[00:00:00] Speaker 03:
Stay where they are is 162584, Garmin International versus ITC.

[00:00:07] Speaker 03:
Just for clarification, my understanding is this is the modified order appeal.

[00:00:18] Speaker 03:
Right?

[00:00:18] Speaker 03:
This is the modified order appeal?

[00:00:21] Speaker 03:
Exactly.

[00:00:33] Speaker 05:
there seems to be, at the outset, a dispute as to whether modification, in fact, changed what garment was allowed to import.

[00:00:49] Speaker 06:
And in our view, it certainly did.

[00:00:53] Speaker 06:
The modification didn't address the redesign, right?

[00:00:57] Speaker 05:
The modification did not explicitly address the redesign, but it

[00:01:03] Speaker 05:
because the commission takes the view that, unlike, say, a district court, where it simply says, our exclusion orders were all covered products.

[00:01:16] Speaker 05:
Therefore, the practical effect of it was that the redesign could no longer be imported if it was going to be kitted.

[00:01:28] Speaker 05:
And so while it doesn't, on its face, address that,

[00:01:34] Speaker 05:
When you go to customs, what happens is that you now, after the modification, could not continue importing the redesign if it was going to kit those things, the redesign, and then sell the kit.

[00:01:52] Speaker 06:
How does the order prohibit that, since it doesn't say anything about the redesign?

[00:01:56] Speaker 05:
It says, in essence, it says you can't import transducers that are going to be kitted.

[00:02:04] Speaker 05:
That are going to be what?

[00:02:06] Speaker 05:
Kitted.

[00:02:07] Speaker 06:
It doesn't say that.

[00:02:12] Speaker 05:
It says that you can't, the carve out, there's a carve out from the carve out if you will, that the carve out from the carve out says, the carve out itself does not apply to things that are going to be combined.

[00:02:29] Speaker 03:
Can I, my understanding of this is when we're looking

[00:02:32] Speaker 03:
In the case we were looking at stand-alone transducers, and the Commission found, unless we've reversed it on appeal, those are okay.

[00:02:41] Speaker 03:
The CAR vote, it seems to me, and I don't know, I'm looking at JA 3 at paragraph 4, is, it says, it continues to say, the provisions of this order shall not apply, and this is the new language that was added, to stand-alone products.

[00:02:57] Speaker 03:
For example, the transducer product,

[00:03:00] Speaker 03:
that are imported and sold after importation as standalone products.

[00:03:06] Speaker 03:
That's what we were always talking about in terms of the standalone transducer.

[00:03:10] Speaker 03:
The only clarification the modification provides is that if there are standalone transducers that are imported, but not for the purpose of sale after deportation as standalone products, but for the purpose of kitting with the other products, those are covered by this order.

[00:03:30] Speaker 03:
That's what I read to be the limits of the modification, and I frankly don't see, unless you can tell me otherwise, what's the problem with that?

[00:03:41] Speaker 05:
I think the problem is a practical matter for Garmin, and the reason for the appeal was because what that meant on the ground was that the design around product could no longer be imported for kitting.

[00:03:57] Speaker 05:
And the order

[00:03:59] Speaker 06:
How does it say that?

[00:04:02] Speaker 06:
It doesn't address whether the design around product infringes or doesn't infringe.

[00:04:08] Speaker 05:
No, but I think that this comes to... It says that any component that's quote covered... Where were we reading at?

[00:04:43] Speaker 05:
I think it's paragraph one.

[00:04:47] Speaker 03:
Well, you want to give me the appendix site?

[00:04:49] Speaker 03:
Appendix two.

[00:04:51] Speaker 06:
It says that are covered by one or more of the claims.

[00:04:59] Speaker 06:
You argued that the redesigns are not covered by the clients.

[00:05:13] Speaker 06:
And that issue hasn't been resolved.

[00:05:16] Speaker 06:
It has not yet been resolved.

[00:05:17] Speaker 06:
So how is it that this provision bars you from importing the redesign?

[00:05:23] Speaker 06:
It only embars you from importing the redesign if it's covered by the claims, an issue which hasn't been decided yet.

[00:05:32] Speaker 05:
I think because of what it also says about certification.

[00:05:40] Speaker 03:
Can I ask you, is this...?

[00:05:42] Speaker 03:
Were these amendments, were these changes made as a result of the modification?

[00:05:49] Speaker 03:
I'm looking at the modification order and it talks about amendment to paragraph three.

[00:05:55] Speaker 03:
So is that what you're talking about, paragraph three?

[00:05:57] Speaker 03:
And then it talks about amendment to paragraph four.

[00:06:02] Speaker 03:
And it shows the red line of those paragraphs.

[00:06:07] Speaker 03:
So which paragraph are you saying

[00:06:12] Speaker 03:
interferes with the design around?

[00:06:23] Speaker 05:
We think, Your Honor, that in paragraph four, when it says the provisions of this order shall apply to components, for example, a transducer component, which will be imported or sold as part of a marine sonar imaging system covered by one of the claims.

[00:06:43] Speaker 05:
That's what is.

[00:06:52] Speaker 03:
So is it because it's beyond a transducer?

[00:06:55] Speaker 03:
If it was just the transducer, that would be OK, but because it says components and, for example, a transducer?

[00:07:03] Speaker 05:
Well, I think the practical issue with the effect of this was that before this modification,

[00:07:13] Speaker 05:
Garmin was able to import the design around transducer and then combine that in the so-called kitting process and sell the resulting product in the United States.

[00:07:31] Speaker 06:
Well, there's no question, but the kitting is now prohibited by the order if the kitting results in an infringing device.

[00:07:40] Speaker 06:
Yes.

[00:07:41] Speaker 06:
bar it if it's not an infringing device.

[00:07:45] Speaker 05:
That's correct, Your Honor, but the certification provisions which would allow the importation are keyed off of this.

[00:08:05] Speaker 04:
How does that help you?

[00:08:07] Speaker 04:
What you just said about the certification requirements

[00:08:10] Speaker 04:
They seem to go against your argument.

[00:08:15] Speaker 04:
In what way?

[00:08:17] Speaker 04:
Well, the components, any components that are still covered are not excluded.

[00:08:24] Speaker 04:
And the certification allows an importer to certify that they're familiar with the terms of exclusion order and that the importation of these particular components will not infringe.

[00:08:41] Speaker 05:
Prior to the modification, Garmin was able to certify that the transducer components were carved out from the scope of the order.

[00:08:58] Speaker 05:
And after the modification, it was not able to do that.

[00:09:01] Speaker 03:
But that's true.

[00:09:02] Speaker 03:
But that has nothing to do with the design around.

[00:09:04] Speaker 03:
We all acknowledge the modification did something.

[00:09:08] Speaker 03:
And what it did was cut off

[00:09:10] Speaker 03:
what was imported as a standalone transducer, and then after importation is kitted with the other stuff.

[00:09:19] Speaker 03:
But that has nothing to do with whether the order originally would have allowed for designer rounds, and now it doesn't.

[00:09:28] Speaker 03:
It just has to do with the transducers, not that are sold to customers separately, but that are kitted upon importation, right?

[00:09:36] Speaker 05:
Right.

[00:09:36] Speaker 05:
It's certainly correct that this order doesn't

[00:09:40] Speaker 05:
this modification has nothing to do with the design around per se.

[00:09:45] Speaker 05:
In other words, it doesn't address, it doesn't reach the design around.

[00:09:48] Speaker 06:
And you can continue to import the design around as long as you certify that it doesn't result in infringement when it's kitted.

[00:09:56] Speaker 06:
I don't think that's correctional.

[00:09:59] Speaker 06:
In other words, I think... Why could that not be correct?

[00:10:04] Speaker 05:
I believe that the

[00:10:08] Speaker 05:
Certainly what has happened is that customs has not allowed the design around.

[00:10:16] Speaker 04:
I think there's a kidding occur before importation.

[00:10:20] Speaker 04:
Does this stuff come into like a free trade zone and there it's kitted?

[00:10:27] Speaker 05:
As far as I understand it, you're on a note it would come in clear customs and then it would be kitted after that.

[00:10:35] Speaker 06:
They come in in two different plastic bags and then they're combined after you import them, right?

[00:10:45] Speaker 05:
I don't think that's... I mean, in other words, I think that they come in in separate shipments and then they're combined in a garment facility somewhere.

[00:10:55] Speaker 03:
So what were you about to say that you were complaining about certain actions being taken by customs that you're aware of?

[00:11:01] Speaker 03:
What was that?

[00:11:03] Speaker 05:
Customs has held up shipments of the designer round, which it was not doing prior to the modified order.

[00:11:12] Speaker 06:
Have you certified that the designer round is not infringing to them?

[00:11:18] Speaker 06:
Garmin has commenced a so-called 177%.

[00:11:22] Speaker 06:
No, no, no.

[00:11:22] Speaker 06:
Have you certified to Customs that the designer round is not infringing?

[00:11:29] Speaker 06:
I believe so.

[00:11:30] Speaker 06:
But have you sought a scope ruling on this issue?

[00:11:33] Speaker 05:
Yes, Your Honor.

[00:11:34] Speaker 05:
That's the government has sought a so-called 177 ruling from Customs on this.

[00:11:42] Speaker 05:
But that has not yet been issued.

[00:11:43] Speaker 05:
And what's the result of that?

[00:11:44] Speaker 05:
It hasn't been hit.

[00:11:45] Speaker 05:
They haven't decided it.

[00:11:46] Speaker 04:
Well, isn't this kind of not right?

[00:11:51] Speaker 04:
It just seems to me you're complaining about something that you haven't fully exhausted all your other remedies before you can assert this on appeal.

[00:12:01] Speaker 05:
Well, if the 177 ruling were adverse to Gaumann, I think there would be a separate way of seeking a reversal of that, right?

[00:12:15] Speaker 04:
But in this instance... Well, you're appealing the imposition of the modification order, but yet I just don't see how you demonstrated how it affects you, other than your argument.

[00:12:29] Speaker 05:
Well, I have the sense that I'm not making much headway.

[00:12:34] Speaker 03:
So why don't we turn to the other side?

[00:12:36] Speaker 05:
Yes.

[00:12:43] Speaker 00:
Good morning, Your Honors.

[00:12:44] Speaker 00:
May it please the Court.

[00:12:45] Speaker 00:
It's clear to me the Court understands what happened in the modification proceeding.

[00:12:51] Speaker 00:
Before, or at least when the record was open at the Commission, Garmin was importing in two different ways.

[00:12:58] Speaker 00:
It was importing

[00:12:59] Speaker 00:
complete so-called kitted units, that's the head units and transducers together, and it was importing transducers in particular alone for sale after importation to its customers.

[00:13:11] Speaker 00:
The commission found that the second, the importation of transducers was not indirectly infringing, so it limited its order to the importation of the kitted items.

[00:13:21] Speaker 00:
However, at some point, either during or after the commission issued its order, although

[00:13:28] Speaker 00:
the commission was never informed of this, Garmin began importing the head units and transducers separately and then combining them for sale after importation in a possibly directly infringing device.

[00:13:42] Speaker 06:
So what happens if they certify, they import the redesigned transducers, they certify that when combined with the head unit that this is not infringing.

[00:13:55] Speaker 06:
Are they entitled to import that?

[00:13:58] Speaker 00:
is not quite as simple as that.

[00:14:00] Speaker 00:
The commission explained even in its original violation opinion, and that is at page 847, that mere certification that the product is not infringing is enough.

[00:14:10] Speaker 00:
You have to have some sort of ruling on that.

[00:14:12] Speaker 00:
It's not enough.

[00:14:13] Speaker 00:
It's not enough unless you can say you've had a 177 proceeding, or you've got customs, or you've come to the commission for an advisory opinion.

[00:14:21] Speaker 00:
And if you rule in your favor, then yes, you can certify to customs that

[00:14:26] Speaker 06:
So what this does is essentially shift the burden to them now to, in the kidding situation, to secure a ruling that the redesign is not infringing.

[00:14:39] Speaker 00:
So, Your Honor, this is no different than any other... No, no, no, no.

[00:14:42] Speaker 06:
Is that true?

[00:14:43] Speaker 06:
Answer my question.

[00:14:44] Speaker 00:
Yes, Your Honor.

[00:14:45] Speaker 00:
But that's the same as any other exclusion order.

[00:14:48] Speaker 06:
This court specifically... But it's a change.

[00:14:50] Speaker 06:
So the exclusion order before the modification

[00:14:55] Speaker 06:
allowed them to import these separately packaged transducers, even though they were going to be kitted later.

[00:15:04] Speaker 06:
And now, even though they say they're redesigned and not infringing, they're not allowed to import them unless they come up with a ruling that they're not infringing.

[00:15:14] Speaker 06:
Is that correct?

[00:15:16] Speaker 00:
Not quite, Your Honor.

[00:15:17] Speaker 00:
That's two different issues.

[00:15:18] Speaker 00:
The first issue is whether or not Garmin was allowed to import components for kitting.

[00:15:24] Speaker 00:
The answer to that is no.

[00:15:25] Speaker 00:
Garmin was not allowed.

[00:15:26] Speaker 00:
The problem was the commission's order, because of the carve-out, was a little confusing on that.

[00:15:32] Speaker 06:
I understand that.

[00:15:33] Speaker 06:
And nobody seems to be much objecting to that.

[00:15:36] Speaker 06:
The question is about the redesigned transducers.

[00:15:39] Speaker 06:
And apparently this worked some change as to whether those can be imported without securing the ruling in the scope proceeding or whatever.

[00:15:51] Speaker 00:
No, Your Honor.

[00:15:52] Speaker 00:
Even under the original order, if the order had been interpreted correctly to bar not only the direct infringing devices, but components thereof, which is basically what the clarification made clear, Garmin still would have had to, before certifying any redesigned product, and this is true for any party subject to an exclusion order, must seek some sort of adjudication before it can certify.

[00:16:16] Speaker 00:
It can't merely go to customs and say,

[00:16:18] Speaker 00:
This product is not infringing.

[00:16:19] Speaker 00:
We believe in that it doesn't infringe, so you can bring it in.

[00:16:21] Speaker 00:
There are procedures in place, 177 ruling before importation, customs protest, if customs stops the product.

[00:16:28] Speaker 04:
Why wouldn't the order itself suffice as a legal authority?

[00:16:32] Speaker 00:
As far as redesign?

[00:16:33] Speaker 04:
Right, as far as redesign is concerned.

[00:16:36] Speaker 04:
The only thing that affected the importation is a modified order.

[00:16:41] Speaker 04:
So why couldn't Garmin just certify?

[00:16:45] Speaker 04:
pursuant to the order of ITC on so-and-so date, blah, blah, blah, I hereby certify that this standalone transducer is non-infringing.

[00:16:55] Speaker 00:
Well, I think the standalone transducer, that's correct.

[00:16:58] Speaker 00:
As far as a standalone transducer, which is imported for sale to customers directly.

[00:17:04] Speaker 00:
But the order does bar importation of components that are infringing components.

[00:17:12] Speaker 00:
In this case, components that are imported

[00:17:14] Speaker 00:
And the only thing Garmin did to try to get around the commission's order was separate shipments, bring them in, and then put them back together.

[00:17:20] Speaker 03:
So then what it doesn't have to do, does it have to certify to the customs official that the purpose of importing this transducer standalone is for sealed to another customer and not for kidding?

[00:17:31] Speaker 00:
Exactly, Your Honor.

[00:17:32] Speaker 00:
And that is exactly what the certification provision in the modified order makes clear.

[00:17:35] Speaker 00:
And it only helps Garmin.

[00:17:37] Speaker 00:
Garmin can, in that case, say we are importing transducers for individuals.

[00:17:41] Speaker 04:
If your order doesn't say that.

[00:17:42] Speaker 00:
The modified one?

[00:17:43] Speaker 04:
Yeah, it doesn't say you can't.

[00:17:47] Speaker 04:
But you have to ensure that the cell subsequent to importation cannot be used in a kit.

[00:17:57] Speaker 04:
I mean, that would prevent all assembly.

[00:17:59] Speaker 04:
That would prevent the use of a transducer.

[00:18:01] Speaker 00:
I'm sorry.

[00:18:01] Speaker 00:
I'm not sure I understand your honor's question.

[00:18:04] Speaker 00:
But the certification provision says that Garmin is permitted to import if the

[00:18:12] Speaker 00:
product, in this case a transducer, is intended for sale or use other than in the infringing device, meaning that if they are importing the transducer just to sell as a component by itself, that's fine.

[00:18:25] Speaker 00:
And that was the carve-out that was in the original order, and it's preserved in the modified order.

[00:18:33] Speaker 06:
applies to kidding by Garmin.

[00:18:36] Speaker 00:
Correct, Your Honor.

[00:18:37] Speaker 00:
Correct, exactly.

[00:18:38] Speaker 00:
Garmin was found to be directly infringing but was not found to be indirect infringing.

[00:18:41] Speaker 03:
So the new thing is by contrast the order does apply to components like the transducer when the components are or will be imported or sold after importation as part

[00:18:56] Speaker 03:
of the system.

[00:18:57] Speaker 00:
Right, by Garmin.

[00:18:58] Speaker 00:
When Garmin itself combines... It doesn't say by Garmin.

[00:19:02] Speaker 00:
Well, this is a limited exclusion order, Your Honor, and limited exclusion orders are directed to a specific party, in this case Garmin and its various entities that are named.

[00:19:11] Speaker 00:
So when the products are imported, and I believe this is explained more clearly in the Commission's opinion, but when the components are imported

[00:19:20] Speaker 00:
and assembled by Garmin for sale by Garmin.

[00:19:23] Speaker 00:
That is a directly infringing device.

[00:19:25] Speaker 04:
Even though Garmin knows that this assembly that they're engaging in is going to result in a non-infringing device or a non-infringing product?

[00:19:37] Speaker 00:
Well, again, that question is reserved or is answered by the normal process.

[00:19:43] Speaker 00:
When any product is imported that is subject to an exclusion order,

[00:19:48] Speaker 00:
there's a procedure.

[00:19:49] Speaker 00:
Customs will look at the product and do whatever analysis is necessary to determine whether or not the product infringes.

[00:19:56] Speaker 00:
And the order specifically says that articles covered by the claims that are listed are to be kept out.

[00:20:04] Speaker 00:
Whether or not any article that is imported is covered by the claims is usually dealt with in the first instance by customs, or... Customs made a determination here that the redesigns are infringing?

[00:20:17] Speaker 00:
No, I do not believe so.

[00:20:18] Speaker 00:
And I believe my opponent mentioned it.

[00:20:21] Speaker 04:
Have they held up shipments pursuant to the modified order?

[00:20:25] Speaker 00:
Again, I'm not aware of that.

[00:20:28] Speaker 00:
I believe no.

[00:20:29] Speaker 00:
We are notified when there are seizures.

[00:20:31] Speaker 00:
And I do not believe there has been one in this case.

[00:20:33] Speaker 00:
But don't quote me on that.

[00:20:35] Speaker 00:
I'm not completely aware of that.

[00:20:36] Speaker 00:
But at any rate, that is the normal procedure.

[00:20:39] Speaker 00:
And that is true for any commission order.

[00:20:42] Speaker 00:
question of whether or not a product is covered.

[00:20:44] Speaker 04:
Let's assume that, because you don't know, but let's assume that Customs has held up the importation of the redesign transducer.

[00:20:55] Speaker 04:
Wouldn't that be enough to say, there I'm injured, this modified order is affecting me, I'm certifying that these are all used for non-infringing purposes?

[00:21:06] Speaker 00:
No, Your Honor.

[00:21:06] Speaker 00:
If Customs stops the shipment, importer can file a protest.

[00:21:10] Speaker 00:
And if the protest is denied with customs, if the protest is denied, they have recourse and appeal to the CIT and ultimately to this court.

[00:21:17] Speaker 00:
So there are procedures in place to determine whether or not shipments come in.

[00:21:21] Speaker 00:
But the commission has stated that you cannot simply just bring a piece of paper and say, I don't infringe.

[00:21:28] Speaker 00:
It may be that proving non-infringement is simple, but there are avenues to do so.

[00:21:34] Speaker 03:
But there are two potential defenses here.

[00:21:36] Speaker 03:
One is that we've redesigned, and this is a non-infringer transducer.

[00:21:41] Speaker 03:
The other is that we're going to be selling this transducer as a stand-along to our customers and not kidding them.

[00:21:49] Speaker 03:
Correct.

[00:21:50] Speaker 03:
So they could say either one of those, the former

[00:21:54] Speaker 03:
And the newer one that's allowed in the modification would be the change would be that it would require that they have to establish that the stand-alone transducer is not going to be kitted afterwards.

[00:22:07] Speaker 03:
Correct.

[00:22:07] Speaker 03:
So that's the change.

[00:22:09] Speaker 00:
Well, it's not a change.

[00:22:10] Speaker 00:
That was always the case.

[00:22:12] Speaker 00:
OK.

[00:22:12] Speaker 00:
Well, that's the clarification.

[00:22:13] Speaker 00:
It's the clarification.

[00:22:14] Speaker 03:
OK.

[00:22:15] Speaker 03:
But with respect to whether or not redesigned or design products get in, you're telling us that it's always been the same deal.

[00:22:24] Speaker 00:
Yes, that's always been the case.

[00:22:25] Speaker 00:
Commission orders cover infringing products.

[00:22:27] Speaker 00:
The court said that in Hyundai Electronics, the commission has always abided by that.

[00:22:32] Speaker 06:
I'm confused.

[00:22:33] Speaker 06:
So they try to bring in the redesign.

[00:22:36] Speaker 06:
Let's make it simple.

[00:22:38] Speaker 06:
So a combined device.

[00:22:41] Speaker 06:
And Customs says you can't bring this in because it's infringing.

[00:22:45] Speaker 06:
They can file a protest.

[00:22:46] Speaker 06:
Then who bears the burden of showing that their redesigned device is infringing?

[00:22:52] Speaker 00:
If there is a customs protest, the importer bears the burden because that is, I believe, an ex parte process.

[00:22:58] Speaker 00:
The patent owner is not involved.

[00:23:02] Speaker 06:
So importer would have to show that it's non-infringing.

[00:23:06] Speaker 00:
Correct.

[00:23:07] Speaker 06:
So what is the basis for shifting the burden to the importer to have to show that its product is non-infringing as opposed to the burden on customs or the ITC to show that it isn't?

[00:23:21] Speaker 00:
So correct your honor, and this court explained that in Hyundai Electronics.

[00:23:26] Speaker 00:
The court said that commission exclusion orders appropriately placed the risk of unfairness associated with the order upon potential importers rather than American manufacturers.

[00:23:36] Speaker 00:
And the court further recognized that commission remedial orders therefore extend not only to products adjudicated to infringe, but also to unadjudicated products later presented.

[00:23:47] Speaker 00:
And therefore, once a finding of violation has been made and a party wishes to... But did Hyundai address the burden of proof question?

[00:23:55] Speaker 00:
Not explicitly, but it did say that... Well, it did, yes.

[00:23:59] Speaker 00:
It did say the risk of unfairness is on the importer.

[00:24:02] Speaker 00:
So I believe, yes, it did.

[00:24:03] Speaker 00:
Saying that when a product is possibly subject to exclusion order,

[00:24:10] Speaker 00:
and seeks to be imported, the importer, and if it's challenged, the importer has to show that the product does not fall under the order.

[00:24:16] Speaker 00:
And that was this court's holding at Hyundai Electronics.

[00:24:20] Speaker 03:
OK, so I'm over my time here.

[00:24:22] Speaker 03:
Hopefully your colleague won't mind curtailing his argument.

[00:24:26] Speaker 03:
Why don't we decrease the number to four just to try to keep the other side even?

[00:24:39] Speaker 01:
May it please the court.

[00:24:40] Speaker 01:
I do want to make clear that the original limited exclusion order issued at the end of 2015, at that time, placed the burden on Garmin as the importer to seek approval of any redesigns.

[00:24:54] Speaker 01:
That original order did that.

[00:24:55] Speaker 01:
And that's the way it's been.

[00:24:56] Speaker 01:
That's the way commission practice has worked since at least 1981 in the Sealed Air case, also more recently reiterated in the Hyundai case, where this court has said what we could do is the ITC could exclude

[00:25:10] Speaker 01:
all products and put the burden on the importer, or the ITC could allow the shipments and require the complainant to file another complaint, and the Commission has chosen to put the burden on the importer to seek approval of redesigns.

[00:25:24] Speaker 03:
Is this long-standing practice?

[00:25:26] Speaker 01:
Yes, ma'am.

[00:25:27] Speaker 01:
That's the way it's been.

[00:25:28] Speaker 01:
And Garmin in its briefs makes clear in its reply brief that it's not challenging the Commission's general practice in this regard.

[00:25:35] Speaker 01:
That was the way it was when the limited exclusion order came out.

[00:25:38] Speaker 01:
And it's still the way it is.

[00:25:40] Speaker 06:
Yeah, but is there a difference between a general exclusion order and a limited exclusion order?

[00:25:43] Speaker 06:
Because Hyundai is talking about general exclusion orders.

[00:25:48] Speaker 01:
Not in this respect, Your Honor.

[00:25:49] Speaker 01:
Not on the issue of who bears the burden of getting approval as to a redesign.

[00:25:54] Speaker 04:
The Sealed Air case makes clear from 1981... Well, under general exclusion order, no one can get approval, right?

[00:26:01] Speaker 04:
The product has just stopped at the border.

[00:26:03] Speaker 04:
For a general exclusion order, it's general.

[00:26:06] Speaker 01:
It's not specific to the particular NCDS right, Your Honor.

[00:26:09] Speaker 01:
But the point is, in a limited exclusion order, for sure, the burden is on the importer.

[00:26:15] Speaker 01:
And this isn't just commission practice.

[00:26:18] Speaker 01:
The commission said so in their commission opinion.

[00:26:21] Speaker 06:
The commission may have said so.

[00:26:22] Speaker 06:
The question is whether that's right.

[00:26:25] Speaker 01:
First, it is right.

[00:26:26] Speaker 01:
The Seawater case says so.

[00:26:28] Speaker 01:
The Hyundai case says so in the context of a general exclusion order.

[00:26:31] Speaker 01:
See what error is not limited to general exclusion orders.

[00:26:34] Speaker 01:
And moreover, Garmin is not challenging the general practice that this is how the commission operates.

[00:26:40] Speaker 01:
The issue Garmin is raising is whether the modified order somehow affected a change that resulted in excluding from entry the tilted redesign.

[00:26:53] Speaker 01:
The modified order had nothing to do with the tilted redesign.

[00:26:56] Speaker 03:
It had to do with Garmin's... Well, it did mark a change.

[00:26:59] Speaker 03:
I mean they did it for a reason and the reason was before that at least it was unclear as to whether not the redesigned stuff but the standalone transducer even if it were kitted after importation would be subject to the exclusion and that's why they needed the modification to clarify that right?

[00:27:17] Speaker 01:
We needed the modification to clarify that because what Garmin did was they stopped importing complete kits that had the transducers in the box.

[00:27:27] Speaker 01:
They said what we'll do

[00:27:28] Speaker 01:
is we'll pretend that all these transducers are standalone products for individual retail sale.

[00:27:34] Speaker 01:
And then we'll tell Customs they're all that.

[00:27:37] Speaker 01:
And then once they get past Customs and get in the United States.

[00:27:40] Speaker 03:
Well, I think your characterization may be a bit unfair.

[00:27:43] Speaker 03:
Because they're not representing this.

[00:27:47] Speaker 03:
They were doing it because it wasn't precluded.

[00:27:50] Speaker 03:
They were assuming that the order did not cover that because the order did not explicitly cover it.

[00:27:57] Speaker 01:
Paragraph one of the original exclusion order said, infringing products are covered and components thereof, meaning components of those infringing products.

[00:28:06] Speaker 01:
When you know you have a component being imported as part of an infringing product, paragraph one plainly said that.

[00:28:13] Speaker 01:
They talked with customs and got customs to not believe that.

[00:28:17] Speaker 01:
And we went to the commission and said, this is a loophole that Garmin is exploiting and it needs to be closed.

[00:28:23] Speaker 01:
If they're importing transducers to be kitted,

[00:28:25] Speaker 01:
That's a component of an infringing product, banned under paragraph one.

[00:28:31] Speaker 06:
Yeah, but only if it's infringing.

[00:28:32] Speaker 06:
The exclusion order only excludes things that are infringing.

[00:28:36] Speaker 06:
How can you say that the burden shifts to the importer to say that it's non-infringing?

[00:28:44] Speaker 06:
The question is whether the order covers it.

[00:28:46] Speaker 06:
And it doesn't cover it if it's non-infringing.

[00:28:49] Speaker 01:
The order covers all infringing devices, as your honor said.

[00:28:54] Speaker 01:
having it be non-infringing as sealed air states, Hyundai states, and garments not even challenging.

[00:29:00] Speaker 01:
That burden is on the importer.

[00:29:02] Speaker 01:
And here, they have gone to customs.

[00:29:04] Speaker 01:
They have filed a Rule 177 request asking for it to be ruled to be non-infringing.

[00:29:10] Speaker 01:
That is the process that is supposed to happen.

[00:29:12] Speaker 01:
That's what's going on.

[00:29:13] Speaker 04:
Why then does ITC not include in these orders that an importer that's seeking to show that a particular product is non-infringing

[00:29:22] Speaker 04:
must receive some sort of a ruling, a customs ruling, before they can do that.

[00:29:27] Speaker 04:
All it says is that they just need to certify that it's going to be used for a non-infringing purpose.

[00:29:33] Speaker 01:
That's inaccurate, Your Honor.

[00:29:34] Speaker 01:
The commission opinion made clear on 847 to 848 of the Joint Appendix that the burden, in accordance with the long-standing practice, the burden is on Garmin.

[00:29:45] Speaker 01:
Garmin can go to customs and file a rule.

[00:29:47] Speaker 04:
I know that.

[00:29:48] Speaker 04:
I know that.

[00:29:49] Speaker 04:
But under a limited exclusion order, and the general order was modified, all government has to do is certify that the importation is going to be used for non-infringing purposes.

[00:30:03] Speaker 01:
That's not correct, Your Honor.

[00:30:04] Speaker 01:
The Customs does not allow an importer to certify non-infringement.

[00:30:09] Speaker 01:
They have to seek a ruling of non-infringement through the 177 process.

[00:30:14] Speaker 01:
or going back to the commission and seeking an advisory.

[00:30:19] Speaker 06:
The order doesn't say that.

[00:30:22] Speaker 01:
The commission opinion says it, plus it's well entrenched in the case law and recommended and supported by this court.

[00:30:31] Speaker 01:
I need to wrap up.

[00:30:32] Speaker 01:
Clearly here, the commission's actions were well within its broad discretion.

[00:30:37] Speaker 01:
This is not an abuse of discretion type of situation, and it clearly must be affirmed.

[00:30:50] Speaker 05:
suspect the panel may have had enough of the ITC so I will be brief.

[00:30:58] Speaker 05:
The issue really concerns the interplay between the burden shifting and the change because of the idea that even if Garmin has a product that's redesigned, it still has to

[00:31:16] Speaker 05:
get a ruling on that.

[00:31:18] Speaker 03:
But that's not really an issue posed in this case.

[00:31:22] Speaker 03:
Absolutely right.

[00:31:25] Speaker 05:
But the issue is, why does modification matter?

[00:31:29] Speaker 05:
Why does it adversely affect garment?

[00:31:31] Speaker 05:
It's because of that burden shifting.

[00:31:36] Speaker 05:
It's as though the redesigned product is not considered to be redesigned.

[00:31:41] Speaker 05:
And therefore, under the unmodified original order,

[00:31:44] Speaker 05:
Garmin was allowed to import these transducers and to kit them.

[00:31:50] Speaker 05:
And under the modified order, it's not allowed to do that.

[00:31:53] Speaker 05:
And that's what will change.

[00:31:54] Speaker 04:
Even under the general order, it wasn't allowed.

[00:31:57] Speaker 04:
Garmin was not allowed to import standalone transducers that infringed.

[00:32:03] Speaker 04:
There were components thereof.

[00:32:05] Speaker 05:
As Garmin read this, it was allowed to import.

[00:32:14] Speaker 05:
Although, I mean, it didn't do this, but the original order would have allowed it to import standalone transducers.

[00:32:24] Speaker 04:
Well, it just seems to me that it's pretty common practice in the 337 case that the ITC, when it uses, even in the title, names of products and parts of components thereof, it goes on when describing the product subject to investigation, the components are

[00:32:44] Speaker 04:
are included.

[00:32:44] Speaker 04:
Otherwise, a 337 case wouldn't make any sense.

[00:32:48] Speaker 04:
It would allow everybody, every importer, to just simply disassemble a product, import it, and reassemble it.

[00:32:55] Speaker 04:
So components are always, as long as they're infringing, they're always included or subject to the scope of the exclusion order.

[00:33:05] Speaker 06:
But here, there was a carve out for them.

[00:33:09] Speaker 06:
The transducers are not infringing.

[00:33:11] Speaker 05:
That's correct, Your Honor.

[00:33:12] Speaker 06:
It's the combined device of the head end unit and the transducer that's infringing.

[00:33:17] Speaker 06:
Correct, Your Honor.

[00:33:19] Speaker 05:
And just to clarify one thing, I'm advised that at least two shipments of the redesigned transducers have been held up by customs.

[00:33:31] Speaker 05:
So I don't believe that's in the record, because it's a relatively recent development.

[00:33:36] Speaker 05:
But there was a question to that effect.

[00:33:41] Speaker 05:
Thank you.

[00:33:45] Speaker 02:
We thank all sides.

[00:33:46] Speaker 02:
The case is submitted, and that concludes our proceedings for this morning.

[00:33:50] Speaker 03:
All rise.

[00:33:57] Speaker 03:
The Honorable Court is adjourned until tomorrow morning.

[00:33:59] Speaker 03:
It's an o'clock a.m.