDWXV>IRUUDGLREURDGFDVWLQJRU WHOHYLVLRQ@´3O%UDWQ3ODLQWLIILPSOLHVWKDWLQWKHSDVW&XVWRPVFRQVLGHUHGWKH FODVVLILFDWLRQRISURGXFWVWKDWZHUHDUJXDEO\³LQWKHWUDQVPLVVLRQSDWK´DQGWKXVVKRXOG KDYHEHHQFODVVLILHGLQ+HDGLQJ LQVWHDGSODLQWLIIDUJXHV&XVWRPVFODVVLILHG WKRVHSURGXFWVLQRWKHUKHDGLQJVVXFKDV+HDGLQJDV³DSSDUDWXVIRUWKH WUDQVPLVVLRQRUUHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWD´See id.DW )RUH[DPSOHSODLQWLIIGLVFXVVHVSUHYLRXV&XVWRPV¶UXOLQJOHWWHUV+4 'HF DQG1HZVLF@GHWHUPLQHGWKDW FRPSRQHQWVRIWHOHYLVLRQWUDQVPLVVLRQV\VWHPVZKLFKOLHLQWKHWUDQVPLVVLRQ SDWKUHFHLYHDVLJQDODQGWKHRXWSXWRIZKLFKLVUHOD\HGRUIHGIXUWKHULQWKH WUDQVPLVVLRQV\VWHPIRUHYHQWXDOILQDOUHFHSWLRQDQGGLVSOD\DUHFODVVLILHG LQKHDGLQJ>VLF@+7686DVWUDQVPLVVLRQDSSDUDWXV 7KHUXOLQJOHWWHUVRQZKLFK&XVWRPVUHOLHGIRUVXSSRUWLQWKHLQVWDQWFDVHDUH +4 'HF +4 )HE +4 $SU +4+ 'HF DQG +4+ 2FW See'HI([ 7RGHWHUPLQHWKHH[WHQWWRZKLFK&XVWRPV¶WUDQVPLVVLRQSDWKWKHRU\LVZHOO IRXQGHGDQGFRQVLVWHQWO\DSSOLHGDQGWKHUHIRUHWKHH[WHQWWRZKLFKWKHFRXUWFRQVLGHUV WKHSULRUSUDFWLFHWREHSHUVXDVLYHLQWKLVFDVHWKHFRXUWILUVWH[DPLQHVWKHUXOLQJOHWWHUV FLWHGE\SODLQWLII,QUHJDUGWR+4 DQG1<1 FRQFHUQLQJWKH&LVFR VZLWFKHVSODLQWLII¶VDUJXPHQWLVIODZHGEHFDXVHWKH&LVFRVZLWFKHVLQFOXGHGLQ +DUPRQLF(05VGLIIHUIURPWKHRQHVWKDW&XVWRPVFRQVLGHUHGLQWKRVHGHFLVLRQV)RU SODLQWLII¶VDUJXPHQWWREHFRUUHFWWKH&LVFRVZLWFKHVWRZKLFKSODLQWLIIUHIHUVWKDWDUH XVHGLQ+DUPRQLF(05VDQGWKH&LVFRVZLWFKHVDWLVVXHLQ+4 DQG1< 1 ZRXOGQHHGWREHWKHVDPHRUDWOHDVWUHODWLYHO\VLPLODU+RZHYHUWKH\DUH QHLWKHU,QSDUWLFXODUWKH&LVFRVZLWFKHVLQ+DUPRQLF(05VDSSHDUWREHIURPWKH 6HULHVDQG 6HULHVZKHUHDVWKHRQHVFRQVLGHUHGLQ+4 DQG1<1 ZHUHWKH&LVFR&DWDO\VW6HULHV6ZLWFKHVIRU,QWHUQHW3URWRFRO ,3 WHOHSKRQ\See 3O([% +4 DW 1<1 0RUHRYHUXQOLNHWKH&LVFRVZLWFKHVXVHG LQ+DUPRQLF(05VWKHVZLWFKHVDWLVVXHLQ+4 DQG1<1 RSHUDWHGLQ SURGXFWVWKDWGLGQRWVHUYHWKHIXQFWLRQRIWHOHYLVLRQVLJQDOWUDQVPLVVLRQDQGWKHUHIRUH GRQRWSURYLGHDQDSSURSULDWHFRPSDULVRQId. 6SHFLILFDOO\LQ+4 WKHLVVXHZDVZKHWKHUDOLQHFDUG SULQWHGFLUFXLW DVVHPEO\ XVHGH[FOXVLYHO\LQ&LVFR&DWDO\VW6HULHV6ZLWFKHVIRU,QWHUQHW3URWRFRO ,3 WHOHSKRQ\ZDVSURSHUO\FODVVLILHGXQGHU+HDGLQJDVDQHOHFWULFDODSSDUDWXV IRUOLQHWHOHSKRQ\DQGOLQHWHOHJUDSK\See+4 DW,QWKDWFDVH&XVWRPV FODVVLILHGWKHSURGXFWLQ+HDGLQJEHFDXVHWKHSURGXFW¶VVROHXVHZDVLQVZLWFKHV IRU,3WHOHSKRQ\DQGWKHOLQHFDUGZDVVSHFLILFDOO\SURYLGHGIRULQVXEKHDGLQJ +7686Id.DW6LPLODUO\LQ1<1 &XVWRPVGHWHUPLQHGWKDW &LVFR&DWDO\VW6HULHV6ZLWFKHVGHVFULEHGDV³FRPSXWHUQHWZRUNKRVWLQJ HTXLSPHQW´ZHUHSURYLGHGIRULQVXEKHDGLQJ+7686See1<1 ,QVXPLQERWK+4 DQG1<1 WKHSURGXFWVDWLVVXHZHUHVSHFLILFDOO\ LGHQWLILHGLQ+HDGLQJ$FFRUGLQJO\LQERWKFDVHV&XVWRPV¶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ee+4+ DW 6LPLODUO\1<0GRHVQRWVXSSRUWSODLQWLII¶VLQFRQVLVWHQWXVDJHDUJXPHQW EHFDXVHLQWKDWFDVHWKHSURGXFWDWLVVXHZDVDPRELOHFROODERUDWLRQGHYLFHWKDWGLGQRW EURDGFDVWWRDODUJHHQRXJKSRSXODWLRQWREHFRQVLGHUHGDWHOHYLVLRQGHYLFHSee1< 0DW,QRWKHUZRUGV&XVWRPVGLGQRWQHHGWRDSSO\LWVWUDQVPLVVLRQSDWK WKHRU\EHFDXVH&XVWRPVKDGDOUHDG\GHWHUPLQHGWKDWWKHQDWXUHRIWKHSURGXFW SUHFOXGHGFODVVLILFDWLRQXQGHU+HDGLQJ Id. $GGLWLRQDOO\1<1GRHVQRWSURYLGHJXLGDQFHLQWKHSUHVHQWFDVH EHFDXVHWKDWUXOLQJUHOLHGRQDSSOLFDWLRQRIDGLIIHUHQWVWDWXWRU\LQVWUXFWLRQ*5, F ,Q WKDWOHWWHU&XVWRPVGHWHUPLQHGWKDWDXGLRYLGHRSURGXFWLRQXQLWVZHUHQRWprima facie FODVVLILDEOHXQGHU+HDGLQJDVWKHKHDGLQJGRHVQRWFRYHUWKHHGLWLQJIXQFWLRQRI WKHSURGXFWLRQXQLWV See1<1DW&XVWRPVXOWLPDWHO\FODVVLILHGWKHSURGXFWV XVLQJ*5, F Id. 8QGHU*5, F WKHTXHVWLRQLVQRWZKHWKHUWKHSURGXFWLVprima facie FODVVLILDEOHXQGHUWKHODQJXDJHRIDSDUWLFXODUKHDGLQJDVLQ*5,EXWUDWKHU ZKLFKRIWZRRUPRUHSRVVLEOHKHDGLQJVRFFXUVODVWLQQXPHULFDORUGHU7KHUHIRUH1< 1LVLQDSSRVLWHEHFDXVHLWFRQFHUQHGWKHDSSOLFDWLRQRIDGLIIHUHQW*5,LQD GLIIHUHQWFRQWH[W )XUWKHUWKHUHPDLQLQJWKUHHOHWWHUVDOVRGRQRWSURYLGHJXLGDQFHLQWKLVFDVHZLWK UHVSHFWWR&XVWRPV¶XVHRIWKHWUDQVPLVVLRQSDWKWKHRU\,Q+4+ ZKLFK LQYROYHGFRD[LDOFDEOHV&XVWRPVGLGQRWQHHGWRDSSO\LWVWUDQVPLVVLRQSDWKWKHRU\WR FODVVLI\WKHSURGXFWLQ+HDGLQJEHFDXVH+HDGLQJVSHFLILFDOO\SURYLGHVIRU FRD[LDOFDEOHVSee+4+ DW6LPLODUO\LQ1<1 &XVWRPVGLGQRW QHHGWRDSSO\LWVWUDQVPLVVLRQSDWKWKHRU\EHFDXVHWKHSURGXFWDWLVVXHDYLGHR FRQIHUHQFLQJV\VWHPZDVSULPDIDFLHFODVVLILDEOHXQGHU+HDGLQJSee1< 1 DW/LNHZLVH1<5FDQEHGLVWLQJXLVKHGEHFDXVHWKHSURGXFWDWLVVXH ZDVSULQFLSDOO\XVHGIRUYRLFHDQGGDWDWUDQVPLVVLRQDQGWKXVIHOOXQGHU+HDGLQJ See+4+DW GLVWLQJXLVKLQJWKHPHUFKDQGLVHLQ1<5IURP3OH[XV HQFRGHUVEHFDXVHWKHIRUPHUZDVFDSDEOHRIWUDQVPLWWLQJWHOHSKRQLFGDWDVLJQDOV ,QVXPSODLQWLIIKDVIDLOHGWRHVWDEOLVKWKDW&XVWRPV¶WUDQVPLVVLRQSDWKWKHRU\LV HLWKHUXQIRXQGHGRULQFRQVLVWHQWO\DSSOLHG7KHFRXUWQH[WFRQVLGHUVWKHILYHUXOLQJ OHWWHUVFLWHGE\&XVWRPVLQLWVIRXQGDWLRQDOUXOLQJOHWWHURQWKHWUDQVPLVVLRQSDWKWKHRU\ See +4+ 'HI([ 7KHUXOLQJOHWWHUVFLWHGE\&XVWRPVSURYLGHVWURQJVXSSRUWIRU&XVWRPV¶ WUDQVPLVVLRQSDWKWKHRU\,Q+4 IRUH[DPSOH&XVWRPVGHWHUPLQHGWKDWD FRPSRQHQWRIDGLJLWDOVDWHOOLWHV\VWHPWKDWLVXVHGIRUWHOHYLVLRQLVSURSHUO\FODVVLILHGLQ +HDGLQJQRWLQJWKDWWKHSURGXFWLV³LQWKHWUDQVPLVVLRQSDWKEXWLWLVQRWDWWKH HQGRIWKHWUDQVPLVVLRQSDWKZKHUHILQDOUHFHSWLRQDQGYLHZLQJWDNHV>VLF@SODFH´+4 DW TXRWLQJ+4DW 'HF 6LPLODUO\LQ+4 &XVWRPVGHWHUPLQHGWKDWDFRPSRQHQWRIDWHOHYLVLRQVDWHOOLWHGLVKVKRXOGEHFODVVLILHG LQ+HDGLQJEHFDXVHDVLQWKHFDVHRIWKHGLJLWDOVDWHOOLWHV\VWHPFRQVLGHUHGLQ+4 LW³OLHVLQWKHWUDQVPLVVLRQSDWK´DQGUHFHLYHVVLJQDOVDQGUHOD\VWKHPIRUILQDO UHFHSWLRQDQGGLVSOD\+4 DW ,Q+4 &XVWRPVFRQVLGHUHGWKHFODVVLILFDWLRQRIHQFRGHUVWKDWDUHXVHG WRFRPSUHVVVLJQDOVIRUHYHQWXDOWHOHYLVLRQWUDQVPLVVLRQ²PXFKOLNHWKH+DUPRQLF (05VDWLVVXHLQWKHSUHVHQWFDVH²DQGGHWHUPLQHGWKDWWKH\DUHFRYHUHGXQGHU +HDGLQJ7KHUH&XVWRPVFLWHGDQRWKHUUXOLQJOHWWHU+4 0D\ LQVXSSRUWRILWVFRQFOXVLRQSee+4 DW,Q+4&XVWRPVFODVVLILHGD W\SHRIVLJQDOSURFHVVRUXQGHU+HDGLQJZKLOHQRWLQJWKDWWKHSURGXFWLV³LQWKH WUDQVPLVVLRQSDWKEXWLWLVQRWDWWKHHQGRIWKHWUDQVPLVVLRQSDWKZKHUHILQDOUHFHSWLRQ DQGYLHZLQJWDNHVSODFH´+4DW )XUWKHULQ+4+DSUHYLRXV3OH[XVUXOLQJ&XVWRPVIRXQGWKDWWKH HQFRGHUVDWLVVXHZHUHDSSDUDWXVIRUWHOHYLVLRQWUDQVPLVVLRQLQ+HDGLQJSee+4 +DW7KHUHWKHNH\LQTXLU\LQYROYHGWKHW\SHRIVLJQDOEHLQJWUDQVPLWWHG Id.DW&XVWRPVIRXQGWKDWWKHHQFRGHUVGLGQRWWUDQVPLWWHOHSKRQLFGDWDVLJQDOVDQG WKHUHIRUHGLGQRWILWXQGHU+HDGLQJId. )LQDOO\LQ+4+&XVWRPVREVHUYHGWKDWILOWHUVWKDWDOWHUFDEOHWHOHYLVLRQ WUDQVPLVVLRQ³OLHLQWKHWUDQVPLVVLRQSDWKUHFHLYHDVLJQDODQGUHOD\VLJQDOVIXUWKHU LQWKHWUDQVPLVVLRQV\VWHPIRUHYHQWXDOILQDOUHFHSWLRQDQGGLVSOD\´+4+DW 7DNHQDVDZKROHWKHVHUXOLQJOHWWHUVFLWHGE\&XVWRPVLQGLFDWHWKDW&XVWRPV KDVFRQVLVWHQWO\DSSOLHGLWVWUDQVPLVVLRQSDWKWKHRU\WRFODVVLI\WHOHYLVLRQWUDQVPLVVLRQ HTXLSPHQWWKDWOLHVLQWKHWUDQVPLVVLRQSDWKUHFHLYHVDVLJQDODQGUHOD\VDQRXWSXW IXUWKHUGRZQWKHWUDQVPLVVLRQV\VWHPDQGIRUWKRVHUHDVRQVLVSURSHUO\FODVVLILHGLQ +HDGLQJ&RQWUDU\WRSODLQWLII¶VDVVHUWLRQV&XVWRPVKDVVKRZQFRQVLVWHQF\LQLWV DSSOLFDWLRQRIWKH³WUDQVPLVVLRQSDWKWKHRU\´WRFODVVLI\FRPSRQHQWVRIWHOHYLVLRQ WUDQVPLVVLRQV\VWHPVXQGHU+HDGLQJ7KHFRXUWUHVHUYHVMXGJPHQWDVWRWKH DSSOLFDELOLW\RIWKHVHUXOLQJOHWWHUVWRWKHSUHVHQWFDVHSHQGLQJWKHUHVROXWLRQRIWKH LVVXHRISULQFLSDOXVH+RZHYHUWKHFRXUWGHWHUPLQHVWKDWWKH³WUDQVPLVVLRQSDWK WKHRU\´XVHGE\&XVWRPVLQLWV+4+ OHWWHU 'HI([ LVSHUVXDVLYHDQG GHVHUYLQJRIGHIHUHQFHLQUHODWLRQWRWKHFRQWH[WRIWKHLQVWDQWFDVH 5HOHYDQFHRIWKH&&3$Ampex'HFLVLRQ )LQDOO\GHIHQGDQWXUJHVWKHFRXUWWRORRNWRDGHFLVLRQRIWKH86&RXUWRI &XVWRPVDQG3DWHQW$SSHDOV ³&&3$´ WKDWLQWHUSUHWHGDSSDUDWXVRIWHOHYLVLRQ WUDQVPLVVLRQWR³SHUIRUPDQ\RIDZLGHYDULHW\RIIXQFWLRQVLQFRQQHFWLRQZLWKWHOHYLVLRQ WUDQVPLVVLRQDQGUHFHSWLRQ´LQWKHFODVVLILFDWLRQRIWHOHYLVLRQFDPHUDFDEOHVUnited States v. Ampex Corp. &&3$)G $VGLVFXVVHG EHORZWKHFRXUWFRQVLGHUVWKH&&3$¶VFKDUDFWHUL]DWLRQLQAmpexRI³WHOHYLVLRQ WUDQVPLVVLRQDSSDUDWXV´LQVWUXFWLYHDOEHLWQRWSHUVXDVLYH 3ODLQWLIIDUJXHVWKDWAmpexVKRXOGQRWDSSO\WRWKHSUHVHQWFDVHIRUWKUHH UHDVRQV)LUVWEHFDXVHWKHDSSHDOVFRXUWDQDO\]HGAmpex XQGHUWKH7DULII6FKHGXOHRI WKH8QLWHG6WDWHV ³7686´ UDWKHUWKDQWKH+7686LWVDQDO\VLVGRHVQRWSURYLGH JXLGDQFH3O5HS%UDW6HFRQGEHFDXVHWKH&&3$DSSOLHGWKHUXOHRI³UHODWLYH VSHFLILFLW\´ZKLFKKDVVLQFHEHHQFRGLILHGLQ+7686DW*5,WKHAmpex FRXUW¶V DQDO\VLVLVLQDSSOLFDEOHWRWKHSUHVHQWDFWLRQEHFDXVHLWLQYROYHVFODVVLILFDWLRQSXUVXDQW WR*5,Id7KLUGEHFDXVHWKHAmpex FRXUWGHULYHGLWVPHDQLQJRI³WUDQVPLVVLRQ DSSDUDWXV´IURPDVLQJOHOH[LFRJUDSKLFVRXUFHIURP\HDUVDJRLWVLQWHUSUHWDWLRQLV LQDSSOLFDEOHId 7KH)HGHUDO&LUFXLWKDVKHOGWKDWWKH&&3$¶VSULRUGHWHUPLQDWLRQRIDFRPPRQ PHDQLQJRIDWHUPEDVHGRQDQLQWHUSUHWDWLRQRIDWDULIISURYLVLRQXQGHUWKH7686LV QRWFRQWUROOLQJDVWRDGHWHUPLQDWLRQXQGHUWKH+7686:KHUHWKHODQJXDJHRIWKH SURYLVLRQVRIWKH7686DQGWKH+7686LVLGHQWLFDOGHFLVLRQVLQWHUSUHWLQJWKH7686 PD\EHLQVWUXFWLYHEXWWKH\DUHQRWGLVSRVLWLYH JVC Co. of Am. v. United States )G )HG&LU 7KHUHOHYDQWSRUWLRQRI+HDGLQJ7686UHIHUVWR³UDGLREURDGFDVWLQJDQG WHOHYLVLRQWUDQVPLVVLRQDQGUHFHSWLRQDSSDUDWXV´7KHUHOHYDQWSRUWLRQRI+HDGLQJ +7686VWDWHV³WUDQVPLVVLRQDSSDUDWXVIRUUDGLREURDGFDVWLQJDQGWHOHYLVLRQ´ $OWKRXJKWKHWZRSURYLVLRQVDUHQRWLGHQWLFDOWKHLUGLIIHUHQFHDVSHUWDLQLQJWRWKHLVVXHV LQWKLVFDVHLVRQO\LQWKHRUGHURIWKHWHUPV 7KHFRXUWILQGVSODLQWLII¶VVHFRQGUHDVRQXQFRQYLQFLQJ7KH&&3$¶V LQWHUSUHWDWLRQRI³WUDQVPLVVLRQDSSDUDWXV´FRPHVEHIRUHDQGLVVHSDUDWHHQWLUHO\IURP WKH&&3$¶VDSSOLFDWLRQRI³UHODWLYHVSHFLILFLW\´+HUHWKHFRXUWLVFRQFHUQHGRQO\ZLWK WKH&&3$¶VLQWHUSUHWDWLRQRIDWDULIIWHUP'HIHQGDQW VUHOLDQFHRQAmpexLVPRUH OLPLWHGWKDQSODLQWLIIDVFULEHV'HIHQGDQWUHOLHVRQAmpexRQO\DVSHUVXDVLYHDXWKRULW\ WRVXSSRUWDEURDGLQWHUSUHWDWLRQRI³WUDQVPLVVLRQDSSDUDWXVIRUUDGLREURDGFDVWLQJRU WHOHYLVLRQ´'HI5HS%UDW'HIHQGDQWGRHVQRWUHO\RQDUJXPHQWVUHODWLQJWR &&3$¶VGLVFXVVLRQRI³UHODWLYHVSHFLILFLW\´$VDFRQVHTXHQFHSODLQWLII VDUJXPHQWVDUH XQVXFFHVVIXOLQXQGHUPLQLQJGHIHQGDQW VFLWDWLRQRIAmpex 7KHFRXUWDOVRFRQVLGHUVSODLQWLII¶VWKLUGUHDVRQXQFRQYLQFLQJ,QAmpexWKH DSSHDOVFRXUWUHFDOOVDFKDSWHURQ7HOHYLVLRQ6\VWHPV)XQGDPHQWDOVLQDERRN HQWLWOHGTelevision Broadcasting LQDUULYLQJDWWKHFRXUW¶VGHILQLWLRQRI³WHOHYLVLRQ WUDQVPLVVLRQ´Ampex)GDW7KHUHLVQRLQGLFDWLRQWKDWWKHXQGHUVWDQGLQJ RIWKHWHUPV³WUDQVPLVVLRQ´RU³WHOHYLVLRQ´KDYHFKDQJHGVLJQLILFDQWO\VLQFHWKH&&3$ SXEOLVKHGWKLVRSLQLRQ7KHUHIRUHWRGHQ\WKHFKDUDFWHUL]DWLRQRI³WUDQVPLVVLRQ DSSDUDWXV´SURYLGHGE\DQLQGXVWU\VSHFLILFVRXUFHRQZKLFKWKHFRXUWUHOLHGZRXOGEH DUELWUDU\ ,QVXPWKHFRXUWFRQVLGHUVWKH&&3$¶VFKDUDFWHUL]DWLRQLQAmpexRI³WHOHYLVLRQ WUDQVPLVVLRQDSSDUDWXV´LQVWUXFWLYHDOEHLWQRWSHUVXDVLYH7KHLQWHUSUHWDWLRQE\WKH DSSHDOVFRXUWRIWKHWHUPVDVWR³SHUIRUPDQ\RIDZLGHYDULHW\RIIXQFWLRQVLQ FRQQHFWLRQZLWKWHOHYLVLRQWUDQVPLVVLRQDQGUHFHSWLRQ´VXSSRUWVWKHLQWHUSUHWDWLRQRI ³WUDQVPLVVLRQDSSDUDWXVIRUWHOHYLVLRQ´GLVFXVVHGsupraVHFWLRQ,,,$DVGHYLFHV GHVLJQHGIRUWKHSXUSRVHRIVHQGLQJVLJQDOVIURPRQHORFDWLRQWRDQRWKHUIRUWKH HYHQWXDOWUDQVPLVVLRQRIYLHZLQJWHOHYLVLRQFRQWHQW7KHAmpex FRXUW¶VLQWHUSUHWDWLRQLV FRQVLVWHQWDOVRZLWKWKHGHVFULSWLRQRI³WUDQVPLVVLRQSDWK´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¶VLQTXLU\EHJLQVZLWKZKHWKHUWKHVXEMHFWPHUFKDQGLVHLVSURSHUO\ FODVVLILHGLQ+HDGLQJFaus Group, Inc. v. United States)G )HG&LU $VQRWHGDERYHDQGDVHODERUDWHGEHORZWKHFRXUWGHWHUPLQHVWKDW IDFWXDOLVVXHVUHJDUGLQJWKHSULQFLSDOXVHRIWKHVXEMHFWPHUFKDQGLVHUHPDLQ XQUHVROYHG&RQVHTXHQWO\WKHFRXUWGRHVQRWUHDFKDFRQFOXVLRQDVWRZKHWKHUWKH SURSHUFODVVLILFDWLRQRIWKHVXEMHFWPHUFKDQGLVHLV+HDGLQJ ZKLFKLVFRPSULVHGRI SDUWVVXLWDEOHIRUXVHVROHO\RUSULQFLSDOO\ZLWKWKHDSSDUDWXVRI+HDGLQJRU +HDGLQJ +HDGLQJ 7KHUHOHYDQWODQJXDJHLQ+HDGLQJGHVFULEHVSURSHUO\FODVVLILHGSURGXFWVDV ³WUDQVPLVVLRQDSSDUDWXVIRUWHOHYLVLRQ´:KHWKHU+HDGLQJFRYHUVWKH +DUPRQLF(05VWKDWDUHWKHVXEMHFWRIWKLVFDVHGHSHQGVVSHFLILFDOO\RQZKHWKHUWKH HTXLSPHQWVHQGVGDWDWKDWZLOOEHXVHGSULQFLSDOO\IRUYLHZLQJWHOHYLVLRQFRQWHQWDV RSSRVHGWRYLGHRFRQIHUHQFLQJRURWKHUFRQWHQW 3ODLQWLIIUHOLHVRQWKH6FKRQIHOG([SHUW5HSRUWWRVXSSRUWWKHDUJXPHQWWKDW³>W@KH GDWDWKDWLV>VLF@FRPSUHVVHGDQGPXOWLSOH[HGE\WKH+DUPRQLFHQFRGHUVPXOWLSOH[HUV DQGUHPXOWLSOH[HUVXOWLPDWHO\FDQEHOLVWHQHGWRDQGZDWFKHGRQVPDUWSKRQHVSHUVRQDO FRPSXWHUVDQGRWKHUGHYLFHVQRWOLPLWHGWRWHOHYLVLRQVRUUDGLRVDQGFDQFRQVLVWRI YLGHRFRQIHUHQFLQJDQGRWKHUDXGLRYLGHRFRQWHQWWKDWLVQRWWHOHYLVLRQRUUDGLR SURJUDPPLQJ´3O6WPW)DFWV FLWLQJ3O([) 6FKRQIHOG([SHUW5HSRUW DW 3O([, 'HSRVLWLRQRI'DQ6FKRQIHOG ³6FKRQIHOG'HS´ DW 7KH6FKRQIHOG([SHUW5HSRUWDQGGHSRVLWLRQGRQRWVXSSRUWSODLQWLII¶VFRQFOXVLRQ 6FKRQIHOGLQKLVWHVWLPRQ\GHVFULEHGKRZHQFRGHUVPXOWLSOH[HUVDQGUHPXOWLSOH[HUVDUH generally XVHGDQGKRZWKH+DUPRQLF(05Vcan EHXVHG+RZHYHU6FKRQIHOGPDGH FOHDUWKDWKHZDVQRWIDPLOLDUZLWK+DUPRQLF¶VEXVLQHVVRUWKHFXVWRPHUVIRUWKHVXEMHFW PHUFKDQGLVH3O([, 6FKRQIHOG'HS DW)RUH[DPSOHZKHQDVNHGLIKHNQHZ ZKHWKHUWKH+DUPRQLF(05V³DUHXVHGRYHUWKH,QWHUQHWZKHWKHUWKH\ UHXVHGZLWKD FDEOHV\VWHPRUXVHGVRPHRWKHUZD\´6FKRQIHOGUHVSRQGHG ³,GRQRWNQRZ´Id :KHQDVNHGLIWKHUHLV³DZD\WRWHOOE\ORRNLQJDWNLQGRI>VLF@WKHGHVFULSWLRQRIWKH VSHFLILFDWLRQVWRVHHLIWKDWZRXOGWHOOXVKRZDSDUWLFXODUGHYLFHLVEHLQJXVHG´KH UHVSRQGHGWKDWWKHUHLV³QRZD\WRWHOOH[DFWO\KRZLW¶VEHLQJXVHG´Id/DWHUZKHQ DVNHGLIKHGLGQRW³NQRZZLWKVSHFLILFLW\KRZ+DUPRQLFLVXVLQJWKHLUSDUWLFXODUILQLVKHG SURGXFWV´6FKRQIHOGUHVSRQGHG ³7KDW VULJKW,GRQRWNQRZ´IdDW ([SHUWZLWQHVV(ULF$UPVWURQJLV+DUPRQLF¶V9LFH3UHVLGHQWRI6DD66ROXWLRQV 8QOLNH6FKRQIHOG$UPVWURQJZDVIDPLOLDUZLWKWKHZD\VLQZKLFK+DUPRQLF¶VFXVWRPHUV XVHGWKH(05V'HI([ $UPVWURQJ'HS DW$IWHUEHLQJDVNHGWRGHVFULEHWKH QLQHSURGXFWVWKDWFRPSULVHWKHVXEMHFWPHUFKDQGLVH$UPVWURQJGHVFULEHGWKHPDV EHLQJ³XVHGLQ>+DUPRQLF¶V@FXVWRPHUV LQIUDVWUXFWXUH7KHLU primary purposeLVYLGHR DQGDXGLRFRPSUHVVLRQDQGPXOWLSOH[LQJ´Id. DW HPSKDVLVVXSSOLHG ZLWKWKHWHUP FRPSUHVVLRQEHLQJ³>S@ULPDULO\DERXWUHGXFLQJWKHEDQGZLGWKRIYLGHRWKHDPRXQWRI VSDFHLWZRXOGRFFXS\RQDVWRUDJHGHYLFHRUWKHDPRXQWRIEDQGZLGWKLWZRXOGRFFXS\ DVWKHYLGHRLVWUDQVPLWWHG for a T.V. service´Id HPSKDVLVVXSSOLHG $UPVWURQJH[SUHVVHGWKHYLHZWKDW+DUPRQLF¶VcustomersDUHSULPDULO\WHOHYLVLRQ VHUYLFHSURYLGHUVIdDW DQG see also'HI%UDW6LPLODUO\ +DUPRQLF¶V'LUHFWRURI3URGXFW/LQH0DQDJHPHQWIRU&RPSUHVVLRQDQG6WUHDP 3URFHVVLQJ1HLO%U\GRQDOVRGHFODUHGWKDW³+DUPRQLF VHQFRGHUVPXOWLSOH[HUVDQG UHPXOWLSOH[HUVDUHRSWLPL]HGIRUXVHLQFDEOHVDWHOOLWH,379DQGWHUUHVWULDODSSOLFDWLRQV´ 3O([' 'HFODUDWLRQRI1HLO%U\GRQ ³%U\GRQ'HFODUDWLRQ´ DW)LQDOO\DWRUDO DUJXPHQWGHIHQGDQWGHFODUHGWKDW9HUL]RQXVHVWKHVXEMHFWPHUFKDQGLVHWRSURYLGH WHOHYLVLRQFRQWHQWDQGQRWWHOHSKRQ\ZKLFKLVFRYHUHGE\+HDGLQJ7U2UDO$UJ DW $JDLQWKHUHFRUGLQGLFDWHVDODFNRIDJUHHPHQWEHWZHHQSODLQWLIIZKLFKDUJXHV WKDWFXVWRPHUVVXFKDV9HUL]RQPD\XVHWKHSURGXFWVWKDWFRPSULVHWKHVXEMHFW PHUFKDQGLVHLQDYDULHW\RIZD\V3O%UDWZKLOHGHIHQGDQWDVVHUWVWKDWWRWKH H[WHQWWHOHSKRQHSURYLGHUVVXFKDV9HUL]RQXVHWKRVHSURGXFWVWKHSURYLGHUVXVHWKHP SULPDULO\WRSURYLGH³,379´VHUYLFHV'HI([ $UPVWURQJ'HS DW 7KHFRXUWQH[WFRQVLGHUVZKHWKHU+HDGLQJLVWKHDSSURSULDWHFODVVLILFDWLRQ LQUHVSHFWRIWKHODQJXDJHRI³WUDQVPLVVLRQ´LQWKHKHDGLQJ)RUH[DPSOH%U\GRQ FODULILHGLQDGHFODUDWLRQWKDWWKH+DUPRQLF(05V³GHOLYHU´DVLJQDO+HVWDWHGWKDW³LQ FDEOHRUVDWHOOLWHGHOLYHU\DSSOLFDWLRQVPRGXODWLRQDQGWUDQVPLVVLRQHTXLSPHQWLV UHTXLUHGDIWHUWKHHQFRGHUPXOWLSOH[HURUUHPXOWLSOH[HUWRHQDEOHWKHVLJQDOWREH GHOLYHUHGRYHUWKHDFFHVVPHGLXP6LPLODUO\LQDQ,379DSSOLFDWLRQthe encoder, multiplexer or remultiplexer delivers the signalWRD'6/$0 'LJLWDO6XEVFULEHU/LQH $FFHVV0XOWLSOH[HU WKDWWKHQWUDQVPLWVWKHVLJQDOWRPXOWLSOHVXEVFULEHUVRYHUWKH WHOHSKRQHQHWZRUNWRWKHFRQVXPHUUHFHSWLRQHTXLSPHQW´3O([' %U\GRQ 'HFODUDWLRQ DW HPSKDVLVVXSSOLHG ,QVXPWKHSDUWLHVGRQRWGLVSXWHWKHFRQFOXVLRQWKDW+DUPRQLF(05VVHQG VLJQDOVWRRWKHUHTXLSPHQWZLWKLQWKHSDWKRIWUDQVPLVVLRQVXFKDVDPRGXODWRUZKLOH QRWVHQGLQJVLJQDOVWRDILQDOUHFHLYLQJGHYLFHSee 'HI([ $UPVWURQJ'HS DW see also3O5HS%UDW 7KLVW\SHRIDFWLYLW\PHHWVWKHHVWDEOLVKHG LQWHUSUHWDWLRQRI³WUDQVPLVVLRQDSSDUDWXV´EHFDXVHWKH+DUPRQLF(05VDUH³DSSDUDWXV WKDWVHQGDVLJQDORXWWRDQRWKHUORFDWLRQ´See GLVFXVVLRQRIGLFWLRQDU\GHILQLWLRQVDQG FRPPRQPHDQLQJRI³WUDQVPLVVLRQ´supra S +RZHYHUWKHSDUWLHVGLVSXWHWKHSULQFLSDOXVHRIWKHVXEMHFWPHUFKDQGLVHD PDWHULDOIDFWWKDWDIIHFWVWKHRXWFRPHRIWKLVFDVHSee Anderson86DW 86&,75XOH D SURYLGHVWKDWWKHFRXUWJUDQWVXPPDU\MXGJPHQWRQO\LIDPRYLQJ SDUW\FDQVKRZWKDW³WKHUHLVQRJHQXLQHGLVSXWHDVWRDQ\PDWHULDOIDFWDQGWKHPRYDQW LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ´$FFRUGLQJO\VLQFHSODLQWLIIKDVIDLOHGWR PHHWLWVEXUGHQLQWKLVUHVSHFWWKHFRXUWGRHVQRWUHDFKDFRQFOXVLRQDVWRZKHWKHUWKH VXEMHFWPHUFKDQGLVHLVSURSHUO\FODVVLILHGDW+HDGLQJV DQG +HDGLQJ 7KHUHOHYDQWSDUWRI+HDGLQJGHVFULEHVSURSHUO\FODVVLILHGLWHPVDV³RWKHU DSSDUDWXVIRUWKHWUDQVPLVVLRQRUUHFHSWLRQRIYRLFHLPDJHVRURWKHUGDWDLQFOXGLQJ DSSDUDWXVIRUFRPPXQLFDWLRQLQDZLUHGRUZLUHOHVVQHWZRUN VXFKDVDORFDORUZLGH DUHDQHWZRUN RWKHUWKDQWUDQVPLVVLRQRUUHFHSWLRQDSSDUDWXVRIKHDGLQJ´ 3ODLQWLIIDUJXHVWKDWWKH+DUPRQLF(05VDUHSURSHUO\FODVVLILHGLQ+HDGLQJ EHFDXVHWKHGHYLFHVDUHXVHGIRUDYDULHW\RISXUSRVHVLQFOXGLQJQRQWHOHYLVLRQ 3ODLQWLIIUHOLHVRQWKH6FKRQIHOG([SHUW5HSRUWWRVXSSRUWWKLVDVVHUWLRQ7U2UDO$UJDW 7KHUHSRUWVWDWHVWKDWWKH³+DUPRQLFHQFRGHUVPXOWLSOH[HUVDQGUH PXOWLSOH[HUVZHUHLQWHQGHGIRUXVHLQPXOWLPHGLDcommunicationQHWZRUNV´3O([ ) 6FKRQIHOG([SHUW5HSRUW DW(DUOLHUWKHUHSRUWGHVFULEHVPXOWLPHGLD FRPPXQLFDWLRQQHWZRUNVDVSURYLGLQJ³DYDULHW\RIGLJLWDOVHUYLFHVWRWKHLUFXVWRPHUV LQFOXGLQJWHOHSKRQ\WHOHYLVLRQDQG,QWHUQHWVHUYLFHV´Id7KHUHSRUWDOVRVWDWHVWKDW ³>W@KHVWURQJUHODWLRQVKLSEHWZHHQPXOWLPHGLDFRPSUHVVLRQVWDQGDUGVDGRSWHGIRU PXOWLPHGLDVWRUDJHYLGHRWHOHSKRQ\DQGRWKHUQHWZRUNHGDSSOLFDWLRQVVXFKDV YLGHRFRQIHUHQFLQJLVDFOHDULQGLFDWLRQRIWKHFRQIOXHQFHRIPDQ\RIWKHWHFKQRORJLHV XVHGIRUWKHVHYHU\GLIIHUHQWPXOWLPHGLDDSSOLFDWLRQV´IdDW +RZHYHUDVQRWHG0U6FKRQIHOGVWDWHGGXULQJKLVGHSRVLWLRQWKDWKHGRHVQRW NQRZKRZ+DUPRQLF(05VDUHactually XVHGSee 3O([, 6FKRQIHOG'HS.)DW ,QOLJKWRIWKLVVWDWHPHQWWKHH[SODQDWLRQLQWKH6FKRQIHOG([SHUW5HSRUWDERXW PXOWLPHGLDFRPSUHVVLRQVWDQGDUGVGRHVQRWVXSSRUWSODLQWLII¶VDUJXPHQWWKDWWKH +DUPRQLF(05VWKDWLQFRUSRUDWHWKHVXEMHFWPHUFKDQGLVHDUHXVHGprincipally IRU WHOHSKRQHDQG,QWHUQHWQHWZRUNV5DWKHUWKLVVWDWHPHQWFRQYH\VWKDWWKHWHFKQRORJ\ XVHGWRFRPSUHVVGDWDIRUPRYLHDQGWHOHYLVLRQYLHZLQJLVVLPLODUWRWKDWXVHGIRUYLGHR WHOHSKRQ\DQGYLGHRFRQIHUHQFLQJ$VDFRQVHTXHQFHWKH6FKRQIHOG([SHUW5HSRUW OHDYHVXQFOHDUWKHSULQFLSDOXVHWRZKLFKWKH+DUPRQLF(05VZLWKZKLFKWKHLPSRUWHG PHUFKDQGLVHLVXVHGDUHSXW QDPHO\IRUWHOHYLVLRQRUQRQWHOHYLVLRQSXUSRVHV &21&/86,21 0XFKKDVEHHQZULWWHQDERXWWKH³*ROGHQ(UDRI7HOHYLVLRQ´7KHFRXUWLVQRWLQ DSRVLWLRQWRRIIHUDMXGJPHQWRQZKHQH[DFWO\WKDWHUDPD\KDYHVWDUWHGDQGHQGHG +RZHYHUZLWKRXWTXHVWLRQRQHRIWKHJUHDWHVWVKRZVLQWHOHYLVLRQKLVWRU\ SXQFWXDWHGE\WKHXVHRID6KRH3KRQHDSSURSULDWHO\ZDVWKHFRPHG\DFWLRQ DGYHQWXUHVHULHVGet SmartFUHDWHGE\WKHH[WUDRUGLQDU\0HO%URRNVDQG%XFN+HQU\ DVDVSRRIRIWKH-DPHV%RQGPRYLHV7KHVKRZIHDWXUHGDPHPRUDEOHVHULHVRI JDGJHWVZKLFKLQFOXGHGWKH6KRH3KRQH $JHQW0D[ZHOO6PDUWSOD\HGE\'RQ$GDPV KDGWRUHPRYHKLVVKRHDQGKROGWKHERWWRPRILWXSWRKLVFKHHNDQGHDU DQGWKH&RQH RI6LOHQFH FRPSULVHGRIWZRFOHDUVHPLFLUFXODUVKHHWVRIWUDQVOXFHQWSODVWLFWKDW GHVFHQGHGIURPWKHFHLOLQJWRFUHDWHD VYHUVLRQRID6HQVLWLYH&RPSDUWPHQWDOL]HG ,QIRUPDWLRQ)DFLOLW\ ³6&,)´ 6PDUWLQVLVWHGRQXVLQJLWWRFRQYH\WKHPRVWUXGLPHQWDU\ DQGXVHOHVVLQIRUPDWLRQWRKLVVXSHULRU²NQRZQVLPSO\DV³7KH&KLHI´SOD\HGWRFRPLF SHUIHFWLRQE\(GZDUG3ODWW²DQGLWLQYDULDEO\PDOIXQFWLRQHGERQNLQJ6PDUWRUWKH &KLHIRQWKHKHDGRUFDXVLQJRWKHUSUREOHPV 7KHVKRZDOVRLQFOXGHGFDWFKSKUDVHVWKDWFDXJKWRQTXLFNO\DWWKHWLPHDQGZHUH ZLGHO\UHSHDWHG7KHUHZDV³WKHROG>ILOOLQWKHEODQN@WULFN´FDWFKSKUDVHDVLQ ³7KHROG 3URIHVVRU3HWHU3HFNLQSDKDOOSXUSRVHDQWLSHUVRQQHO3HFNLQSDKSRFNHWSLVWROXQGHU WKHWRXSHHWULFN´ $QGWKHQWKHUHZDVWKH³ZRXOG\RXEHOLHYH´FDWFKSKUDVHDVLQRQHLQVWDQFHLQ ZKLFKDQHYLOFKDUDFWHUNQRZQDV0U%LJFDSWXUHV6PDUWDQGKLVSDUWQHU$JHQW SOD\HGE\%DUEDUD)HOGRQ 6PDUW ³$WWKHPRPHQWVHYHQ&RDVW*XDUGFXWWHUVDUHFRQYHUJLQJRQXV:RXOG \RXEHOLHYHLW"´ 0U%LJ ³,ILQGWKDWKDUGWREHOLHYH´ 6PDUW ³:RXOG\RXEHOLHYHVL["´ 0U%LJ ³,GRQ¶WWKLQNVR´ 6PDUW ³+RZDERXWWZRFRSVLQDURZERDW"´ Get Smart:,.,3(',$KWWSV HQZLNLSHGLDRUJZLNL*HWB6PDUW ODVWYLVLWHG'HF &DWFKSKUDVHV:28/'<28%(/,(9(&20 KWWS ZZZZRXOG\RXEHOLHYHFRPSKUDVHVKWPO ODVWYLVLWHG'HF Get Smart: Mr. Big 1%&WHOHYLVLRQEURDGFDVW6HSW $V0HO%URRNVVDLGDWWKHWLPH ³,ZDVVLFNRIORRNLQJDWDOOWKRVHQLFHVHQVLEOH VLWXDWLRQFRPHGLHV7KH\ZHUHVXFKGLVWRUWLRQVRIOLIH1RRQHKDGHYHUGRQHDVKRZ DERXWDQLGLRWEHIRUH,GHFLGHGWREHWKHILUVW´ 7KHFRXUWWUXVWVWKDWLWVDQDO\VLVZLOOEHFRQVLGHUHGWREHQHLWKHULGLRWLFQRUD GLVWRUWLRQRIWKHIDFWVDQGODZLQWKLVFDVH)RUWKHIRUHJRLQJUHDVRQVWKHFRXUWJUDQWV GHIHQGDQW¶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ecember 22, 2020 1HZ