source: Caselaw Access Project

author: LINN, Circuit Judge.

license: Public Domain

text:
    Adrian RIVERA, Adrian Rivera Maynez Enterprises, Appellants v. INTERNATIONAL TRADE COMMISSION, Appellee Solofill, LLC, Intervenor
    2016-1841
    United States Court of Appeals, Federal Circuit.
    Decided: May 23, 2017

      Sudip Kumar Kundu, Kundu PLLC, Washington, DC, argued for appellants. Also represented by Matthew G. Cunningham.
    Robert John Needham, Office of General Counsel, United States International Trade Commission, Washington, DC, argued for appellee. Also represented by Dominic L. Bianchi, Wayne W. Herrington, Sidney A. Rosenzweig.
    Laurence M. Sandell, Mei & Mark LLP, Washington, DC, argued for interve-nor. Also represented by Lei Mei.
    Before REYNA, LINN, and CHEN, . Circuit Judges.
   LINN, Circuit Judge.

Adrian Rivera and Adrian Rivera May-nez Enterprises (collectively, “Rivera”) appeal from a divided decision by the International Trade Commission, finding no violation of Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, based on the Commission’s holding of invalidity of certain asserted claims of Rivera’s U.S. Patent No. 8,720,320 (“’320 patent”), filed July 13, 2007, titled “Pod Adaptor System for Single Service Beverage Brewers.” In re Certain Beverage Brewing Capsules, Components Thereof, and Products Containing the Same, Inv. No. 337-TA-929 (April 5, 2016) (Final) (“Beverage Capsules” and “Beverage Capsules Dissent”).

Because substantial evidence supports the Commission’s holding that all asserted claims are invalid for lack of written description, we affirm. We need not, and do not, reach any of the alternative grounds for affirmance.

I. BACKGROUND

A. The Disclosure in the ’320 patent

The ’320 patent describes single-brew coffee machines falling into two general categories. “Some machines have brewing chambers configured to receive pods which are small, flattened disk-shaped filter packages of beverage extract, while other machines are configured to accommodate larger, cup-shaped beverage filter cartridges.” ’320 patent, col. 1, 11. 17-21. The Keurig® system, which uses “K-Cups,” is an example of the latter system.

The patent describes the Keurig® brewer in some de-tail, and notes that it “inherently limits the use of the machine to cup-shaped cartridges,” id. at col. 1, 11. 40^11, so that “users of the Keurig machine ... would have to purchase a different machine to brew beverage from pods, which are typically somewhat flattened disc shaped filter paper packets containing coffee,” id. at col. 1,11. 41-45. Because multiple machines are inconvenient and expensive, the ’320 patent identifies “a need for brewers configured for cup-shaped cartridges [to] also be used to brew beverages from pods.” Id. at col. 1,11. 47-50.

The ’320 explicitly defines a “pod” as follows: “As used herein, the term ‘pod’ is a broad term and shall have its ordinary meaning and shall include, but not be limited to, a package formed of a water permeable material and containing an amount of ground coffee or other beverage therein.” Id. at col. 1, 1. 66-col. 2, 1. 3.

As explained in the specification, the ’320 patent purports to solve two problems: (1) the incompatibility between pod-based and cartridge-based systems; and (2) the lack of flavor from single-service brewed coffee resulting from the lack of tamping (i.e., contraction) of the coffee. Id. at col. 1,11. 11-62. The claims at issue here are only concerned with the first problem and Rivera’s asserted solution to it. The ’320 patent Abstract explains that “[t]he assembly is especially designed for brewing pods in brewers configured for cup-shaped beverage extract cartridges.” The invention “more particularly relates to an adaptor assembly configured to effect operative compatibility between a single serve beverage brewer and beverage pods.” Id. at col. 1,11. 6-9.

The ’320 patent includes several embodiments to effectuate its purposes. Every embodiment in the ’320 patent shows a cup-shaped “receptacle,” adapted in various ways to receive a discrete water permeable, coffee-containing “pod.” For example, the embodiment shown in Figure 3A, reproduced below, shows a “pod adaptor assembly,” 300, which “generally comprises a receptacle 302”.with “a substantially circular base 306 and sidewalls 308 extending upwardly from the base.” Id. at col. 5,11. 40-43. “The base 306 has an annular raised portion 314 extending upwardly from a lower surface 316 of the base,” which “provides a raised support surface 318 for a pod 320 so that the pod 320 does not contact and possibly block the opening 324 for brewed coffee to flow through.” Id. at col. 5,11. 42-51.

The remaining embodiments either show only a “receptacle” without a filter, id. at FIGS. 1A, IB, 1C, 2, 3B, 6, or show a discrete “pod” with filter sitting inside the receptacle, id. at FIGS. 4, 5. See also FIG. 1 (showing prior art).

The patent was filed on July 13, 2007, claiming a “pod adaptor assembly” with a “receptacle ... adapted to provide a support surface for a pod,” or a “pod adaptor assembly” with a “housing having an interior region adapted to receive a beverage pod,” or a “brewing chamber for a beverage pod” with “a housing adapted to receive the beverage pod.” J. App’x at 2052-53. After almost seven years of prosecution and multiple amendments, the ’320 patent issued. None of the claims as issued included any reference to a “pod,” “pod adaptor assembly,” or “brewing chamber for a beverage pod.” Instead, the relevant claims call for “a container ... adapted to hold brewing material.” Representative claim 5 reads as follows:

5. A beverage brewer, comprising:
a brewing chamber;
a container, disposed within the brewing chamber and adapted to hold brewing material while brewed by a beverage brewer, the container comprising:
a receptacle configured to receive the brewing material; and .
a cover;
wherein the receptacle includes
a base, having an interior surface and an exterior surface, wherein at least a portion of the base is disposed a predetermined distance above a bottom surface of the brewing chamber, and
at least one sidewall extending upwardly from the interior surface of the base,
wherein the receptacle has at least one passageway that provides fluid flow from an interior of the receptacle to an exterior of the receptacle;
wherein the cover is adapted to seal-ingly engage with a top edge of the at least one sidewall, the cover including an opening, and
wherein the container is adapted to accept input fluid through the opening and to provide a corresponding outflow of fluid through the passageway;
an inlet port, adapted to provide the input fluid to the container; and
a needle-like structure, disposed below the base;
wherein the predetermined distance is selected such that a tip of the needle-like structure does not penetrate the exterior surface of the base.

’320 patent, col. 8,1. 60-col. 9,1. 23.

B. Procedural History

On September 9, 2014, Rivera filed a complaint with the International Trade Commission (“Commission”), alleging that Solofill, LLC (“Solofill”) was importing beverage capsules that infringed claims 5-8 and 18-20 of the ’320 patent, in violation of Section 337. Rivera there-after withdrew its allegations with respect to claims 8 and 19, leaving currently pending claims 5-7, 18, and 20. Solofill’s K2 and K3 beverage capsules are made to fit, into a Keu-rig® brewer, and include an integrated mesh filter surrounding a space designed to accept loose coffee grounds.

In an initial decision, the Administrative Law Judge (“ALJ”) held that Rivera had established both the technical and economic prongs of the domestic industry requirement, and Solofill had not proved invalidity of the ’320 patent. However, the ALJ found no violation of § 337, concluding that Rivera failed to show infringement. In particular, the ALJ held that Solofill did not directly infringe because Solofill only imported the cartridges, and the claims required the combination of Solofill’s accused cartridges and a Keurig®-type brewer, The ALJ also held that Solofill was not liable for induced or contributory infringement because it did not have pre-suit knowledge of the ’320 patent, and therefore lacked the required mens rea for indirect infringement.

On review, the Commission also concluded that there was no violation of § 337, but for different reasons. The Commission held that, inter alia, asserted claims 5-7, 18, and 20, were invalid for lack of written description, and that claims 5 and 6 were additionally invalid as anticipated by U.S. Patent No. 6,079,315 to Beaulieu (“Beau-lieu”). Beverage Capsules at 36-52. Commissioner Kieff dissented-in-part, concluding that the specification as filed satisfied the written description requirement. Commissioner Kieff reasoned that the specification gave a “broader-than-typieal definition to the word ‘pod,’ ” which included both closed packets and open packages of a water permeable material containing ground coffee. Beverage Capsule Dissent at 5.

Rivera timely appeals. We have jurisdiction to review a final decision by the Commission under 28 U.S.C. § 1295(a)(6).

II. DISCUSSION

A. Standard of Review

Written description is a question of fact, which we review for substantial evidence on appeal from the International Trade Commission. SSIH Equip. S.A. v. Int’l Trade Comm’n, 718 F.2d 365, 371 (Fed. Cir. 1983). The accused party must show a lack of written description by clear and convincing evidence. Hynix Semiconductor v. Rambus Inc., 645 F.3d 1336, 1351 (Fed. Cir. 2011).

B. Written Description

The specification of a patent as filed must “contain a written description of the invention.” 35 U.S.C. § 112. A specification has an adequate written description when it “reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date” of the patent. Arlad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc). “[T]he test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art.... [to] show that the inventor actually invented the invention claimed.” Id.

The basic issue in this case is whether the “pod adaptor assembly,” “pod,” and “receptacle” disclosures in the patent as filed, support Rivera’s “container ... adapted to hold brewing material,” as recited in independent claim 5. Rivera argues all the asserted claims together, and we treat dependent claims 6-7, 18, and 20 as rising or falling with independent claim 5.

The Commission concluded that the specification did not provide the necessary written description support for the full breadth of the asserted claims, because the specification was entirely focused on a “pod adaptor assembly” or “brewing chamber,” and did not disclose a container that was itself a pod or that contained an integrated filter. The Commission only cited the explicit definition of “pod” in its Background section,' and cited the narrower “typical” definitions of “pod” in its analysis section. See Beverage Capsules at 26 (background section), 27 & n.13 (analysis section).

Both parties analyze the written description issue under the assumption that the asserted claims read on Solofill’s K2 and K3 cup-shaped containers. The salient feature of the K2 and K3 containers is the integration of the filter into the cup itself, allowing the insertion of loose coffee into the receptacle. The parties agree that nothing in the ’320 patent explicitly describes a pod adaptor assembly with a filter integrated into the cartridge.

Rivera’s primary argument is that the Commission failed to apply the broad definition of a “pod” contained in the specification, and that correctly applying that definition would have provided written description support for the claimed integrated filter cartridge. Rivera reasons that the integrated filter cartridge is simply a configuration of the generic disclosure of a “pod.” The specification explicitly defines a “pod”: “[A]s used herein, the term ‘pod’ is a broad term and shall have its ordinary meaning and shall include, but not be limited to, a package formed of a water permeable material and containing an amount of ground coffee or other beverage therein.” ’320 patent, col. 1, 1. 66-col. 2, 1. 3. According to Rivera, this definition teaches a broad genus, which provides written description support for the species shown in the specification’s embodiments (with a “pod” including a filter distinct from the cartridge), and the species represented by the accused products (with a filter integral to the cartridge).

The Commission and Solofill respond that the broader definition of a “pod” does not provide written description support for the claimed “container ... adapted to hold brewing material” (i.e., a container with an integral filter) because: (1) every embodiment and teaching in the specification shows the “pod” and the cartridge or container as distinct elements; (2) the distinction of the “pod” from the cartridge or container is fundamental to the problem and solution taught in the specification; and (3) the embodiments shown in the specification would not work without a separate filter.

We agree with the Commission and So-lofill. The underlying concern addressed by the ’320 patent is enabling compatibility between pods used in pod-type beverage brewers and cartridges used in cartridge-type beverage brewers. See ’320 patent, Abstract (“The assembly is especially designed for brewing pods in brewers configured for cup-shaped beverage extract cartridges.”); id. at col. 1, 11. 7-9 (“This invention ... more particularly, relates to an adaptor assembly configured to effect operative compatibility between a single serve beverage brewer and beverage pods.”); id. at col. 1, II. 17-21 (distinguishing machines “configured to receive pods” and machines “configured to accommodate larger, cup-shaped beverage filter cartridges”); id. at col. 1, 11. 39-45 (explaining that Keurig machines are “inherently limit[ed]” to using cup-shaped cartridges, and users “would have to purchase a different machine to brew beverage from pods”); id. at col. 1, 11. 47-50 (“[T]here is a need for an apparatus and method for modifying single serve beverage brewers configured for cup-shaped cartridges so that they can also be used to brew beverages from pods.”).

The distinction between “pods” and cartridges permeates the entire patent. There is no hint or discussion of a cartridge or pod adaptor assembly or receptacle that also serves as the “pod.” Instead, the specification explains how the cartridge may be adapted to accept a separate “pod” to be used inside the cartridge. For example, the embodiment in Figure 1A calls for a “cup-shaped receptacle” with “protrusions 122 [to] collectively provide a plurality of spaced apart raised surfaces for the pod to rest against.” ’320 patent, col. 4,11.1-2, 42-44; see also id. at col. 4, 11. 48-49 (explaining that the protrusions may also be configured as in Figure IB); id. at col. 5, 11. 16-20 (describing the “pod adapter assembly 200” of Figure 2, “comprising] a cup shaped receptacle 202 adapted to receive a pod”). Likewise, Figure 3A shows an embodiment of the “pod adaptor assembly 300” with a “receptacle 302” with a “raised portion 314 [that] provides a raised support surface 318 for a pod 320 so that the pod 320 does not contact and possibly block the opening 324 for brewed coffee to flow through.” Id. at col. 5,11. 38-51.

This relationship between the pod adaptor assembly, the receptacle (i.e., cartridge) and the pod carries through every embodiment. See id. at col. 5, 11. 61-62 (explaining that Figure 3B is an implementation of the receptacle in the embodiment in Figure 3A); id. at col. 6, 11. 11-15 (explaining that in Figure 4, “a beverage pod 404, prefer-able containing ground coffee, is positioned inside the receptacle 302 of the assembly 100,” such that the “pod 402 preferably fits snugly inside the receptacle 302 and rests against the protrusion 330.”); id. at col. 6, 11. 35-46 (identifying the pod 502 as fitting inside the receptacle 504, and showing the pod being pressed against the cover of the receptacle to compact the coffee within the pod); id. at col. 7, 11. 22-26, 11. 50-65 (describing Figure 6 as comprising a “cup-shaped housing 602” “sized to receive a circular beverage pod,” which may be compressed). As confirmed by So-lofill’s expert, Dr. Howie, “[njone of the embodiments in the ’320 patent resemble [Rivera’s] [integrated filter] Eco-Fill products because none of the described embodiments are adapted to be used without a separate ‘pod.’ ” J. App’x 2193.

Indeed, Dr. Howie explained that without a separate “pod,” the assemblies shown in the ’320 patent would not function, because inserting loose-grain coffee or loose-leaf tea into the containers shown in the embodiments would clog the brewing chamber. Id. Dr. Howie concluded that “[o]ne of ordinary skill would therefore read the description of the ’320 patent as limited to embodiments that require use of a separate ‘pod.’ ” Id.

The disclosure of the ’320 patent consistently describes an invention in which the “pod” and the receptacle or container are distinct components. Thus, even applying the “broad” definition of “pod” as “a package formed of a water permeable material and containing an amount of ground coffee or other beverage therein,” written description support for broad claims covering a receptacle with integrated filter such as Solofill’s accused products and Rivera’s Eco-Fill products is lacking. Whatever a “pod” is, the specification indicates that it is distinct from the receptacle; for the integral filter cartridge to be supported by the written description definition of a “pod” it must act as both a “pod” and a receptacle. But nothing in the specification shows that the “pod” and the receptacle may be the same structure. Indeed, Rivera’s expert, Mr. Phillips, agreed that “the patent is silent on [the] option” of using an integrated filter media or integrated filter mesh in a pod adaptor assembly. Id. at 721. Moreover, Mr. Phillips agreed that a “filter cup,” i.e. a cup-shaped cartridge with an integrated filter that would fit into a pod brewing chamber as shown in Figure 6, would not be a “pod” “because a pod implies to me some sort of a construction that ... has been prepared and sealed, and that filter cup is still an open device.” Id. at 719-20.

Rivera’s argument essentially requires that an ordinary artisan would read the broad definition of “pod” as encompassing anything containing a water permeable material that contains brewing material, in whatever form. Appellants’s Opening Br. 25. For this, Rivera relies on Honeywell Int’l Inc. v. United States, 609 F.3d 1292, 1301 (Fed. Cir. 2010), in which we held that the teaching of a CRT-type monitor provided written description support for other types of monitors. Rivera argues that he was “not required to recite in the ’320 patent the multitude of well-known water permeable materials.” Appellants’s Opening Br. 28. This argument is inapposite. The question is not whether the disclosure of one water permeable material (equivalent to the disclosure of a CRT monitor in Honeywell) supports the use of other water permeable materials. Rather, the question is whether a pod adaptor assembly intended to allow compatibility between distinct brewing systems, also supports an undisclosed configuration that eliminates a fundamental component of one of those systems (i.e., the “pod”) through integration. It does not.

Moreover, we believe that the Commission did not use the citations to the “typical” definitions of “pod” contained in the specification in a limiting way, but merely to demonstrate that the purpose of the ’320 patent was bridging the compatibility gap between pod-type beverage brewers and cup-shaped cartridge brewers. See Beverage Capsules at 27. As described above, a key characteristic of a “pod” is that it is separate from the claimed container into which it fits. The Commission did not require that the pod be “small,” “flattened,” “disk-shaped,” or composed of “filter paper,” as provided by the typical definitions of “pod.” We thus reject Rivera’s argument that the Commission’s failure to apply the “broad” definition of “pod” is reversible error.

Finally, Rivera argues that the background knowledge of those skilled in the art can supplement the teaching in the specification to provide written description support. For this proposition, Rivera relies on Boston Scientific Corp. v. Johnson & Johnson, 647 F.3d 1353, 1366 (Fed. Cir. 2011) and Falkner v. Inglis, 448 F.3d 1357, 1367-68 (Fed. Cir. 2006). Rivera argues as follows: (1) ordinary artisans recognized the need for some type of filter in the cartridge; (2) ordinary artisans were aware of the availability of an integrated filter; (3) nothing in the patent limits the use of a filter to an enclosed package to put into a separate cartridge; and therefore (4) the ’320 patent provides written description support for an integrated filter.

We reject Rivera’s argument. As we explained in Ariad, the written description inquiry looks to “the four corners of the specification” to discern the extent to which the inventor(s) had possession of the invention as broadly claimed. Ariad, 598 F.3d at 1351; see also Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1571 (Fed. Cir. 1997) (“It is the disclosures of the applications that count.”). The knowledge of ordinary artisans may be used to inform what is actually in the specification, see Lockwood, 107 F.3d at 1571, but not to teach limitations that are not in the specification, even if those limitations would be rendered obvious by the disclosure in the specification. Id. at 1571-72. The specification here does not teach a container with an integrated filter, and so, does not provide written description support for such a container, even if that type of container might be rendered obvious by the specification.

Falkner and Boston Scientific are not to the contrary. In Falkner, we held that a disclosure in an application of vaccinia, a type of poxvirus, provided sufficient written description for a claim requiring that a mutation in the vaccinia was to an “essential gene.” 448 F.3d at 1366. Although the patent did not teach the gene sequence of the essential gene, we held that the specification provided adequate written description support because the sequence of the essential gene was well-known in the art. Id. Unlike Falkner, where the application disclosed the use of essential genes in a poxvirus and simply did not include the well-known sequence, the patent here does not teach the identity of the pod and the pod adaptor assembly. Boston Scientific, too, is inapposite. There, we noted that “[b]ecause the specification is viewed from the perspective of one of skill, in some circumstances, a patentee may rely on information that is ‘well-known in the art’ for purposes of meeting the written description requirement.” 647 F.3d at 1366 (citing Falkner, 448 F.3d at 1366-68). However, nothing in the ’320 patent disclosure indicates the possibility of a cartridge with an integrated filter. The gap-filling Rivera attempts here is thus non-analogous to that allowed under Boston Scientific.

As the Commission correctly explained, this case is substantially similar to several of our cases holding claims unsupported by the written description, in which the sped-fication fails to teach a potential configuration of elements. For example, in ICU Medical, the specification (and the initially filed claims) included a medical device valve for the transmission of fluids requiring a spike to pierce a seal in an intravenous medicine delivery setup. ICU Medical, Inc. v. Alaris Medical Sys., Inc., 558 F.3d 1368, 1377 (Fed. Cir. 2009). A group of later filed claims eliminated the spike limitation. We held that the specification only described medical valves with spikes, and that the specification could not support claims for spikeless valves, even though ordinary artisans would have understood that the slits originally made by the spikes could also have been made by compression of a (disclosed) preslit seal. Id. at 1378-79 (“The fact that compression of a preslit seal would allow an opening for fluid transmission [(and thus accomplish what the spike accomplished) ] does not answer the question of whether the claimed invention nevertheless requires a spike capable of piercing the seal in preslit embodiments.”). The ’320 patent similarly discloses only a pod adapter assembly with a separate “pod.” That ordinary artisans may have understood that the filter could be incorporated into the cartridge does not save the claims—ordinary artisans would not have understood that Rivera had possession of an integrated filter system. The “broad” definition of a pod does not change that—however broad “pod” is, it must still be distinct from pod adapter assembly.

Rivera attempts to distinguish ICU Medical, arguing that the broad definition of “pod” here also includes integral filter cartridges. As explained above, even the broad definition of “pod” does not provide such a teaching. We thus reject Rivera’s argument.

Conclusion

For the foregoing reasons, we affirm the Commission’s conclusion that claims 5-7, 18, and 20 are invalid for lack of written description and that Solofill thus did not violate Section 337. We need not and do not consider the Commissioner’s holding with respect to anticipation of claims 5 and 6, nor the alternative grounds for affir-mance presented by Solofill.

AFFIRMED


author: PER CURIAM. Newman, Circuit Judge,

text:
    JOSEPH PHELPS VINEYARDS, LLC, Appellant v. FAIRMONT HOLDINGS, LLC, Appellee
    2016-1089
    United States Court of Appeals, Federal Circuit.
    Decided: May 24, 2017

      Thomas Schneck, Law Offices of Thomas Schneck, San Jose, CA, for appellant.
    Kimberly Kolback, Law Office of Kimberly Kolback, Miami, FL, for appellee. Also represented by Miriam Richter, Richter Trademarks, PL, Wilton Manors, FL.
    Before NEWMAN, DYK, and WALLACH, Circuit Judges.
   PER CURIAM.

Joseph Phelps Vineyards, LLC (“Vineyards”) has produced and sold wines bearing the trademark INSIGNIA since 1978. In 2012, Fairmont Holdings, LLC (“Fair-mont”) received federal registration for the mark ALEC BRADLEY STAR INSIGNIA for cigars and cigar products. On Vineyards’ petition for cancellation, the Trademark Trial and Appeal Board (“Board” or “TTAB”) denied the petition, stating the finding that:

while it appears that Petitioner’s INSIGNIA branded wine has met with success in the marketplace, we are not persuaded on this record that Petitioner’s mark is a famous mark.

TTAB Op. at 8.

The TTAB found that Vineyards’ INSIGNIA mark is not a “famous” mark and gave this factor no weight. The TTAB erred in its legal analysis, in analyzing the “fame” of INSIGNIA wine as an all-or-nothing factor, and discounting it entirely in reaching the conclusion of no likelihood of confusion as to source, contrary to law and precedent. As a result of this error, the Board did not properly apply the totality of the circumstances standard, which requires considering all the relevant factors on a scale appropriate to their merits. We vacate the Board’s decision and remand for redetermination of the merits of the cancellation petition.

The Factor of “Fame”

The TTAB acknowledged: “Fame for confusion purposes arises as long as a significant portion of the relevant consuming public ... recognizes the mark as a source indicator,” citing Palm Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee en 1772, 396 F.3d 1369, 1374-75 (Fed. Cir. 2005) (“[T]he proper legal standard for evaluating the fame of a mark under the fifth DuPont factor is the class of customers and potential customers of a product or service, and not the general public.”).

The TTAB applied a legally incorrect standard in applying an all-or-nothing measure of “fame,” more akin to dilution analysis. “While dilution fame is an either/or proposition—fame either does or does not exist—likelihood of confusion fame ‘varies along a spectrum from very strong to very weak.’ ” Id. (quoting In re Coors Brewing Co., 343 F.3d 1340, 1344 (Fed. Cir. 2003)). In examination of INSIGNIA’S fame, the applicable viewpoint is that of the relevant market. Id. (“[A] mark’s renown within a specific product market is the proper standard.”).

Vineyards provided evidence that INSIGNIA wine is renowned in the wine market and among consumers of fine wine. The record shows extensive recognition and accolade for INSIGNIA brand wine. Vineyards’ INSIGNIA wines were selected as Wine of the Year in 2005 and 1997, with Wine Spectator noting that INSIGNIA wine had by 2005 earned an outstanding score in 26 of its 29 vintages and repeatedly ranked as a “classic,” scoring between 95 and 100 points. J.A. 62. Following is a selection from the exhibits presented to the TTAB with the testimony of Joseph Phelps:

• Food and Wine, October 2011, at ISO-152: “INSIGNIA was the first Bordeaux blend produced in Napa Valley ... and it’s still one of the most famous. (It’s also one of the best.).” (J.A. 82-83).
• Wall St. J., March 16, 2012: “Favorite Vintage: 1994 Phelps INSIGNIA, $70 on release. A full-bodied, generous, gorgeous wine that manages to taste youthful as well.” (J.A. 79-81).
• The Capital, February 1, 2012: “Joseph Phelps Napa Valley INSIGNIA 2008 ($200)—From one of the most respected producers in the Napa Valley, this colossal blend ... is a wine that will last for decades.” (J.A. 87-88).
• Wash. Post, February 24, 1999: “[T]his has to be INSIGNIA, because when 1 love a Cabernet and don’t know what it is, I always guess my beloved INSIGNIA.” (J.A. 73).
• Balt. Sun, April 14, 1996: Fireworks explode at tasting for ’91 Joseph Phelps INSIGNIA, “But even amid the abundance of excellent wines on show at the MacArthur tasting, the INSIGNIA stood out.... In more than a decade of attending MacArthur barrel tastings, this was the finest wine I had ever encountered.” (J.A. 74).
• Valley Times, March 8, 2000: “The granddaddy of these so-called proprietary wines is INSIGNIA, introduced by Joseph Phelps Vineyards with the 1974 vintage.” (J.A. 75).
• California Grapevine, Vol. 35, No. 5, p. 65, October-November 2009, at 65: “2006 Joseph Phelps INSIGNIA ... Very highly recommended. My score 92/100, first place.” (J.A. 90).
• Quarterly Rev. of Wines, Winter 2009/2010, at 75: “1st Place: Phelps INSIGNIA ... it’s a perennial winner at our annual Best of the Best in California.” (J.A. 92).

The record shows INSIGNIA wine served at the White House:

• The White House dinner menu honoring the Prime Minister of Canada, March 14, 2002 (Phelps INSIGNIA 1994). (J.A. 65).
• The White House Holiday dinner menu dated December 1, 2006 (Joseph Phelps INSIGNIA 2002). (J.A. 66).
• President’s Invitation to a dinner honoring The Governors of the States and Territories dated February 22, 1998 (Phelps INSIGNIA 1994). (J.A. 69-70).

The record contains many more examples. We are perplexed at the Board’s finding that INSIGNIA wine has no “fame,” giving no discernable weight to this factor. The TTAB applied an incorrect standard, for “fame” is determined from the viewpoint of consumers of like products. The record shows appreciation by consumers and the wine market of Vineyards’ INSIGNIA brand. It was error to refuse to accord any “fame” to Vineyards’ INSIGNIA mark. The factor of “fame” warrants reasonable weight, among the totality of the circumstances.

Conclusion

We vacate the decision of the TTAB solely on the basis that the Board used an incorrect standard for fame and remand for determination of the cancellation petition utilizing the correct standard.

VACATED AND REMANDED

Each party shall bear its costs.

Newman, Circuit Judge,

concurring.

I agree that the TTAB improperly analyzed the factor of “fame” and that vacatur and remand are appropriate. I believe it to be appropriate, also, that Vineyards’ decades of prior usage should receive its proper weight in this consideration, beyond the acknowledgement of simple “priority.” However, my primary purpose in writing separately is to call attention to two additional issues that warrant review on remand.

1. The Board, in its analysis of “relatedness,” as the DuPont factor is called, did not fully consider all aspects of this factor, despite noting that relatedness can be based on use together (TTAB Op. 14), complementarity (TTAB Op. 12), or simultaneous consumption (TTAB Op. 13, 14). Indeed, the Board found that:

the evidence suggests that the goods are sold in the same channels of trade to the same purchasers....

TTAB Op. 15, suggesting a degree of relatedness that requires further exploration on remand.

2. Second, among the factors relevant to the likelihood of confusion analysis, the Board did not include the form of Fair-mont’s actual use of its registered mark.

These factors are part of the totality of the circumstances, all of which must be considered, each on a sliding scale appropriate to its weight and merit. I would include these aspects in the vacatur and remand, in order to ensure that the rede-termination of the cancellation petition properly encompasses all relevant factors.

I

Actual Use of the Registered Mark

Responding to Vineyards’ argument that in Fairmont’s use of ALEC BRADLEY STAR INSIGNIA the word INSIGNIA is in dominant format, the Board simply stated that “[b]ecause the depiction of the mark is in standard character format and Respondent is not limited to any particular presentation, the format in which Respondent currently uses its mark is not at issue.” TTAB Op. 9. The Board did not examine the actual use of the mark. However, as the Tenth Circuit has stated, “[a] standard character registration does not override the requirement that likelihood of confusion be measured by the perceptions of consumers in the marketplace, including the effect of packaging.” Hornady Mfg. Co. v. Doubletap, Inc., 746 F.3d 995, 1002 n. 2 (10th Cir. 2014). A comparison that “presentís] the mark ‘differently from the way that it actually appears on packaging,’ ” should be “rejected.” Id. At a minimum, the appearance and format is a factor to be given appropriate weight.

The specimens submitted in support of the challenged registration show the presentation of Fairmont’s mark in commerce, where ALEC BRADLEY is separated from STAR INSIGNIA, and the relative sizes of the words STAR and INSIGNIA are different, as seen in the registration specimens:

J.A. 195.

The Board described ALEC BRADLEY as a “house mark” and stated that “[g]en-erally, if the product marks are identical, the addition of the house mark does not avoid confusion, however, “where there are some recognizable differences in the asserted product marks ... the addition of a house mark and/or other material to the assertedly conflicting product mark has been determined to render the marks as a whole sufficiently distinguishable,’ ” TTAB Op. 10, quoting TTAB precedent. The Board found that because the marks at issue possess “recognizable differences,” the house mark “does distinguish the marks.” Id. However, this analysis did not take into account the actual usage, with separation of ALEC BRADLEY from STAR and INSIGNIA, in a different font and size.

The Board erred in declining to consider “illustrations of the mark as actually used,” for precedent recognizes that such illustrations “may assist the T.T.A.B. in visualizing other forms in which the mark might appear.” Citigroup Inc. v. Capital City Bank Grp., Inc., 637 F.3d 1344, 1353 (Fed. Cir. 2011). Contrary to the Board’s assessment, the dominance of the word INSIGNA as used on Fairmont’s products is indeed an issue. Citigroup explains that consideration of actual use serves to ensure the TTAB visualizes the full breadth of a standard character mark. Id. (“[T]he T.T.A.B. used current and past commercial displays of the applied-for mark to inform but not to restrict its analysis of potential displays.”).

To the extent that the actual use of the ALEC BRADLEY STAR INSIGNIA mark presents a different impression to the consumer than the standard character mark viewed in the abstract, the Board should recall that the likelihood of confusion inquiry is “viewed through the eyes of a consumer” to determine the commercial impression of the mark. Duopross Medi-tech Corp. v. Inviro Med. Devices, 695 F.3d 1247, 1253-54 (Fed. Cir. 2012). Consideration of how the Fairmont registered mark is actually used, and viewed by the consumer, is part of the totality of the circumstances of likelihood of confusion and should be considered on remand.

II

The “Relatedness” of the Goods

Of course, cigars and wine are different. However, as noted in Hewlett-Packard Co. v. Packard Press, Inc., 281 F.3d 1261, 1267 (Fed. Cir. 2002), “[e]ven if the goods ... are not identical, the consuming public may perceive them as related enough to cause confusion about the source or origin.” See In re Shell Oil Co., 992 F.2d 1204, 1207 (Fed. Cir. 1993) (the Board is to “consider the degree of overlap of consumers exposed to the respective services, for ... even when goods or services are not competitive or intrinsically related, the use of identical marks can lead to the assumption that there is a common source”).

The Board treated relatedness as an all- or-nothing factor, although this factor should be analyzed along a sliding scale. As stated in DuPont, there is

no warrant, in the statute or elsewhere, for discarding any evidence bearing on the question of likelihood of confusion. Reasonable men may differ as to the weight to give specific evidentiary elements in a particular case. In one case it will indicate that confusion is unlikely; in the next it will not.... In every case turning on likelihood of confusion, it is the duty of the examiner, the board and this court to find, upon consideration of all the evidence, whether or not confusion appears likely. That determination ends the decisional process.

In re E. I. DuPont de Nemours & Co., 476 F.2d 1357, 1362 (C.C.P.A. 1973).

As noted supra, the TTAB found that “the evidence suggests that the goods are sold in the same channels of trade to the same purchasers.” TTAB Op. at 15. Precedent illustrates the factual sensitivity of the question of relatedness. In Shell Oil, 992 F.2d at 1207, the court recognized that “[t]he degree of ‘relatedness’ must be viewed in the context of all factors, in determining whether the services are sufficiently related that a reasonable consumer would be confused as to source or sponsorship.”

In In re Licores Veracruz, S.A. de C. V., Serial No. 77753913, 2012 WL 423807 (TTAB January 26, 2012), the TTAB reached a contrary conclusion on relatedness with respect to rum and cigars, stating:

in conjunction with the arbitrary nature of the mark MOCAMBO, we find that cigars and rum will be encountered by the same consumers under circumstances that could, because of the identity of the marks, give rise to the mistaken belief that they originate from the same source.... In view of the facts that the marks are identical and are a fanciful or arbitrary term, and the goods are related, move in the same channels of trade and are sold to the same consumers, we find that applicant’s mark MOCAMBO for “rum” is likely to cause confusion with the mark MOCAMBO for “cigars.”

Id. at 8, 10-11. In the present case, the TTAB relied on different reasoning: “Thus, the mere fact that two goods are used together in the same setting or venue does not, in and of itself, demand a finding that confusion is likely.” TTAB Op. 14 (quoting 4 J. McCarthy, on Trademarks and Unfair Competition § 24:26 (4th ed. 2015)). McCarthy cautions that these are fact-bound determinations and that no fact may “demand” a particular outcome. However, it devolves on the TTAB to provide reasonably consistent rulings on similar facts, to provide premises on which the public can rely.

Here, the Board concluded that wine and cigars are not “related” because they are products differing in both composition and method of manufacture. TTAB Op. 14. However, relatedness is a broad concept; products may exhibit “relatedness” when they “are complementary products sold in the same channels of trade to the same classes of consumers.” See In re Licores Veracruz, supra (finding that rum and cigars meet the criteria of relatedness). See also John Walker & Sons Ltd. v. Tampa Cigar Co., 124 F.Supp. 254, 256 (S.D.Fla. 1954), aff'd 222 F.2d 460 (5th Cir. 1955) (“Whisky and cigars are closely related in distribution and use.”); Geo. A. Dickel Co. v. Stephano Bros., 155 U.S.P.Q. 744 (TTAB 1967) (relying on John Walker in finding confusion for whiskey and cigarettes). But see Schenley Distillers, Inc. v. Gen. Cigar Co., 427 F.2d 788 (CCPA 1970) (the court rejected any principle that the same mark on tobacco and alcoholic beverage products necessarily results in likelihood of confusion; the court did not address the relatedness of all tobacco products and all alcoholic beverages under all circumstances).

Conclusion

It is appropriate for the Board to consider and to explain the weight given to all factors in evaluating the totality of circumstances, explaining any departure from' holdings in other proceedings. I concur in the judgment of vacatur and remand and would ensure the readjudication of all the relevant factors in the Board’s further consideration of the question of likelihood of confusion.

      . Joseph Phelps Vineyards, LLC v. Fairmont Holdings, Cancellation No. 92057240, 2015 WL 4658975 (TTAB July 6, 2015) ("TTAB Op.”).

      . The Fairmont registration states “no claim is made to the exclusive right to use ‘STAR INSIGNIA', apart from the mark as shown.” (J.A. 21). However, "a disclaimer is irrelevant in determining likelihood of confusion," and "disclaimed matter cannot be ignored.” 3 J. McCarthy, Trademarks and Unfair Competition § 19.72 (4th ed. 2014).


author: MOORE, Circuit Judge.

text:
    UNITED STATES, Plaintiff-Appellant v. AMERICAN HOME ASSURANCE COMPANY, Defendant-Cross-Appellant
    2016-1088, 2016-1090
    United States Court of Appeals, Federal Circuit.
    Decided: May 26, 2017

      Beverly A. Farrell, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, NY, argued for plaintiff-appellant. Also represented by Amy M. Rubin; Benjamin C. Mizer, Jeanne E. Davidson, Washington, DC; Brandon Rogers, Office of Assistant Chief Counsel, United States Customs and Border Protection, Indianapolis, IN; Paula S. Smith, New York, NY.
    Herbert C. Shelley, Steptoe & Johnson, LLP, Washington, DC, argued for defendant-cross-appellant. Also represented by Mark Frederick Horning.
    Edward Graham Gallagher, The Surety & Fidelity Association of America, Washington, DC, for amicus curiae The Surety & Fidelity Association of America.
    Before MOORE, TARANTO, and CHEN, Circuit Judges.
   MOORE, Circuit Judge.

The government appeals from the United States Court of International Trade’s (“Trade Court”) judgment on the pleadings holding that the government is not entitled to non-statutory equitable interest for unpaid antidumping duties for imported goods. United States v. Am. Home Assur. Co., 100 F.Supp.3d 1364, 1373 (Ct. Int’l Trade 2015) ("AHAC II”). American Home Assurance Company (“AHAC”) cross-appeals the Trade Court’s decision to award the government interest on the unpaid duties under 19 U.S.C. §§ 580 and 1505(d). Id. at 1371. We affirm the Trade Court decision on all issues.

Background

This appeal stems from four collection actions in which the government sought to recover unpaid antidumping duties from AHAC, a surety. AHAC secured three different importers’ importation of preserved mushrooms and crawfish tail meat from China by issuing numerous single transaction and continuous entry bonds in 2001 and 2002. The issued bonds obligated the importers and AHAC to pay, up to the face amounts of the bonds, “any duty, tax or charge and compliance with law or regulations” resulting from covered activities. Customs liquidated the entries secured by the bonds and assessed antidumping duties on the merchandise. Each importer failed to pay the duties owed. The parties do not dispute that AHAC is liable for the principal amounts of antidumping duties owed on the bonds.

After liquidation, Customs started charging statutory post-liquidation interest on the unpaid duties of two of the collections that did not exceed the face amount of the bonds pursuant to 19 U.S.C. § 1505(d) (“§ 1505(d) interest”). From 2003 to 2009, Customs issued multiple demands notifying AHAC of the government’s intent to seek § 1505(d) interest. AHAC protested the government demands and Customs denied the protest. AHAC could have challenged Customs’ denial at the Trade Court under 28 U.S.C. § 1581(a), but elected not to do so. In 2009, the government commenced four suits at the Trade Court for the collection of unpaid duties and interest, which the Trade Court consolidated. After discovery, the parties cross-moved for summary judgment. Relevant to this appeal, the parties disputed the application of equitable prejudgment interest, § 1505(d) interest, and 6% statutory prejudgment interest under 19 U.S.C. § 580 (“§ 580 interest”).

The Trade Court granted in part and denied in part both the government’s and AHAC’s motions. It ordered AHAC to pay § 1505(d) interest up to the face amounts of the bonds. It held that § 1505(d) interest involves “charges or exactions of whatever character” under 19 U.S.C. § 1514(a)(3) and that the statute does not contain an exception for charges or exac-tions arising after liquidation. It held that the bonds statutorily and contractually serve to secure the payment of duties and any interest—they do not distinguish between pre- and post-liquidation interest. It held that because the § 1505(d) interest determination is “final and conclusive” under § 1514(a) and AHAC failed to contest its denied protest, AHAC was precluded from asserting any defenses regarding its liability for § 1505(d) interest.

The Trade Court also held AHAC liable for § 580 interest, which is 6% statutory prejudgment interest. The Trade Court declined to award equitable prejudgment interest because the 6% rate of the § 580 interest “far exceeds the applicable rates at which the Government would receive equitable interest” and awarding equitable prejudgment interest in these circumstances would over-compensate the government. The government appeals the Trade Court’s denial of non-statutory equitable interest, and AHAC cross-appeals the Trade Court’s award of § 580 and § 1505(d) interest to the government. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

We review the Trade Court’s grant or denial of summary judgment for correctness as a matter of law and we decide de novo “the proper interpretation of the governing statute and regulations as well as whether genuine issues of material fact exist.” United States v. Am. Home Assur. Co., 789 F.3d 1313, 1319 (Fed. Cir. 2015) (“AHAC F). We review the Trade Court’s determination not to award equitable prejudgment interest for abuse of discretion. Princess Cruises, Inc. v. United States, 397 F.3d 1358, 1367 (Fed. Cir. 2005).

A. Equitable Prejudgment Interest

The government argues the Trade Court erred in denying the government equitable prejudgment interest because its decision was predicated on the assumption that § 580 interest is compensatory. It argues the purpose of equitable prejudgment interest is to compensate the government for the time value of money, whereas the purpose of § 580 interest is to penalize a noncompliant party. We do not agree with the government’s characterization. While we agree that § 580 interest and equitable prejudgment interest are not mutually exclusive, the mere availability of dual sources of prejudgment interest does not mandate their application in every case. The Trade Court retains broad discretion to apply equitable prejudgment interest in accordance with the facts of each case.

Equitable prejudgment interest “serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered, thereby achieving full compensation for the injury those damages are intended to redress.” Princess Cruises, 397 F.3d at 1367 (quoting West Virginia v. United States, 479 U.S. 305, 310 n.2, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987)). No statute or regulation explicitly authorizes equitable prejudgment interest; its award is governed by traditional judge-made principles. Id. Factors a court may consider in awarding equitable prejudgment interest may include the degree of wrongdoing on the part of the defendant, the availability of alternative investment opportunities to the plaintiff, whether the plaintiff delayed bringing the action, and other fundamental considerations of fairness. United States v. Great Am. Ins. Co. of N.Y., 738 F.3d 1320, 1326 (Fed. Cir. 2013).

In its entirety, 19 U.S.C § 580 states: “Upon all bonds, on which suits are brought for the recovery of duties, interest shall be allowed, at the rate of 6 per centum a year, from the time when said bonds became due.” Section'580 applies to bonds securing the payment of antidump-ing duties when the government sues for payment under those bonds. AHAC I, 789 F.3d at 1324-28.

Generally, equitable remedies are unavailable when a party has an adequate statutory remedy. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992); accord West Virginia, 479 U.S. at 308-09, 107 S.Ct. 702 (“In the absence of an applicable federal statute, it is for the federal courts to determine, according to their own criteria, the appropriate measure of damage, expressed in terms of interest, for nonpayment of the amount found to be due.”)- AHAC argues that to allow both statutory prejudgment interest at 6% and equitable prejudgment interest would amount to a windfall to the government and permit double recovery or more. In the current environment where interest rates are less than 6%, th'e statutory rate chosen by Congress under § 580 amounts to fall recovery plus some. This, of course, is Congress’ choice and we are bound by the statute.

The availability of statutory interest would normally render equitable interest unavailable. Here, however, Congress expressly indicated the availability of both statutory and equitable prejudgment interest when it enacted the Trade Facilitation and Trade Enforcement Act of 2015 (“TFTEA”). See Pub. L. No. 114-125, 130 Stat. 122. TFTEA provided authority for the government to deposit interest earned on antidumping duties into the special account created by the Continued Dumping and Subsidy Offset Act. 19 U.S.C. § 4401. Congress recognized that interest earned on antidumping duties includes “[ejquita-ble interest under common law and interest under section 580 of this title awarded by a court against a surety under its bond for late payment of antidumping duties.” Id. § 4401(c)(2)(C) (emphasis added). The plain meaning of this statutory language indicates that Congress recognized that a court may award both equitable and § 580 interest. See also AHAC I, 789 F.3d at 1330.

That the Trade Court may, in its discretion, award dual sources of prejudgment interest does not mean that the Trade Court must award dual sources of prejudgment interest when the government brings an action to recover duties. The fact that the plain language of § 580 covers bonds securing the payment of anti-dumping duties does not transform the statute into one that is punitive in nature. In fact, the statute expressly designates the § 580 monies as “interest.” We conclude that the Trade Court retains broad discretion to apply nonstatutory prejudgment interest according to traditional equitable principles, which is exactly what it did in this case.

The Trade Court did not abuse its discretion in concluding that equitable prejudgment interest is unnecessary. It recognized our decision in AHAC I and noted that an award under § 580 may “alterf] the landscape” with respect to equitable prejudgment relief. AHAC II, 100 F.Supp.3d at 1371 (quoting AHAC I, 789 F.3d at 1330). The Trade Court then reviewed various equitable factors, noting that the government did not unreasonably delay bringing this action, although its “timing may not have been optimal,” and “AHAC has never paid the outstanding duties, with one exception, despite Customs’ numerous requests.” Id. at 1372-73. Ultimately, the Trade Court determined that “[§ ] 580 interest more than fairly compensates the Government for the time value of the unpaid duties” because the 6% rate under § 580 “far exceeds the applicable rates at which the Government would receive equitable interest.” Id. at 1373. While the government correctly points out that the Trade Court stated that the factors in this case “may favor an award of equitable interest,” id., the court has discretion to weigh the factors and is not required to come out in any particular way. See United States v. Nat’l Semiconductor Corp., 547 F.3d 1364, 1368-69 (Fed. Cir. 2008) (“[T]he trial court’s discretion permits more than simply counting the factors pointing in each direction.”). We see no abuse of discretion in its weighing of relevant factors and thus affirm the Trade Court’s decision not to award equitable prejudgment interest.

B. § 580 Interest

AHAC argues the Trade Court erred by awarding § 580 interest on § 1505(d) interest and by calculating § 580 interest from the date of Customs’ first demand, rather than the date of Customs’ first demand after denying AHAC’s protests. AHAC also argues that the Trade Court abused its discretion by declining to permit AHAC to make a deposit in an interest-bearing account to mitigate the running of § 580 interest. We affirm the Trade Court on all counts.

Customs assesses any duties and fees due for imported merchandise at the time of liquidation, and payment is due “30 days after issuance of the bill for such payment.” 19 U.S.C.' § 1505(b). If the bill is not paid within the 30-day period, “any unpaid balance shall be considered delinquent and bear interest by 30-day periods, at a rate determined by the Secretary, from the date of liquidation ... until the full balance is paid.” Id. § 1505(d). Because the statute, titled “Payment of Duties and Fees,” is directed to the duties and fees due on the merchandise under bond, id. § 1505(a), the sum of any § 1505(d) interest and any other duties and fees may not exceed the face amount of the subject bond. In other words, the government is entitled to post-liquidation § 1505(d) interest, which may accrue up to the face amount of the bond, starting thirty days after Customs issues the first post-liquidation bill and ending when the full balance is paid (up to the bond amount). Accord United States v. Am. Home Assur. Co., 113 F.Supp.3d 1297, 1310-13 (Ct. Int’l Trade 2015) (holding surety hable for § 1505(d) interest up to the face amount of the bond).

The • plain terms of § 580 dictate that § 580 interest may be assessed on the entire bond amount, including any applicable § 1505(d) interest. The statute states that interest shall be allowed “upon all bonds” on which the government must bring suit to recover duties. 19 U.S.C. § 580. As we previously recognized, the word “duties” does not modify “bonds”— the statute calls for interest on “all bonds” and does not discriminate between duties, fees, or interest assessed under the bond. AHAC I, 789 F.3d at 1325.

19 U.S.C. § 4401 further reinforces that Congress intended that § 580 apply to all duties, fees, and interest assessed under the bond. In describing the various types of interest earned on anti-dumping duties, Congress identified:

Equitable interest under common law and interest under section 580 of this title awarded by a court against a surety under its bond for late payment of anti-dumping duties, countervailing duties, or interest [accrued under section 1505(d) of this title].

19 U.S.C. § 4401(c)(2)(C) (emphases added). This statute expressly anticipates 'that both equitable interest and § 580 interest can be earned on, inter aha, antidumping duties and § 1505(d) interest. We hold that § 580 interest may be assessed on the bond up to its face value, including applicable § 1505(d) interest.

We are not persuaded by AHAC’s argument that the Trade Court erred in awarding § 580 interest from the date of the government’s first formal demand for payment because § 1505(d) interest did not become “legally fixed” under 19 C.F.R. § 113.62(a)(1)(h) until Customs denied AHAC’s protest regarding the § 1505(d) interest. The plain language of § 580 dictates that § 580 interest is calculated “from the time when said bonds became due.” This language is clear and unambiguous. Since “no interest runs against a surety on the principal amount of a bond unless requisite notice and demand for payment is first made,” the time when the bonds became due can be no earher than the government’s first formal demand for payment. United States v. Reul, 959 F.2d 1572, 1581 (Fed. Cir. 1992).

The language of § 113.62(a)(l)(ii) is not to the contrary. Section 113.62 sets forth the basic conditions for a bond for importation and entry. It does not dictate the timing when interest must run. It does not mention § 580 or § 1505, nor does it use the word “interest.” And in context, the regulation states that the surety must “[p]ay, as demanded by CBP, all additional duties, taxes, and charges subsequently found due, legally fixed, and imposed on any entry secured by this bond.” 19 C.F.R. § 113.62(a)(l)(ii) (emphasis added). Even if we interpret “legally fixed” to require that AHAC had an opportunity to protest the charge, this regulation would then merely require AHAC to pay the charges after its protest was denied—the regulation does not speak to how to calculate interest charges.

The language of § 580 is clear. The Trade Court did not err in holding that § 580 interest runs from the date of the government’s first formal demand for payment.

AHAC also argues that the Trade Court abused its discretion by declining to permit AHAC to make a deposit in an interest-bearing account to mitigate the running, of § 580 interest and the award of § 580 interest should be reduced by the amount that would have been earned in such an account. AHAC disagrees with the Trade Court’s exercise of its discretion. In denying AHAC’s motion, the Trade Court articulated a thorough and reasoned analysis explaining its denial. See United States v. Am. Home Assur. Co., 6 F.Supp.3d 1371, 1374 (Ct. Int’l Trade 2014). Nothing more is required. The Trade Court did not abuse its discretion when it denied AHAC’s motion.

C. § 1505(d) Interest

AHAC argues the Trade Court erred in holding that AHAC waived its right to contest the award of § 1505(d) interest because 19 U.S.C. § 1514 applies only to the importer, not the surety, during liquidation. We do not agree. We hold that AHAC waived its opportunity to contest the application of § 1505(d) interest when it failed to contest Custom’s denial of its protest and pay the duties* and fees owed.

All reviewable determinations and decisions by Customs relating to liquidation, including “all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury,” are final and conclusive unless a protest is filed “or unless a civil action contesting the denial of a protest” is filed at the Trade Court. 19 U.S.C. § 1514(a)-(b). Once final and conclusive, Customs’ decisions are foreclosed from challenge by any party in a collection action. United States v. Cherry Hill Textiles, Inc., 112 F.3d 1550, 1557 (Fed. Cir. 1997) (“The language of section 1514, that a liquidation will be ‘final and conclusive’ unless protested, is sufficiently broad that it indicates that Congress meant to foreclose unprotested issues from being raised in any context, not simply to impose a prerequisite to bringing suit. Moreover, we discern no compelling policy consideration counseling against giving the statutory language its naturally broad reading.”).

Challenges to the validity of a liquidation and any findings related to liquidation are subject to § 1514. St. Paul Fire & Marine Ins. Co. v. United States, 959 F.2d 960, 963 (Fed. Cir. 1992) (“[A] surety may protest the government’s demand for payment on its bond provided it files such protest within 90 days of the demand. 19 U.S.C. § 1514(c).”); Cherry Hill, 112 F.3d at 1557 (“[T]he issue of the correctness and validity of the liquidation is ‘final and conclusive’ for purposes of the collection action when the liquidation has not been protested in accordance with the provisions of section 1514.”); Volkswagen of Am., Inc. v. United States, 532 F.3d 1365, 1370 (Fed. Cir. 2008) (“[T]he language of § 1514 establishes liquidation as a final challengeable event in Customs’ appraisal process. Findings related to liquidation-including valuation—merge with the liquidation.”). The finality of liquidation under § 1514 is applicable to importer and surety alike. See 19 C.F.R. § 113.62(a)(1)(h) (surety must agree to joint and several liability with importer to “[p]ay, as demanded by CBP, all additional duties, taxes, and charges subsequently found due, legally fixed, and imposed on any entry secured by this bond”); United States v. Utex Int’l Inc., 857 F.2d 1408, 1412 (Fed. Cir. 1988) (“The importer, the surety, and the government are bound by and have the right to rely on the finality of liquidation.”); Cherry Hill, 112 F.3d at 1556 (stating that our case law, which carves out some exceptions, does not stand for the “sweeping proposition that a surety is not bound by unprotested liquidations”).

There is no question that § 1505(d) interest is a “eharge[ ] or exaction[ ] of whatever character within the jurisdiction of the Secretary of the Treasury.” 19 U.S.C. § 1514(a)(3); accord N. Z. Lamb Co. v. United States, 40 F.3d 377, 382 (Fed. Cir. 1994) (“We start from the premise that interest on the underpayment of duties is a charge ‘within the jurisdiction of the Secretary of the Treasury,’ 19 U.S.C. § 1514(a)(3).”). The statutory price for delinquency of payment of the duties and fees determined at liquidation is specified by § 1505(d). Section 1505(d) interest is a straightforward sum that is calculated in the event that the duties and fees at liquidation are not paid in a timely manner. That § 1505(d) interest must inherently be assessed after liquidation (since the surety and importer must have failed to pay the duties and fees assessed at liquidation) changes nothing about the nature of the charge. And as the Trade Court correctly recognized, § 1514 does not distinguish between charges and exactions arising after liquidation or on particular kinds of duties.

AHAC points to no authority that justifies creating a distinction between an importer’s and a surety’s obligation to protest Customs’ notification that it was charging § 1505(d) interest. We have acknowledged a surety may retain the right to assert certain claims or defenses in some situations not applicable here. See Cherry Hill, 112 F.3d at 1560 (where liquidation is deemed final as a matter of law and the government later tries to liquidate the entry anew, the surety is not precluded from using the deemed liquidation as a shield against an enforcement action); St. Paul Fire, 959 F.2d at 963-64 (surety was not barred under § 1514 from raising claims where it was discovered, after the protest period, that the importer was engaged in fraudulent conduct); Utex, 857 F.2d at 1413-14 (surety was not barred under § 1514 from raising defenses for liability for failure to export merchandise as demanded by Customs four years after liquidation).

Once Customs notified AHAC that it was denying its protest, the contest period to commence an action at the Trade Court began running. 28 U.S.C. §§ 1581(a), 2636(a). AHAC chose not to exercise its right to contest Customs’ decision to deny the protest and Customs’ decision thereby became final and conclusive under 19 U.S.C. § 1514(a). We hold that pursuant to § 1514(a), AHAC waived the right to appeal the application of § 1505(d) interest by failing to challenge its liability below.

Conclusion

For the foregoing reasons, we affirm the Trade Court’s judgment. The Trade Court did not abuse its discretion in declining to award the government equitable prejudgment interest on top of § 580 interest or in declining to permit AHAC to make a deposit in an interest-bearing account. We affirm the Trade Court’s award of § 1505(d) interest up to the face amount of the bonds, beginning from the date of Customs’ first demand, and the award of § 580 interest. Finally, we affirm the Trade Court’s determination that AHAC is precluded from asserting defenses to its liability for § 1505(d) interest because it failed to contest the liability at. the Trade Court during the statutory protest period.

AFFIRMED

Costs

No costs.


author: DYK, Circuit Judge.

text:
    Paul L. OLLIS, Claimant-Appellant v. David J. SHULKIN, Secretary of Veterans Affairs, Respondent-Appellee
    2016-1315
    United States Court of Appeals, Federal Circuit.
    Decided: May 26, 2017

      Paul Michael Schoenhaed, McDermott, Will & Emery LLP, Washington, DC,, argued for claimant-appellant. Also represented by Darrell Stark, Ropes & Gray LLP, Washington, DC; Samuel Lawrence Brenner, Boston, MA.
    Loren Misha Preheim, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent-appellee. Also represented by Benjamin C. Mizer, Robert E. Kirschman, Jr., Martin F. Hockey, Jr.; Martie Adelman, Brian D. Griffin, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC.
    Before DYK, REYNA, and STOLL, Circuit Judges.
   DYK, Circuit Judge.

Paul Ollis, a veteran, brought a claim for disability benefits under 38 U.S.C. § 1151, a section that requires the Department of Veterans Affairs (VA”) to pay benefits for certain injuries incurred as a result of VA medical care. Mr. Ollis suffers from atrial fibrillation and claims a disability resulting from complications of a heart procedure to treat that condition. The procedure (called mini-MAZE) was allegedly recommended by a VA doctor but was performed by a private doctor. The VA denied Mr. Ollis’s application for benefits, and both the Board of Veterans’ Appeals and the Court of Appeals for Veterans Claims (‘Veterans Court”) affirmed. We affirm in part and vacate and remand in part.

Background

Mr. Ollis was diagnosed with atrial fibrillation in 1997. He had a surgical ablation procedure to treat that condition in 1999 at a VA facility in Nashville, Tennessee, and had a pacemaker put in later that same year. The ablation procedure proved unsuccessful in treating his condition. Af-terwards, he continued to receive care from the VA and from Dr. Teague, a private cardiologist.

During a 2007 check-up conducted by the VA, Mr. Ollis met with a nurse practitioner and inquired about a MAZE procedure for his heart to treat his atrial fibrillation. His VA cardiologist, Dr. Rottman, later reviewed Mr. Ollis’s file and noted that “[s]ur[gi]cal MAZE is one avail[a]ble option” and that “epicardial MAZE would be the current preference.” J.A. 2. Epicar-dial MAZE is also known as minimally invasive MAZE or mini-MAZE. Since the VA facility did not have the specialized equipment and operators for a mini-MAZE procedure, Dr. Rottman noted that “it could be performed at other local institutions” and indicated that “[r]ecommenda-tions [were] provided.” J.A. 2, 80. Before the Board, Mr. Ollis was asked: “did the V.A. recommend that you have the procedure or did—or did they simply advise you that a procedure was available?,” to which he responded that the VA “recommended that I have the procedure because of my age” and “they thought I could handle it a lot better than somebody at the age of seventy.” J.A. 144. There is no suggestion, however, that Dr. Rottman recommended Dr. Hall, the private cardiologist who later performed Mr. Ollis’s procedure, or Methodist Medical Center, the medical facility in which Dr. Hall performed it.

Mr. Ollis then saw his private cardiologist, Dr. Teague, and they discussed the different medical procedures that were available. Dr. Teague referred him to Dr. Hall, another private cardiologist, for further evaluation for a mini-MAZE procedure. In his progress notes, Dr. Hall stated: “We appreciate Dr. Teague asking us to see this patient.” J.A. 64. Dr. Hall performed the procedure in August 2007 at the Methodist Medical Center, paid for by Mr. Ollis and his private medical insurance. Mr. Ollis asserts that his phrenic nerve was damaged during the procedure. He claims that this phrenic nerve damage resulted in paralysis of his diaphragm, causing shortness of breath and decreased lung function.

There is no indication that Mr. Ollis asserted a claim for damages against Dr. Hall or the hospital where Dr. Hall performed the procedure. Instead, Mr. Ollis filed for disability benefits under 38 U.S.C. § 1151. That section requires the VA to provide benefits for a “qualifying additional disability ... in the same manner as if [it] were service-connected.” § 1151(a). Under § 1151(a),

[A] disability or death is a qualifying additional disability or qualifying death if the disability or death was not the result of the veteran’s willful misconduct and—
(1) the disability or death was caused by hospital care, medical or surgical treatment, or examination furnished the veteran under any law administered by the Secretary, either by a Department employee or in a Department facility as de-fined in section 1701(3)(A) of this title, and the proximate cause of the disability or death was■—•
(A) carelessness, negligence, lack of proper skill, error in judgment, or similar instance of fault on the part of the Department in furnishing the hospital care, medical or surgical treatment, or examination; or
(B) an event not reasonably foreseeable ....

Id. (emphasis added).

The Veterans Court affirmed the denial of Mr. Ollis’s application because his injury was not caused by VA medical care since, under our decision in Viegas v. Shinseki, 705 F.3d 1374 (Fed. Cir. 2013), it was too attenuated from VA conduct. The Veterans Court noted that “Dr. Hall, a non-VA employee, performed the disabling surgery in a non-VA facility, and [there was] no contractual or agency relationship between VA and Dr. Hall.” J.A. 8. The Veterans Court also found no due process right to notice that referral to a private doctor could affect benefits under § 1151(a). A dissent emphasized that a VA doctor had recommended a particular course of treatment to Mr. Ollis (the mini-MAZE procedure) and concluded that it was not a remote consequence for him to pursue that course of treatment. The dissent also disagreed with the majority’s due process determination.

Mr. Ollis petitions for review. We have jurisdiction under 38 U.S.C. § 7292.

Discussion

Our jurisdiction to review decisions of the Veterans Court is limited by statute. 38 U.S.C. § 7292. We “decide all relevant questions of law, including interpreting constitutional and statutory provisions,” id. § 7292(d)(1), and our review of these questions is de novo, e.g., Cushman v. Shinseki, 576 F.3d 1290, 1296 (Fed. Cir. 2009). But, except to the extent that an appeal presents a constitutional issue, we “may not review (A) a challenge to a factual determination, or (B) a challenge to a law or regulation as applied to the facts of a particular case.” 38 U.S.C. § 7292(d)(2). If the decision by the Veterans Court is not in accordance with law, we can reverse, modify, or remand. Id. § 7292(e)(1).

I

Section 1151 has a long history and is used “typically to provide benefits to veterans for nonservice related disabilities” resulting from VA medical care. Brown v. Gardner, 513 U.S. 115, 116 n.1, 115 S.Ct. 552, 130 L.Ed.2d 462 (1994), abrogated in part by statute, Pub. L. No. 104-204, § 422(a), 110 Stat. 2874, 2926-27 (1996); see also Viegas, 705 F.3d at 1381-82. The provision originated with the World War Veterans’ Act, 1924, Pub. L. No. 68-242, § 213, 43 Stat. 607, 623. The provision was amended several times thereafter and renumbered in 1991. See Department of Veterans Affairs Codification Act, Pub. L. No. 102-83, §§ 4(a)(1), 5(a), 105 Stat. 378, 403, 406 (1991). The 1991 version was reviewed by the Supreme Court in Gardner. Throughout its various iterations, including the version at issue in Gardner, the provision provided benefits if a veteran “suffered an injury, or an aggravation of an injury, as the result of hospitalization, [or] medical or surgical treatment.” 38 U.S.C. § 1151 (1994); 38 U.S.C. § 351 (1982); 38 U.S.C. § 351 (1958); see 38 U.S.C. § 501 (1934).

Since at least as early as 1938, VA regulations interpreting the provision had required fault by the VA. The regulations provided that “[compensation is not payable for either the usual or the unusual after results of approved medical care properly administered, in the absence of a showing that the disability proximately resulted through carelessness, accident, negligence, lack of proper skill, error in judgment, etc.” 38 C.F.R. § 2.1123(c)(4) (1938); see also 38 C.F.R. § 3.123 (1956). In 1961, VA altered this language to provide that “the disability proximately resulted through carelessness, accident, negligence, lack of proper skill, error in judgment, or similar instances of indicated fault on the part of the [VA].” Pensions, Bonuses, and Veterans’ Relief, 26 Fed. Reg. 1561, 1590-91 (Feb. 24, 1961) (emphasis added). VA also amended the regulations to make explicit that the “as the result of’ language in the statute is a “cause” requirement. Id.

An opinion by VA’s General Counsel in 1978 then opined that the fault requirement in the regulations was in error with respect to “accidents.” U.S. Dep’t of Veterans Affairs, Op. Gen. Counsel 2-78 (Oct. 25, 1978). After analyzing the legislative history of the provision and the development of VA regulations implementing it, the opinion concluded that Congress had intended recovery for a disability deriving from either an accident or some form of negligence or fault by VA. The opinion also made clear that an accident would not encompass “expected or contemplated risks of surgery, no matter how remote.” Id. at 5. Accordingly VA amended the regulations to provide that:

Compensation is not payable for either the contemplated or foreseeable after results of approved medical or surgical care properly administered, no matter how remote, in the absence of a showing that additional disability or death proximately resulted through carelessnes[s], negligence, lack of proper skill, error in judgment, or similar instances of indicated fault on the part of the Veterans’ Administration. However, compensation is payable in the event of the occurrence of an “accident” (an unforeseen, untoward event), causing additional disability or death proximately resulting from Veterans’ Administration hospitalization or medical or surgical care.

Ratings for Special Purposes, 43 Fed. Reg. 51,015 (Nov. 2, 1978) (final regulation); see also Ratings for Special Purposes, 43 Fed. Reg. 34,505 (Aug. 4, 1978) (proposed rulemaking). In proposing this change to the regulation, VA made clear that compensation predicated on an unforeseeable event would not extend to expected or normal risks of VA medical care unless there was a showing of fault by the VA. See 43 Fed. Reg. 34,505. The amended regulation, 38 C.F.R. § 3.358(c)(3) (1993), was the version at issue in Gardner.

In Gardner, the Supreme Court addressed whether this regulation, by requiring some level of fault by the VA (except for unforeseeable events), was consistent with the governing text of § 1151, which only required that the “injury” occur “as the result of’ hospitalization or medical treatment. 513 U.S. at 117-20, 115 S.Ct. 552. The Court held that neither the “injury” nor “as the result of’ language contemplated an element of fault by the VA, and that “it would be unreasonable to read the text of § 1151 as imposing a burden of demonstrating [fault] upon seeking compensation.” Id. at 120,115 S.Ct. 552.

In analyzing the “as the result of’ language, the Court concluded that it “is naturally read simply to impose the requirement of a causal connection between the ‘injury’ or ‘aggravation of an injur/ and ‘hospitalization, medical or surgical treatment, or the pursuit of a course of vocational rehabilitation.’ ” Id. at 119, 115 S.Ct. 552. The Court noted that if the causal connection was meant to require “proximate causation so as to narrow the class of compensable cases, that narrowing occurs by eliminating remote consequences, not by requiring a demonstration of fault.” Id.

After the Supreme Court’s decision in Gardner, in 1996 Congress amended § 1151. See Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, Pub. L. No. 104-204, § 422(a), 110 Stat. 2874, 2926-27 (1996). In many ways, Congress adopted the prior VA regulation, abrogated the decision in Gardner, and explicitly required an element of fault by the VA or an unforeseeable event. First, Congress altered the “as the result of’ language in § 1151, but still maintained the basic requirement of a causal connection between the disability and VA treatment or care—i.e., “the disability or death was caused by hospital care, medical or surgical treatment, or examination furnished the veteran ... by a [VA] employee or in a [VA] facility.” Id. (emphasis added).

Second, Congress added a requirement that “the proximate cause of the disability or death was ... carelessness, negligence, lack of proper skill, error in judgment, or similar instances of fault on the part of the [VA] ... [or] an event not reasonably foreseeable.” Id. (emphasis added).

More recently, in Viegas we considered the causation requirement of § 1151. There, the veteran went to a prescribed aquatic therapy session in a VA facility and subsequently sustained an injury when the grab bar in one of the restrooms came loose from the wall when he attempted to use it. 705 F.3d at 1376. We reversed a decision by the Veterans Court that had denied compensation, holding that, even though Congress replaced “as the result of’ with “caused by,” the cause requirement remained substantively unchanged. Id. at 1382. The panel found “no indication that [by amending § 1151, Congress] intended to impose any additional restrictions on the statute’s original causation element.” Id. at 1382. The Viegas decision further reaffirmed that under Gardner this cause requirement means that coverage “does not extend to the ‘remote consequences’ of the hospital care or medical treatment provided by the VA.” Id. at 1383. But Viegas held that the veteran’s injury from the faulty grab bar was not a remote consequence of VA medical treatment since using the restroom is part of medical care and the injury stemmed from VA’s failure “to properly install and maintain the equipment necessary for the provision of his medical care.” Id.

II

The question presented in this case is how to construe the statutory requirements of § 1151 when the disability-causing event occurred during a medical procedure not performed by a VA doctor or in a VA facility. More specifically, we consider the application of § 1151 to referral situations.

A. Negligence by VA

A theory of recovery under § 1151 based on negligence by the VA is straightforward. See § 1151(a)(1)(A). The claimant must show: (1) a causal connection between the disability and “hospital care, medical or surgical treatment, or an examination furnished the veteran ... by a [VA] employee or in a [VA] facility,” and (2) that “carelessness, negligence, lack of proper skill, error in judgment, or similar instance of fault on the part of the [VA] ” was “the proximate cause of the disability.” § 1151(a)(1).

Thus, this theory incorporates the fault element rejected by the Supreme Court in Gardner but subsequently added by Congress when it amended § 1151. The standard for recovery is similar to the usual standard used for medical malpractice cases. It requires that VA medical care actually cause the claimant’s disability (a traditional but-for causation requirement, as opposed to the disability stemming from “willful misconduct” or the natural progress of the claimant’s preexisting disease, injury, or condition, see 38 C.F.R. § 3.361(c)), and that, in providing such care, VA’s failure “to exercise the degree of care that would be expected of a reasonable health care provider” proximately caused the disability. 38 C.F.R. § 3.361(d)(l)(i); see also, e.g., 1 David W. Louisell & Harold Williams, Medical Malpractice § 8.07; 1 Steven E. Pegalis, American Law of Medical Malpractice §§ 3:1, 5:1 (3d ed. 2016).

The proximate cause requirement of § 1151(a)(1)(A) applicable to VA-fault claims thus incorporates traditional tort law notions of proximate cause. While the precise meaning and formulation of proximate cause in tort law is subject to significant debate, its purpose is generally understood to limit an actor’s legal responsibility. See Black’s Law Dictionary 265 (10th ed. 2014) (defining “proximate cause” as “[a] cause that is legally sufficient to result in liability”); Dan B. Dobbs et al., The Law of Torts § 198 (2d ed. 2016 update). Proximate cause limits legal responsibility to “those [but-for] causes which are so closely connected with the result ... that the law is justified in imposing liability.” W. Page Keeton et. al., Prosser & Keeton on Torts § 41, at 264 (5th ed. 1984); see also Paroline v. United States, — U.S. -, 134 S.Ct. 1710, 1719, 188 L.Ed.2d 714 (2014) (“Every event has many causes ... [s]o to say that one event was a proximate cause of another means that it was not just any cause, but one with a sufficient connection to the result.”).

As the Supreme Court has recognized, a hallmark formulation of proximate cause defines its scope in terms of foreseeability, extending only to those foreseeable risks created by the negligent conduct. See Paroline, 134 S.Ct. at 1719 (“Proximate cause is often explicated in terms of foreseeability ....”) (emphasis added); see also Dobbs et al., § 198 (“The most general and pervasive approach to ... proximate cause holds that a negligent defendant is liable for all the general kinds of harms he fore-seeably risked by his negligent conduct and to the class of persons he put at risk by that conduct.”) (emphasis added); Kee-ton et. al., § 42, at 273 (“[T]he scope of liability should ordinarily extend to but not beyond the scope of the ‘foreseeable risks’—that is, the risks by reason of which the actor’s conduct is held to be negligent.”) (emphasis added).

Before the Veterans Court, Mr. 01-lis suggested various theories of fault under § 1151(a)(1)(A), including that his VA doctors may have been negligent by recommending the mini-MAZE procedure to him, or by referring him to a particular doctor who negligently performed the mini-MAZE procedure. The Veterans Court found no “evidence indicating that Dr. Hall was not qualified to perform the MAZE procedure or that VA medical personnel were negligent in any recommendation regarding who might be able to perform the MAZE procedure.” J.A. 9. Even if Mr. Ollis could meet the cause requirement of § 1151(a)(1), the Veterans Court found Mr. Ollis’s arguments regarding VA fault for negligent referral to a particular doctor under § 1151(a)(1)(A) to be “speculative at best,” i.e., that there was no proximate cause between VA negligence and the injury, id., and we see no legal error in that analysis. The question remains, however, whether Mr. Ollis’s VA medical doctors were negligent under § 1151(a)(1)(A) by recommending the mini-MAZE procedure to him, and we remand for consideration of this question.

B. Event Not Reasonably Foreseeable

A theory of recovery under § 1151(a)(1)(B) in the referral context presents a more difficult interpretive question. In order to resolve this case, it is necessary to construe several terms of the statute insofar as they apply to § 1151(a)(1)(B): (1) “not reasonably foreseeable”; (2) “proximate cause of the disability or death”; and (3) “caused by.”

“[N]ot reasonably foreseeable.” Current VA regulations indicate that, for an event to qualify as an event not reasonably foreseeable, it must be judged not reasonably foreseeable at the time of the disability-causing events—in this case, performance of the mini-MAZE procedure—not at some earlier point in time such as referral or recommendation by the VA. The regulations make this clear that an event not reasonably foreseeable “must be one that a reasonable health care provider would not have considered to be an ordinary risk of the treatment provided” and not “the type of risk that a reasonable health care provider would have disclosed in connection with ... informed consent.” 38 C.F.R. § 3.361(d)(2). The Veterans Court did not address this question of whether the lack of foreseeability requirement was satisfied here.

“[PJroximate cause of the disability or death.” Under § 1151(a)(1)(B), the “proximate cause of the disability or death” language performs a limited function. The veteran need only show that the disability or death was proximately caused by the unforeseeable event, and a showing of fault is not required. One could envisage a situation in which an unforeseeable event is not the proximate cause of a disability, for example, if phrenic nerve severance would not foreseeably cause shortness of breath and decreased lung function. But there is no contention here that is the case. It is also, equally clear that an unforeseeable event such as phrenic nerve severance can be the proximate cause of the disability, meaning that the proximate cause requirement of § 1151(a)(1)(B) would be satisfied. Again, the Veterans Court did not address this requirement.

“[Claused by.” But even if Mr. Ollis can satisfy the proximate cause requirement of § 1151(a)(1)(B), the cause requirement of § 1151(a)(1) remains. The government argues that the cause requirement in § 1151(a)(1) includes at least some lesser proximate causation. To the extent the government argues and the Veterans Court concluded that VA medical care must proximately cause a claimant’s disability, that is inconsistent with § 1151(a)(1)(B) and would render it a nullity. By definition a claimant cannot show that an injury that is unforeseeable was proximately caused by VA medical care.

At the same time, we are convinced that Congress did not contemplate a mere but-for cause analysis under this requirement. From the background of the statute, it seems quite clear that Congress intended some concept of remoteness to be inherent in the cause requirement of § 1151(a)(1). We explained as much in Viegas, concluding that “the statute does not extend to the ‘remote consequences’ of the hospital care or medical treatment provided by the VA.” 705 F.3d at 1383. As Viegas recognized, this cause requirement might not be satisfied “[i]f, for example, a veteran reported to a VA medical center for an examination, and hours later was injured while engaged in recreational activities at the facility, [since] his injury might well be deemed only a ‘remote consequence’ of his earlier examination.” Id.

Thus, we think that cause under § 1151(a)(1) incorporates some remoteness requirement. This remoteness requirement is the same as the traditional proximate cause requirement but without fault and applicable to a limited sequence of events. See Gardner, 513 U.S. at 119, 115 S.Ct. 552 (“Assuming that the [causal] connection is limited to proximate causation so as to narrow the class of compensable cases, that narrowing occurs by eliminating remote consequences.... ” (emphasis added)). It is, in other words, a lesser proximate cause requirement. As discussed earlier, the basis for recovery under § 1151(a)(1)(B)—i.e., an event not reasonably foreseeable—-indicates that the statute cannot require proximate causation between VA medical treatment and the disability. By definition an unforeseeable event cannot be proximately connected to medical treatment. Causation, however, requires that VA medical treatment proximately cause the treatment that caused the disability—ie., that it caused the mini-MAZE procedure. Here, in other words, only the performance of the mini-MAZE procedure and not the nerve severance or the resulting shortness of breath and decreased lung function must be proximately caused by VA medical treatment to satisfy the cause requirement in § 1151(a)(1).

Mr. Ollis seeks to draw a chain of causation that includes the recommendation provided by a VA doctor that ultimately led Mr. Ollis to see Dr. Hall, the private cardiologist who actually performed the mini-MAZE procedure that damaged his phrenic nerve and caused his- disability. The question remains whether VA medical care proximately caused the mini-MAZE procedure, a question not addressed by the Veterans Court.

Ill

Accordingly, when recovery is predicated on a referral theory involving an unforeseeable event under § 1151(a)(1)(B), § 1151(a)(1) requires that VA medical care proximately cause the medical treatment or care (here, the mini-MAZE procedure) during which the unforeseeable event occurred (here, the severance of the phrenic nerve). Section 1151(a)(1)(B) further requires that the unforeseeable event— phrenic nerve damage—proximately cause the disability. As such, the chain of causation has two components (neither of which requires fault)—i.e., proximate cause between VA medical care and the treatment, and proximate cause between the unforeseeable event and the disability.

To some extent the Veterans Court appears to have confused the cause and proximate cause requirements of § 1151(a)(1) and § 1151(a)(l)(A)-(B). See J.A. 8 n.8 (“Viegas ... addresses causation and ... is consistent with the general interpretation of ‘proximate cause’.... ”). Specifically, the Veterans Court made two legal errors in this aspect of its analysis. First, it framed the question as whether Mr. Ollis’s disability was a remote consequence of VA medical treatment, whereas the correct inquiry under § 1151(a)(1)(B) is whether the medical procedure was a remote consequence of VA medical treatment—i.e., whether VA medical treatment proximately caused Mr. Ollis to undergo the mini-MAZE procedure. See J.A. 7-8 (“Mr. Ollis’s disability was, at best, a remote consequence of—and not caused by— VA’s conduct.”) (emphasis added); id. at 8 (“[T]he conduct of VA’s Dr. Rottman ... is simply too remote from Mr. Ollis’s disability to be considered its cause.”) (emphasis added). Second, the Veterans Court focused on the question whether VA medical treatment caused Mr. Ollis to utilize Dr. Hall and Methodist Medical Center, rather than on whether VA medical treatment caused him to have the mini-MAZE procedure itself. The Veterans Court’s decision did not analyze this case under that framework, and a remand is required. On remand, the Veterans Court must also address the not reasonably foreseeable and proximate cause of the disability or death requirements.

IV

Lastly, Mr. Ollis argues that VA’s failure to provide him notice that a referral to a private facility for his mini-MAZE procedure could extinguish his eligibility for benefits under § 1151(a) constitutes a violation of his right to due process. Specifically, Mr. Ollis relies on Cushman v. Shinseki, 576 F.3d 1290 (Fed. Cir. 2009), to argue that he has a protected property interest in his right to coverage under that provision should he meet the requirements, and the lack of notice violated the basic requirements of due process—notice and a fair opportunity to be heard. The Veterans Court held that there was no due process violation.

In Cushman we held that entitlement to veterans’ disability benefits is a protected property interest since such benefits are nondiscretionary and mandated by statute. Id. at 1298. There, VA’s reliance on an improperly altered medical record in adjudicating the veteran’s claim for monetary benefits constituted a due process violation. Id. at 1300. As such, Cushman addressed the adequacy of the adjudication procedure. There is no due process right to notice regarding conditions that might in the future affect an individual veteran’s right to monetary benefits (a right that is governed by statute and regulation) before the veteran incurs an injury or applies for such benefits. See Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 38 L.Ed.2d 548 (1972) (“The Fourteenth Amendment’s procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits.”); see also Devlin v. Office of Pers. Mgmt., 767 F.3d 1285, 1288 (Fed. Cir. 2014) (holding that an application is necessary for Basic Employee Death Benefits before there is a protected property interest). Accordingly, we affirm the Veterans Court’s decision on Mr. 01-, lis’s due process claim.

Conclusion

We affirm in part and vacate in part the decision by the Veterans Court and remand for consideration in light of this opinion.

AFFIRMED IN PART, VACATED IN PART, AND REMANDED

Costs

Costs to appellant.

      . As the Veterans Court explained, a " ‘Maze’ procedure is the ‘surgical division of the normal conduction pathways between the sinoa-trial node and the atrioventricular node by a series of incisions in the left atrium to create a maze of conduction pathways; its purpose is to allow a normal impulse to activate the atrium while eliminating macroreentrant circuits; done for the relief of atrial fibrillation.' ” J.A. 2 n.6 (quoting Dorland’s Illustrated Medical Dictionary 1517 (32d ed. 2012)).

      . Since the procedure was performed by a private doctor, in a non-VA facility, and paid for by private insurance, we are not dealing with a situation where a private physician acts as an agent of the VA.

      . As noted earlier, this is not a case where a private doctor acted as an agent of the VA.

      . Before the Veterans Court, Mr. Ollis also relied on the language of 38 U.S.C. § 6303(c)(1)(A) that the VA "shall distribute full information to eligible veterans ... regarding all benefits and services to which they may be entitled” to support his due process claim. But we have previously held this language to be only hortatory {see Andrews v. Principi, 351 F.3d 1134, 1137 (Fed. Cir. 2003)), and Mr. Ollis does not raise this statutory argument on appeal.

      . The immigration cases that Mr. Ollis relies on are inapposite since none involves notice regarding entitlement to monetary benefits. See United States v. Lopez-Velasquez, 629 F.3d 894 (9th Cir. 2010); United States v. Copeland, 376 F.3d 61 (2d Cir. 2004); United States v. Ubaldo-Figueroa, 364 F.3d 1042 (9th Cir. 2004).