Prysm, Inc. v. United States , 2019 CIT 149 ( 2019 )

Slip Op. 19-
UNITED STATES COURT OF INTERNATIONAL TRADE
PRYSM, INC.,
Plaintiff, Before: Jane A. Restani, Judge
v.
Court No. 18-00151
UNITED STATES,
PUBLIC VERSION
Defendant.
OPINION
[In Customs classification matter, Plaintiff’s motion for summary judgment is denied and
Defendant’s cross-motion for summary judgment is granted.]
Dated: November , 2019
Munford Page Hall, II and Lydia C. Pardini, Adduci, Mastriani & Schaumberg, L.L.P., of
Washington, D.C., for Plaintiff Prysm, Inc.
Marcella Powell, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S.
Department of Justice, and Amy M. Rubin, Assistant Director, International Trade Field Office,
U.S. Department of Justice, of New York, N.Y., for Defendant United States of America. With
them on the brief was Joseph H. Hunt, Assistant Attorney General, Civil Division, U.S.
Department of Justice, of Washington, D.C. Of counsel on the brief was Paula S. Smith, Senior
Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs &
Border Protection, of New York, N.Y.
Restani, Judge: This matter is before the court on cross-motions for summary judgment.
Plaintiff Prysm, Inc. (“Prysm”) commenced this action against Defendant United States (the
“government”) to contest the denial by U.S. Customs and Border Protection (“Customs”) of its
administrative protests. Prysm principally claims that Customs incorrectly determined the tariff
classification of its imported laser phosphor displays (“LPDs”), which Prysm claims were
manufactured for use as “parts of” its Display Wall System, a “monitor.” The government replies
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that Prysm’s LPDs were manufactured for use as independent “monitors” and are classifiable
accordingly.
There are two issues in this case. First, the court must determine whether Prysm’s
merchandise is a “monitor,” classifiable under heading 8528, Harmonized Tariff Schedule of the
United States (“HTSUS”),1 or a “part” of a monitor, classifiable under heading 8529, HTSUS. If
the merchandise is a monitor, then the court must also determine whether the monitor is principally
used in an automatic data processing system and classifiable under subheading 8528.51.00,
HTSUS, as claimed by Prysm.2 For the reasons that follow, the court concludes that the LPDs are
properly classifiable under subheading 8528.59.33, HTSUS as a color monitor, not incorporating
television reception apparatus, with a video display diagonally greater than 34.29 centimeters, with
a flat panel screen, other; other, subject to a 5 percent ad valorem duty, as asserted by the
government.
1
All citations to the HTSUS, including Section and Chapter Notes, are to the 2016 edition. This
version was in effect on December 7, 2016, when Prysm entered the merchandise. See 19 C.F.R.
§ 141.69.
As of January 1, 2017, subheading 8528.51.00 was deleted and replaced with subheading 8528.51
(for monitors “[c]apable of directly connecting to and designed for use with an automatic data
processing machine of heading 8471”). Subheading 8528.59.31 was also deleted. Those changes,
which might have precluded some of Prysm’s arguments here, are inapplicable to the instant case.
2
At oral argument, Prysm abandoned its secondary alternative claim that its merchandise is a flat
panel display device classifiable under heading 8528.59.31, HTSUS. See Oral Arg. Recording at
28:20–29:06 (Nov. 14, 2019). Many subheadings of heading 8528, HTSUS, reference flat panel
screens, such as the one applicable here. A flat panel screen is distinct from the complete object,
known as a flat panel display device, of which a flat panel screen is a part. Flat panel display
devices are classified under subheading 8528.59.31, HTSUS. By contrast, a device with a flat
panel screen, but that is not wholly a flat panel display device, is not classified under that
subheading.
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BACKGROUND
On December 7, 2016, Prysm entered the subject LPDs at San Francisco. See Customs
Entry Form 1651-0024, ECF No. 31-3 at 40 (Dec. 8, 2016) (“Pl. Ex. 2”). Customs classified the
LPDs under subheading 8528.59.33, HTSUS. See [Pl.’s] Statement of Material Facts as to Which
There Is No Genuine Issue To Be Tried ¶¶ 10–11, ECF No. 31-1 (Mar. 15, 2019) (“Pl. Facts”);
Def.’s Resp. to Pl.’s Statement of Material Facts as to Which There Is No Genuine Issue To Be
Tried ¶¶ 10–11, ECF No. 37 (May 24, 2019) (“Gov. Facts”). Prysm timely filed a protest on
December 13, 2017. Pl. Facts ¶ 12; Gov. Facts ¶ 12. Prysm disagrees with this classification and
claims that the LPDs are properly classified under subheading 8529.90.99, HTSUS, as “[p]arts
suitable for use solely or principally with the apparatus of headings 8525 to 8528,” free of duty.
See Corrected Compl. ¶¶ 36–38, ECF No. 9 (July 20, 2018). Prysm requested an accelerated
disposition of its protest, and the protest was deemed denied on June 23, 2018, pursuant to 19
U.S.C. § 1515(b). Pl. Facts ¶ 13; Gov. Facts ¶ 13. Prysm timely commenced the instant action on
June 25, 2018. Pl. Facts ¶ 1; Gov. Facts ¶ 1. Prysm moved for summary judgment on March 15,
2019, and the government cross-moved for summary judgment on May 24, 2019. See Pl.’s Mem.
of P. & A. in Supp. of Pl.’s Mot. for Summ. J., ECF No. 31 (Mar. 15, 2019) (“Pl. Br.”); Def.’s
Mem. in Opp’n to Pl.’s Mot. for Summ. J. & in Support of Def.’s Cross-Mot. for Summ. J., ECF
No. 37 (May 24, 2019) (“Gov. Br.”).
JURISDICTION
The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(a), which vests the Court of
International Trade with exclusive jurisdiction over any civil action commenced against the United
States to contest the denial of a protest under Section 515 of the Tariff Act of 1930, codified as
amended, 19 U.S.C. § 1515.
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STANDARD OF REVIEW
The court reviews the denial of a Customs classification protest de novo. See Pillowtex
Corp. v. United States, 171 F.3d 1370, 1373 (Fed. Cir. 1999); FANUC Robotics Am., Inc., 393 F.
Supp. 3d 1254, 1258 (CIT 2019). The court shall grant summary judgment “if the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” USCIT R. 56(a). A factual dispute is material if it potentially affects the outcome
of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
In a tariff classification dispute, “summary judgment is appropriate when there is no genuine
dispute as to the underlying factual issue of exactly what the merchandise is.” Bausch & Lomb,
Inc. v. United States, 148 F.3d 1363, 1365 (Fed. Cir. 1998). The court’s inquiry is two-fold. First,
the court ascertains the proper meaning of specific terms in the tariff provision. Cummins Inc. v.
United States, 454 F.3d 1361, 1363 (Fed. Cir. 2006). Second, the court determines whether the
merchandise meets the provision’s terms as properly construed. Id.
PRYSM’S DISPLAY WALL SYSTEM
Prysm imports certain tile displays, known as “TD1 Tiles” (first generation) and “TD2
Tiles” (second generation). Pl. Facts ¶¶ 8–9, 14; Gov. Facts ¶¶ 8–9, 14. These tile displays are
types of laser phosphor displays. Pl. Facts ¶ 15; Gov. Facts ¶ 15.3 On December 7, 2016, Prysm
3
Prysm imports the TD1 Tiles separately from their power supply and fan assembly components,
while the TD2 Tiles are imported with their power supply and fan assembly components attached.
Pl. Facts ¶ 17; Gov. Facts ¶ 17. Nevertheless, the parties agree that the TD1 Tiles and the TD2
Tiles are the same product for the purposes of classification. Pl. Facts ¶ 16; Gov. Facts ¶ 16. The
parties also agree that both species of LPD are imported as complete units. See Def.’s Add’l
Statement of Undisputed Material Facts in Supp. of its Cross-Mot. for Summ. J. ¶ 4, ECF No. 37
at 21–25 (May 24, 2019) (“Gov. Add’l Facts); Pl.’s Resp. to Def.’s Add’l Statement of Undisputed
Material Facts in Supp. of its Cross-Mot. for Summ. J. ¶ 4, ECF No. 42 (June 28, 2019) (“Pl. Add’l
Facts”). Accordingly, the court, like the parties, refers to the TD1 and TD2 collectively as the
LPDs. Pl. Facts ¶ 18; Gov. Facts ¶ 18. Wiring diagrams for the original configuration of Prysm’s
Display Wall System are attached in Confidential Appendix I.
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entered 92 LPDs. See Pl. Ex. 2 at 39–41. Prysm contends that the “subject merchandise,” its
LPDs, “when combined with other LPDs and one or more” separate, proprietary components, form
a Display Wall System. Pl. Br. at 4. The government agrees. See Gov. Facts ¶¶ 54–61. The
LPDs are designed to be stacked in groups onto metal frame walls, with a gap of ½-millimeter
between each. Pl. Facts ¶ 54; Gov. Facts ¶ 54.
The LPD can neither accept video signals nor display content unless it is connected directly
to one of two specialized, independent, proprietary apparatuses: either a first-generation
proprietary image processer (“IP1”) or a second-generation proprietary image processor (“IP2”)
(collectively, the “Image Processors”). Pl. Facts ¶¶ 27, 35–36; Gov. Facts ¶¶ 27, 35–36. The
Image Processor receives its input video source from a separate display wall processor or other
image source. Pl. Facts ¶ 67; Gov. Facts ¶ 67. 4 A single Image Processor can control up to 30
LPDs. Pl. Facts ¶¶ 57–58; Gov. Facts ¶¶ 57–58. The proprietary image data and control signals
that the Image Processors send to the LPDs “are shared in a ‘daisy chain’ manner from the first
LPD to other LPDs in an array of tiles.” Pl. Br. at 13; Pl. Facts ¶ 60; Gov. Facts ¶ 60. This
arrangement is known as a Display Wall System, which displays a larger, single image to the end-
user. Pl. Facts ¶¶ 56, 59–61; Gov. Facts ¶ 56, 59–61. In short, the Display Wall System contains
two integral components: (1) the Image Processor, a proprietary device that (a) accepts incoming,
4
Although Prysm markets and sells separately a proprietary display wall processor that is designed
for use with its Display Wall System, the Image Processors can accept incoming, commercial
signals from “any video source with HDMI, DVI, or VGA output,” including, inter alia, PCs and
DVD players. Gov. Add’l Facts ¶ 18; Pl. Add’l Facts ¶ 18. Thus, the display wall processors are
not essential to the LPD’s operation. See Dep. of Dimitris Katsis, Ph.D. at 66:6–14, ECF No. 31-
3 (Jan. 31, 2017) (“Pl. Ex. 3”); Dep. of Scott Norder at 11:6–18, ECF No. 37-1 (Nov. 3, 2017)
(“Gov. Ex. F”). Where a Display Wall System operates with a display wall processor, the display
wall processor’s function is to execute programs that integrate multiple video signal sources into
a single pixel canvas, and then to transmit those data to each LPD through the Image Processors.
Pl. Facts ¶ 79; Gov. Facts ¶ 79.
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commercially-coded incoming video signal data, (b) converts those data into proprietary signal
data, and then (c) sends those signals to the LPDs; and (2) the LPDs, which collectively display a
unified image to the end-user.5 Because the interaction between these parts is essential to the
court’s determination of whether the LPDs are monitors classifiable in heading 8528 or are,
instead, parts of monitors classifiable in heading 8529, the court briefly explains how the LPDs
interact with the Image Processors within Prysm’s Display Wall System.
A. The LPDs, the Subject Merchandise
As relevant for classification purposes, the LPD consists of an anti-glare panel, a phosphor
panel, a laser processor, and a laser engine, all of which are enclosed within a single apparatus. Pl.
5
A “basic” Display Wall System consists solely of LPDs and Image Processors, and may, but need
not, include a display wall processor. Gov. Add’l Facts ¶¶ 1–2; Pl. Add’l Facts ¶¶ 1–2. See
Confidential Appendix I. Yet, in its moving brief, Prysm’s principal argument in support of the
LPDs’ classification under subheading 8528.51.00 was that “the display wall processor” in the
Display Wall System “is an automatic data processing machine,” so that its Display Wall System
“is an automatic data processing system,” and therefore “an array of LPDs is an output unit for an
automatic data processing system.” Pl. Br. at 25–26. In its reply, Prysm appears to abandon its
original argument, claiming instead that the LPDs, coupled with a series of additional LPDs and
remote automatic data processing machines, means that the LIPDs are principally used in an
automatic data processing system within the meaning of heading 8471, HTSUS; specifically, the
Display Wall System. Pl.’s Reply to Def.’s Opp’n to Pl.’s Mot. for Summ. J. & Pl.’s Resp. to
Def.’s Cross-Mot. for Summ. J. at 10, ECF No. 40 (June 28, 2019) (“Pl. Reply”). According to
Prysm, the Display Wall System “includes the LPDs, one or more IPs, and a direct or indirect
connection to an ADP machine.” Id. at 1. But see id. at 6 (the Display Wall System is a “complete
monitor” that is “composed of four or more LPDs and an I[mage] P[rocessor].”). Prysm now
claims that whether a display wall processor is an automatic data processing machine that meets
the definitional requirements of such machines “is irrelevant” for classification purposes. Id. at
14.
At oral argument, the court requested the parties to inform it if a detailed discussion of Prysm’s
proprietary display wall processor was necessary. See Oral Arg. Recording at 45:30–51:10 (Nov.
14, 2019). Prysm was not required to, and did not, file a response. The government agrees with
the court that the display wall processors “are irrelevant to the classification of the LPDs at issue.”
Def.’s Resp. to the Issues Raised by the Ct. During Oral Arg. on the Parties’ Cross Mots. for
Summ. J. at 2, ECF No. 55 (Nov. 14, 2019). Prysm’s most recent contention that whether a display
wall processor is an automatic data processing machine “is irrelevant” for classification purposes
accords with the government’s position. Pl. Reply at 14.
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Facts ¶¶ 19–20; Gov. Facts ¶¶ 19–20. It does not contain a television reception apparatus. Pl.
Facts ¶ 44; Gov. Facts ¶ 44. The LPD has a flat screen that measures 63.6 centimeters diagonally.
Pl. Facts ¶¶ 102, 108; Gov. Facts ¶¶ 102, 108. Each LPD also contains an internal central
processing unit [[
]]. Def.’s Add’l Statement of Undisputed Material Facts in Supp. of its
Cross-Mot. for Summ. J. ¶¶ 10, 14, ECF No. 37 at 21–25 (May 24, 2019) (“Gov. Add’l Facts);
Pl.’s Resp. to Def.’s Add’l Statement of Undisputed Material Facts in Supp. of its Cross-Mot. for
Summ. J. ¶¶ 10, 14, ECF No. 42 (June 28, 2019) (“Pl. Add’l Facts”). Prysm admits that “[e]ach
[LPD] is equipped” with this system, which it describes as a
]], or a central processing unit (“CPU”). Pl.’s First Suppl. Resp. to Def.’s First Set of
Interrogs. at 20, ECF No. 31-3 (Feb. 5, 2019) (“Pl. Ex. 9”). This CPU contains two main
processors. Gov. Add’l Facts ¶ 12; Pl. Add’l Facts ¶ 12; Dep. of Dimitris Katsis, Ph.D.6 at 47:13–
21, ECF No. 40-1 at 6 (Jan. 31, 2017) (“Pl. Ex. 17”); Pl.’s Resp. to Def.’s Second Set of Interrogs.
at 226, ECF No. 37-2 (Oct. 20, 2017) (“Gov. Ex. L”).7 The CPU controls the LPD’s internal
6
Dr. Katsis is the Director of Global Technical Applications and a Technical Fellow at Prysm. Pl.
Ex. 9 at 5.
7
Specifically, the LPD contains a (1) [[ ]] processor and (2) [[ ]]
processor. Gov. Add’l Facts ¶ 12; Pl. Add’l Facts ¶ 12. The first processor monitors the health of
the LPD unit and reads the incoming control signals from the Image Processors. See Dep. of
Dimitris Katsis, Ph.D. at 22:22–24, ECF No. 31-3 (Jan. 31, 2017) (“Pl. Ex. 3”). The second
processor’s main purpose is to distribute the incoming signal data to the LPD’s image display
machinery; namely, the lasers. See Dep. of Dimitris Katsis, Ph.D. at 47:13–21, ECF No. 40-1 at
6 (Jan. 31, 2017) (“Pl. Ex. 17”); Pl.’s Resp. to Def.’s Second Set of Interrogs. at 226, ECF No. 37-
2 (Oct. 20, 2017) (“Gov. Ex. L”). According to Dr. Katsis, “both the TD1 Tile and the TD2 Tile
contain this processor system. Decl. of Dimitris Katsis, Ph.D. ¶ 2, ECF No. 37-1 (Feb. 20, 2019)
(“Gov. Ex. G”). “The difference is that that TD2 Tile uses a different model of the [[
]], instead of the [[ ]] as used in the TD1 Tile. Even though the [[
]] are different models, they perform the same functions[.]” Id.
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machinery, video data, and image display intensity, and also distributes incoming data, processes
video signals, and stores multiple frames. Pl. Ex. 17 at 47:13–48:4; Dep. of Dimitris Katsis, Ph.D.
at 190:4–13, ECF No. 37-1 (Nov. 2, 2017) (“Gov. Ex. E.”). The CPU thus controls which “part
of the image” to display on a given LPD among an arrangement of LPDs that comprise the Display
Wall System. Dep. of Dimitris Katsis, Ph.D. at 34:12–20, ECF No. 31-3 (Jan. 31, 2017) (“Pl. Ex.
3”). See also Pl. Facts ¶¶ 99–102; Gov. Facts ¶¶ 99–102.
B. The Image Processors
To display an image, the LPD must first receive a signal through a Category 7 (“CAT 7”)
cable from a proprietary Image Processor, a second, independent apparatus that Prysm imports
separately from the LPDs. Pl. Facts ¶¶ 18, 24, 31, 36, 42; Gov. Facts ¶¶ 18, 24, 31, 36, 42. The
LPD can neither accept video signals nor display content unless it is connected directly to an Image
Processor. Pl. Facts ¶¶ 27, 35; Gov. Facts ¶¶ 27, 35. The Image Processors convert “consumer-
level digital signals” and data from a separate apparatus into [[
]] and then transmit that data to the LPD through a CAT 7 cable linking the LPD and the
Image Processor. Pl. Ex. 3 at 20:7–10; Pl. Facts ¶¶ 91–92; Gov. Facts ¶¶ 91–92. These signals
“contain[] information for every pixel in the form of RGB triads” (i.e., “red-green-blue” triads).
Pl. Ex. 9 at 22; Gov. Add’l Facts ¶ 17; Pl. Add’l Facts ¶ 17.
DISCUSSION
The HTSUS is organized by classification headings, each of which has one or more
subheadings. The headings set forth “general categories of merchandise,” while the subheadings
“provide a more particularized segregation of the goods within each category.” Deckers Outdoor
Corp. v. United States, 714 F.3d 1363, 1366 (Fed. Cir. 2013) (internal quotation and citation
omitted). The HTSUS also contains General Notes, Section Notes, Chapter Notes, General Rules
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of Interpretation (“GRI”), the Additional United States Rules of Interpretation (“ARI”), and
several appendices for particular categories of goods. See 19 U.S.C. § 3004. Each of these has
the binding effect of statutory law. See BenQ Am. Corp. v. United States, 646 F.3d 1371, 1376
(Fed. Cir. 2011). Thus, the GRIs and ARIs govern merchandise classification, and the court
applies them in numerical order. Id. While not binding upon the court, the court also may consider
the Explanatory Notes (“ENs”), developed by the World Customs Organization (“WCO”), which
are “generally indicative of proper interpretation” of the tariff schedule. See Lemans Corp. v.
United States, 660 F.3d 1311, 1316 (Fed. Cir. 2011). “Absent contrary legislative intent, HTSUS
terms are to be construed according to their common and commercial meanings, which are
presumed to be the same.” Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999)
(citation omitted). To ascertain the proper heading under GRI 1, the court compares only the
language of the headings and not the language of the subheadings. See Orlando Food Corp. v.
United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998).
A. Heading 8528, HTSUS v. Heading 8529, HTSUS
In the instant case, Prysm contends that the LPD is classifiable under heading 8529,
HTSUS, which covers “[p]arts suitable for use solely or principally with the apparatus of headings
8525 to 8528.”8 Meanwhile, the government argues that the LPD is to be classified under heading
8528, HTSUS, which covers “[m]onitors and projectors, not incorporating television reception
apparatus; reception apparatus for television, whether or not incorporating radio-broadcast
receivers or sound or video recording or reproducing apparatus.”9 Thus, the court must determine
8
Headings 8525, 8526, and 8527 are inapposite and need not be addressed.
9
In the alternative, the government argues that heading 8543, HTSUS, which covers “[e]lectrical
machines and apparatus, having individual functions, not specified or included elsewhere in this
chapter; parts thereof,” applies to the LPDs. The court rejects this argument at the outset because
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if the LPDs are “monitors,” and thus classifiable under heading 8528, or “parts” of monitors,
classifiable under heading 8529. Where a tariff classification is in dispute, “the court first
considers whether ‘the government’s classification is correct, both independently and in
comparison with the importer’s alternative.’” FANUC Robotics, 393 F. Supp. 3d at 1260 (quoting
Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984)). The relevant Section and
Chapter Notes define neither “monitors” nor “parts of monitors.” While the WCO ENs likewise
fail to define the terms expressly, the court will consider them here because they are informative
as to the scope of the bounds of heading 8528. See, e.g., Kahrs Int’l, Inc. v. United States, 713
F.3d 640, 644–45 (Fed. Cir. 2013). The General EN to heading 8528, HTSUS provides that all
monitors are apparatuses that employ a wide array of technologies “to display images,” and they
“may be capable of receiving a variety of signals from different sources.” EN 85.28 (General).
As there is no legislative intent to the contrary, the court will construe the term “monitor” in
accordance with its “common and commercial meaning[].” Carl Zeiss, Inc., 195 F.3d at 1379. To
do so, the court will first consider the parties’ proffered “lexicographic and scientific authorities,
dictionaries, and other reliable information sources” or, if those sources prove unavailing, it will
“rely upon its own understanding” of the definition. Irwin Indus. Tool Co. v. United States, 920
F.3d 1356, 1360 (Fed. Cir. 2019) (citations omitted).
heading 8528, HTSUS wholly describes the LPDs. Cf. GRI 1. Additionally, the parties agree that
the LPDs are imported as complete units. Gov. Add’l Facts ¶ 4; Pl. Add’l Facts ¶ 4. Accordingly,
the court need not inquire as to the potential applicability of headings, such as heading 8543, which
do not wholly describe the LPDs. See Mita Copystar Am. v. United States, 160 F.3d 710, 712
(Fed. Cir. 1998).
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For its part, the government points the court to four dictionaries,10 each of which generally
defines a “monitor” in one of two ways; either, broadly, as a screen used to display various media
or, more specifically, a cathode ray tube used to display various media. See Gov. Br. at 11–12.
The government thus concludes that a “‘monitor’ is a device that displays the output of a system,
or a device with a screen that shows or displays pictures or information.” Gov. Br. at 12.
Accordingly, the government contends that the term “monitor” describes the LPDs “precisely,” as
they “contain a screen and . . . pictures or images are displayed on them.” Id. Prysm, by contrast,
offers one dictionary definition and one scientific definition.11 See Pl. Br. at 14. According to
Prysm, while a common dictionary definition of “monitor” is “a screen which displays an image
generated by a computer,” the term is defined more precisely in “scientific authorities,” which
define “monitor” as “an automatic data processing (“ADP”) output device.” Id. (alterations and
citations omitted). Because Prysm urges the court to adopt an uncommon definition of the term
“monitor,” Prysm bears the burden to prove that the term “has a different commercial meaning
that is definite, uniform, and general throughout the trade.” See Carl Zeiss, Inc., 195 F.3d at 1379
(citation omitted).
Despite its assertion that “scientific authorities” afford a more precise definition of the term
“monitor,” Prysm offers only one such source for support. Specifically, Prysm points to the expert
report of Samuel Miller,12 who explains that an automatic data processing (ADP) output device “is
10
Specifically, the government points to the OXFORD ONLINE ENGLISH DICTIONARY (3d ed. 2002);
the MERRIAM-WEBSTER ONLINE DICTIONARY (unknown edition); the MACMILLAN DICTIONARY
(edition unknown); and the CAMBRIDGE ENGLISH DICTIONARY (edition unknown). See Gov. Br.
at 11–12; Gov. Dictionary Excerpts, ECF No. 37-2 (May 24, 2019) (“Gov. Ex. K”).
11
Specifically, Prysm points to “https://en.oxforddictionaries.com” and to the expert testimony
of Mr. Samuel Miller. See Pl. Br. at 14.
12
Mr. Miller holds a Master of Science in Electrical Engineering from Case Western Reserve
University and identifies himself as an “Engineering Vice President.” Pl. Ex. 5, Attach. B.
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an electronic visual display for an automatic data processing device.” Expert Report of Samuel
Miller at 1, ECF No. 31-3 (“Pl. Ex. 5”). Mr. Miller explains that such devices generally include
“a display element, electronic circuitry that performs various functions, a power supply, and a case
to contain the various components.” Pl. Ex. 5 at 1. He provides a lengthy recitation of the
evolution of automatic data processing output devices and notes, in passing, that younger-
generation automatic data processing output devices with flat screens were once known as
“computer monitors.” Pl. Ex. 5 at 1. It remains unclear exactly who understood and used this
definition and whether “the vernacular” to which he refers is or was that of individuals who deal
in the importation of such devices. Pl. Ex. 5 at 1–2. Mr. Miller then explains that, “[i]n the
vernacular,” the combination of the Image Processor and the LPD “is not only a ‘monitor,’ it is
[also] a ‘flat screen display device, a ‘flat screen monitor.’” Pl. Ex. 5 at 12.
Even if Mr. Miller’s explanation were specific enough to support Prysm’s proffered
definition, the overwhelming quantity of Prysm’s own evidence is to the contrary. For example,
Dr. Katsis, a Prysm employee, purports to distinguish the LPDs from other monitors by claiming
that most individuals in the trade associate “monitors” with liquid-crystal displays (“LCDs”),
which “can directly interface” with “a laptop or a PC,” and not with laser phosphor displays, which
cannot. Pl. Ex. 3 at 161:6–162:22. Dr. Katsis also claims that LPDs are distinguishable from
monitors, because whereas “the controller electronics” are “affixed” to “monitors,” the “brains” of
the LPD system are contained within the separate Image Processor, a detached device. Id. at
161:1–22. Dr. Katsis bases his definition upon his years of experience in the display industry,
during which he concedes that he has never seen such a definition “written anywhere,” and that he
“just know[s].” Id. at 161:19–21. Yet, Dr. Katsis readily admits that LPDs contain [[
]] known collectively as the computer processing unit. Pl. Ex. 17 at 47:13–25. Dr.
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Katsis later explains that this computer processing unit processes the incoming data [[
]] within the LPD unit. Gov. Ex. E at 189:22–190:1.
Moreover, in its interrogatory responses, Prysm stated that the LPD is a “monitor” and explained
that “[a]n embedded processor [[
]]. Pl.’s Objs. &
Resp. to Def.’s First Set of Interrogs. at 15–16, ECF No. 37-1 (Nov. 2, 2016) (“Gov. Ex. B”).
Quite plainly, the LPDs employ internal technology to display images and are capable of
receiving signals from the Image Processors. Gov. Add’l Facts ¶¶ 5–9, 11; Pl. Add’l Facts ¶¶ 5–
9, 11; accord EN 85.28 (General). Prysm contends that a given Display Wall System requires at
least four LPDs to operate. Pl. Facts ¶ 65. The parties agree that a single Image Processor can
control up to 30 LPDs “arranged in matrices of up to six columns containing five LPDs each.” Pl.
Facts ¶ 57; Gov. Facts ¶ 57. Thus, it is possible for a given Display Wall System, as sold by Prysm,
to contain as few as four LPDs, or as many as several hundred.13 Dr. Katsis explains, and there is
no genuine dispute, that a single LPD, when connected to an Image Processor, can display a usable
image. See Pl. Ex. 3 at 163:12–20.14 The parties further agree that the Display Wall System
displays “a full image” to which each LPD contributes, “as if it were displayed on a giant LCD
monitor” on the Display Wall. Pl. Facts ¶ 116; Gov. Facts ¶ 116. Given Prysm’s own description
of its Display Wall System and marketing strategy, it is clear that there is no uniform, set
configuration of which any single LPD can constitute a “part,” because the “whole,” in the sense
13
Prysm alleges that its agents sold “full” Display Wall Systems with as few as [[ ]] LPDs and
as many as [[ ]] LPDs. Pl. Facts ¶¶ 112–13.
14
In a “Wall of One” arrangement, by contrast, Prysm is unsure of whether a “Wall of One”
arrangement could display text data clearly. See Pl. Ex. 3 at 163:15–16. But because the court
finds that a device need not be capable of displaying text to satisfy the definition of “monitor,” this
fact is immaterial for ascertaining the proper classification heading. See infra.
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of a full Display Wall System, is undefinable at the time of importation. The large and the small
of it is that each LPD is a monitor that is capable of displaying an image.15 Thus, the court accepts
the Oxford English Dictionary’s definition16 of “monitor” as elucidated by the interpretative
guidance of EN 85.28, and concludes that, for tariff purposes, the following definition of “monitor”
applies: a monitor is a machine that receives data from an external source, and then processes and
converts that data into physical output commands to display an image. Accordingly, the LPDs are
“monitors” within the meaning of the HTSUS, and thus they are properly classified under heading
8528.
B. Subheading 8528.59.33, HTSUS is the proper classification.
After determining the appropriate heading in which to classify a product, the court next
determines the appropriate subheading. See GRI 6; Orlando Food Corp., 140 F.3d at 1440. Prysm
contends that if “the LPD is a monitor classified in heading 8528, the LPD should be classified in
subheading 8528.51.00, HTSUS,” which provides for “[m]onitors and projectors, not
incorporating television reception apparatus; other monitors: [non-cathode-ray tube monitors] of
a kind solely or principally used in an automatic data processing system of heading 8471,” free of
duty. See Pl. Br. at 25. The government maintains that the LPD is properly classifiable in
subheading 8528.59.33, which provides for “[m]onitors and projectors, not incorporating
television reception apparatus; other monitors: [non-cathode ray tube monitors]; other: color with
15
Even if, arguendo, the Display Wall System is also a “monitor” within the meaning of heading
8528, there is no authority that forecloses the notion that a monitor’s component parts cannot also
be “monitors.” Indeed, taking Prysm’s argument to its most expansive reach would cause two
interconnected monitors that display a unified image to each lose their status as independent
monitors, each being a “part” of the other. The court rejects such a strained interpretation.
16
See Monitor, n.7, OXFORD ENGLISH DICTIONARY (3d ed. 2002).
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a flat panel screen; other: other.” Gov. Br. at 2, 15. 17 To resolve this issue, the court must ascertain
whether the LPD is a monitor that is designed solely or principally for use with an automatic data
processing system, as that term is defined in heading 8471, HTSUS.18
The court begins with the text of the HTSUS and the relevant Section and Chapter Notes,
as these are statutory law. BenQ Am., 646 F.3d at 1376. For classification within subheading
8528.51.00, the LPD must be a monitor “of a kind solely or principally used in an automatic data
processing system of heading 8471,” which provides for, inter alia, “[a]utomatic data processing
machines and units thereof.” Compare heading 8471, HTSUS with subheading 8528.51.00,
HTSUS. Chapter Note 5 to Chapter 84 deals explicitly with those “machines” and “systems” that
are properly classifiable in subheading 8471, HTSUS. See Ch. 84, HTSUS n.5.
17
The government contends that the Federal Circuit’s opinion in Optrex forecloses Prysm’s
argument. See Gov. Br. at 15 (citing Optrex Am., Inc. v. United States, 475 F.3d 1367 (Fed. Cir.
2007)). But, given the change in focus explained supra in note 5, Optrex is no longer helpful here.
Further, in Optrex, the goods at issue were imported “[b]etween 1998 and 1999,” prior to the
enactment of the governing HTSUS provision. Optrex, 475 F.3d at 1368.
18
Prysm does not argue that the Image Processors, by themselves, are automatic data processing
machines within the meaning of heading 8471, HTSUS. Nevertheless, it is the court’s duty to
reach the correct result, “by whatever procedure is best suited to the case at hand.” Jarvis Clark,
733 F.2d at 878. The record evidence does not support a conclusion that the Image Processors
meet the statutory definition of “automatic data processing machines” covered by heading 8471,
HTSUS. See Ch. 84 n.5(A). Such machines must be “capable of” four functions: (1) storing a
processing program and data that are immediately necessary for executing that program, (2) being
freely programmable with a user’s requirements, (3) performing user-specified arithmetical
computations, and (4) executing a processing program that requires logical decision-making,
without human intervention. Id. Prysm presents the court with no evidence to demonstrate
whether the Image Processors store a processing program, are freely programmable, or perform
user-specified arithmetical computations. When parties cross-move for summary judgment, “each
party carries the burden on its own motion to show entitlement to judgment as a matter of law after
demonstrating the absence of any genuine disputes over material facts.” Massey v. Del Labs, Inc.,
118 F.3d 1568, 1573 (Fed. Cir. 1997). Prysm has not carried that burden here.
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a. The LPD is not solely or principally used in an automatic data processing
system, within the meaning of subheading 8528.51.00 and Note 5(C) to Chapter
84, HTSUS.
Preliminarily, the court observes that there is no argument that the LPDs themselves are
classified under heading 8471, HTSUS. The EN to heading 8471 emphatically “excludes
machines, instruments or apparatus incorporating or working in conjunction with an automatic
data processing machine and performing a specific function” from the definition of “automatic
data processing machine.” EN 84.71(I) (emphasis in original). Such machines “are classified in
the headings appropriate to their respective functions.” Id. Here, that heading is 8528. The parties
agree that the LPD’s specific function is to display an image to an end-user. Pl. Facts ¶¶ 18, 24,
31, 36, 42; Gov. Facts ¶¶ 18, 24, 31, 36, 42. This is so whether the LPD operates in an expansive
Display Wall System that contains a display wall processor, several Image Processors, and several
other LPDs, wherein each LPD’s function is to display image data, or whether instead the LPD
operates as a “Wall of One,” wherein the LPD’s function likewise is to display image data. Pl. Ex.
3 at 40:11–13, 163:1–14; Pl. Ex. 5 at 6; Dep. of Dimitris Katsis, Ph.D. at 200:10–12, ECF No. 31-
3 (Nov. 2, 2017) (“Pl. Ex. 12”); Gov. Ex. B at 11–19.
As indicated,19 Prysm maintains that even if the LPDs are not parts of a monitor, they are
nonetheless classifiable as components of an automatic data processing system within the meaning
of Note 5(C) to Chapter 84, which provides, in relevant part, that:
[A] unit is to be regarded as being part of an automatic data processing system if it
meets all of the following conditions:
(i) It is of a kind solely or principally used in an automatic data processing
system;
(ii) It is connectable to the central processing unit either directly or through one
or more other units; and
19
See supra Part A and notes 5 & 18.
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(iii) It is able to accept or deliver data in a form (codes or signals) which can be
used by the system.
Ch. 84 HTSUS, n.5(C). The parties agree that the LPDs satisfiy the second and third prongs of
this definition, but they dispute both the scope and application of the first, which mirrors
subheading 8528.51.00, HTSUS. According to Prysm, the LPDs meet this definition because
“[i]mmediately prior to importation, the principal use of LPDs was with ADP machines,” so that
even if its merchandise was “‘put to some atypical use’” after importation, the first prong is
satisfied. Pl.’s Reply to Def.’s Opp’n to Pl.’s Mot. for Summ. J. & Pl.’s Resp. to Def.’s Cross-
Mot. for Summ. J. at 11, ECF No. 40 (June 28, 2019) (“Pl. Reply”) (quoting Primal Lite, Inc. v.
United States, 182 F.3d 1362, 1364 (Fed. Cir. 1999)). The government avers that there is
insufficient evidence in the record to show that the LPDs are “commercially fungible with the class
or kind of goods that are principally used in ADP systems of heading 8471, HTSUS,” so that the
LPDs do not satisfy the first prong. [Def.’s] Reply Mem. in Further Supp. of Def.’s Cross-Mot.
for Summ. J. at 9–10, ECF No. 47 (Aug. 2, 2019) (“Gov. Reply”) (citing United States v.
Carborundum Co., 536 F.2d 373, 377 (C.C.P.A. 1976)).
i. Subheading 8528.51.00, HTSUS is a use provision.
The court construes HTSUS terms “according to their common and commercial
meanings,” only in the absence of “contrary legislative intent.” Carl Zeiss, Inc., 195 F.3d at 1379.
Where the text of the statute inescapably contours the scope of the applicable heading with a
specific, complete, and binding definition that centers upon “principal use,” the court must
construe the statute cohesively, applying relative provisions to their appropriate objects, to give
effect to the expressed legislative intent. See, e.g., Schlumberger Tech. Corp. v. United States,
845 F.3d 1158, 1163 n.5 (Fed. Cir. 2017); Aromont USA, Inc. v. United States, 671 F.3d 1310,
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1312–16 (Fed. Cir. 2012). Accordingly, because Note 5(C)(i) to Chapter 84 inescapably requires
the subject merchandise to be a “unit” that is “of a kind solely or principally used with an automatic
data processing system,” the court concludes that Chapter Note 5(C)(i) clearly defines a use, as
does subheading 8528.51.00, HTSUS. Thus, the applicable subheading is a principal use
provision.
ii. The LPDs are not monitors of a kind solely or principally used in an
automatic data processing system.
The court begins with ARI 1(a), the statute by which “[p]rincipal use provisions are
governed.” Aromont, 671 F.3d at 1312. ARI 1(a) provides that
In the absence of special language or context which otherwise requires[,] a tariff
classification controlled by use (other than actual use) is to be determined in
accordance with the use in the United States at, or immediately prior to, the date of
importation, of goods of that class or kind to which the imported goods belong, and
the controlling use is the principal use.
ARI 1(a). An article’s “principal use is defined as the use that ‘exceeds any other single use’ in
the United States.” GRK Canada, Ltd. v. United States, 761 F.3d 1354, 1362 (Fed. Cir. 2014)
(citing Aromont, 671 F.3d at 1312). In turn, the “class or kind” inquiry examines “the group of
goods that are commercially fungible with” the subject merchandise. Primal Lite, Inc., 182 F.3d
at 1365. To ascertain the class or kind of merchandise in a “principal use” analysis under ARI
1(a), the court evaluates “all the pertinent circumstances.” Carborundum, 536 F.2d at 377.20
(collecting cases). Because the Carborundum test consideration of all pertinent circumstances, the
20
These circumstances include, but are not limited to (1) “the general physical characteristics of
the merchandise,” (2) “the expectation of the ultimate purchasers,” (3) “the channels, class, or kind
of trade in which the merchandise moves,” (4) “the environment of the sale,” (5) “the use, if any,
in the same manner as merchandise which defines the class,” (6) “the economic practicality of so
using the import,” and (7) “the recognition in the trade of this use.” Carborundum, 536 F.2d at
377 (collecting cases). Application of these factors to the subject merchandise is but “[o]ne
method” of determining the “class or kind” of the goods covered by a use provision. BenQ Am.,
646 F.3d at 1380.
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court refers to the applicable ENs because, although they are not binding, they “clarify the scope
of HTSUS subheadings” and afford interpretive guidance of legislative intent. Len-Rong Mfg.
Co., Inc. v. United States, 334 F.3d 1304, 1309 (Fed. Cir. 2003).
The issue, then, is whether the LPD is a monitor “of a kind solely or principally used in an
automatic data processing system of heading 8471.” Subheading 8528.51.00, HTSUS. The ENs
to heading 8528 are instructive because they distinguish qualifying monitors from non-qualifying
monitors based upon a device’s physical characteristics and manner of use. Compare EN 85.28(A)
(defining monitors “of a kind solely or principally used in an automatic data processing system of
heading 84.71”) with EN 85.28(B) (defining monitors “other than those of a kind solely or
principally used in” such a system). Monitors that are classifiable in subheading 8528.51.00 “are
distinguishable from other types of monitors,” and “frequently incorporate tilt and swivel adjusting
mechanisms” and “other ergonomic design characteristics to facilitate prolonged periods of
viewing at close proximity to the monitor.” EN 85.28(A). Prysm’s own evidence indicates that
its LPDs do not have these features at the time of importation. Indeed, according to Prysm, “the
LPDs are not meant to be installed in any other way than onto the metal frame(s)” that comprise
“a metal frame wall consisting of kinematic mounts” that “precise[ly]” affix each LPD’s position.
Pl. Facts ¶¶ 54–55; Gov. Facts ¶¶ 54–55. The LPDs “are not made to sit on a desk or be used as a
television device.” Pl. Facts ¶ 55; Gov. Facts ¶ 55. The Display Wall System, in turn, creates
“one very large display screen.” Pl. Ex. 5.
By contrast, monitors that are not classifiable in subheading 8528.51.00 include those
“devices which can generate a point of light and display it on a screen synchronously with the
source signals.” EN 85.28(B). These monitors may receive coded signals, and “must be equipped
with a decoding device covering (the separation of) the R, G and B signals.” Id. The LPD fits
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squarely within the bounds of this definition. Indeed, the LPD’s dedicated internal CPU receives
“the proprietary packetized data generated by” the Image Processor, which it uses to control “the
intensity of the laser beam that illuminates the phosphor screen.” Gov. Add’l Facts ¶ 11; Pl. Add’l
Facts ¶ 11. The CPU also converts the image data “into timing data,” which “guide the laser beams
to light up the correct pixel location at the appropriate intensity.” Gov. Add’l Facts ¶ 12; Pl. Add’l
Facts ¶ 12. These processors thus “decide” which “part of the image” to display on a given LPD
among the arrangement of LPDs that comprise the Display Wall System. Pl. Ex. 3 at 61; Pl. Facts
¶¶ 99–102; Gov. Facts ¶¶ 99–102. Moreover, the proprietary signals are in the form of R, G, B
signals, and the LPD’s CPU decodes these signals. See Pl.’s Resp. to Def.’s First Set of Interrogs.
at 21, ECF No. 37-3 (Jan. 21, 2019) (“Gov. Ex. O”). Thus, whether or not the LPDs are now
intended to receive image data from a remote automatic data processing machine, they are not
units or components of automatic data processing systems as contemplated by subheading
8528.51.00 and Note 5(C) of Chapter 84. Accordingly, in the light of the uncontroverted evidence
of record, the court concludes that the LPDs are plainly commercially fungible with monitors other
than those of a kind solely or principally used with automatic data processing systems, rendering
classification in 8528.51.00, HTSUS incorrect. Because the LPDs are “monitors” with flat panel
screens whose display diagonal exceeds 34.29 centimeters, without a television reception
apparatus or a cathode-ray tube, they are properly classified in 8528.59.33, HTSUS.
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CONCLUSION
For the foregoing reasons, the court holds that the subject imports are properly classified
in 8528.59.33, HTSUS, subject to a duty at 5 percent ad valorem. The court denies Prysm’s motion
for summary judgment and grants the government’s cross-motion for summary judgment.
Judgment will be entered accordingly.
/s/ Jane A. Restani
Jane A. Restani, Judge
Dated: 1RYHPEHU
New York, New York
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