Sigvaris, Inc. v. United States

United States Court of Appeals
for the Federal Circuit
______________________
SIGVARIS, INC.,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2237
______________________
Appeal from the United States Court of International
Trade in No. 1:11-cv-00532-JCG, Judge Jennifer Choe-
Groves.
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Decided: August 16, 2018
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JOHN MICHAEL PETERSON, Neville Peterson LLP, New
York, NY, argued for plaintiff-appellant. Also represent-
ed by RUSSELL ANDREW SEMMEL.
ALEXANDER J. VANDERWEIDE, International Trade
Field Office, Commercial Litigation Branch, Civil Divi-
sion, United States Department of Justice, New York, NY,
argued for defendant-appellee. Also represented by CHAD
A. READLER, JEANNE E. DAVIDSON, AMY RUBIN; BETH C.
BROTMAN, Office of the Assistant Chief Counsel, United
States Bureau of Customs and Border Protection, United
States Department of Homeland Security, New York, NY.
2 SIGVARIS, INC. v. UNITED STATES
______________________
Before PROST, Chief Judge, DYK and O’MALLEY, Circuit
Judges.
O’MALLEY, Circuit Judge.
Sigvaris, Inc. (“Sigvaris”) appeals the judgment of the
United States Court of International Trade in which the
court found that the subject merchandise is not classified
as duty free under the Harmonized Tariff Schedule of the
United States (“HTSUS”) 1 subheading 9817.00.96 as
articles specially designed for the use or benefit of physi-
cally handicapped persons. Sigvaris, Inc. v. United
States, 227 F. Supp. 3d 1327 (Ct. Int’l Trade 2017).
Although the Court of International Trade erred in its
analysis, we conclude that it reached the correct result.
We therefore affirm its holding that the subject merchan-
1 Because the subject merchandise was imported
between 2008–10, we cite to the HTSUS provisions at
issue at the time of importation. See LeMans Corp. v.
United States, 660 F.3d 1311, 1314 n.2 (Fed. Cir. 2011).
There were no relevant changes to the relevant HTSUS
provisions during this time. Moreover, HTSUS subhead-
ing 9817.00.96 implements the United States’ obligations
under the Nairobi Protocol on the Importation of Educa-
tional, Scientific, and Cultural Materials (“Nairobi Proto-
col”). U.S. Customs Serv. Implementation of the Duty-Free
Provisions of the Nairobi Protocol, Annex E, to the Flor-
ence Agreement (“Customs Implementation”), T.D. 92-77,
26 Cust. B. & Dec. no. 35 (Treas. Dep’t Aug. 26, 1992).
The Nairobi Protocol is an international agreement that
encourages trade in articles for the handicapped by “ex-
panding duty-free treatment to articles for the use or
benefit of the physically or mentally handicapped per-
sons.” Id.
SIGVARIS, INC. v. UNITED STATES 3
dise does not qualify for duty-free treatment under
HTSUS subheading 9817.00.96.
I. BACKGROUND
A. The Subject Merchandise
Sigvaris is the owner and importer of record of the
subject merchandise. The specific goods at issue are
graduated compression hosiery from three product lines—
the 120 Support Therapy Sheer Fashion series for women,
the 145 Support Therapy Classic Dress series for women,
and the 185 Support Therapy Classic Dress series for
men. All of the product lines exert 15–20 millimeters of
mercury (“mmHg”) of compression onto the wearer.
The 120 series consists of a variety of models, includ-
ing pantyhose, maternity pantyhose, thigh-high hosiery,
calf-length hosiery, and calf-length hosiery with open toe.
These models are “made of a combination of nylon and
spandex, and in some products, also silicone.” Id. at 1331.
The 145 series and 185 series “are calf-length graduated
support dress socks made of a combination of nylon and
spandex.” Id. at 1327. Graduated compression hosiery
“when properly worn, forces pooled blood to circulate out
of the leg and throughout the body.” Appellant’s Br. at 3.
B. Customs’s Classification
Between September 2008 and November 2010,
Sigvaris imported 105 entries of various graduated com-
pression merchandise, including the subject merchandise,
into the United States at the Port of Atlanta, in Georgia.
Customs liquidated the entries between August 2009 and
September 2011.
Customs classified the subject merchandise as “[o]ther
graduated compression hosiery: . . . [o]f synthetic fibers”
under HTSUS subheading 6115.10.40 subject to a duty
rate of 14.6% ad valorem. Id. at 1330.
4 SIGVARIS, INC. v. UNITED STATES
Sigvaris timely protested the classification of the sub-
ject merchandise, and sought “special classification” as
duty free under HTSUS subheading 9817.00.96. That
subheading states:
9817
Articles specially designed or adapted for the use
or benefit of the blind or other physically or men-
tally handicapped persons; parts and accessories
(except parts and accessories of braces and artifi-
cial limb prosthetics) that are specially designed
or adapted for use in the foregoing articles:
9817.00.96
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
Free
Customs denied the protest on December 12, 2011.
Sigvaris paid liquidated duties according to Customs’s
classification but challenged the classification by filing a
complaint in the Court of International Trade.
C. Court of International Trade Decision
Sigvaris’s complaint alleged that the subject mer-
chandise should have been entitled to special classifica-
tion as duty free under HTSUS subheading 9817.00.96.
The government maintained that Customs properly
classified the subject merchandise. The parties filed
cross-motions for summary judgment.
In a decision dated May 17, 2017, the Court of Inter-
national Trade denied Sigvaris’s motion for summary
judgment and granted the government’s cross-motion for
summary judgment with respect to the classification of
the subject merchandise, which it held was properly
classified by Customs under HTSUS subheading
6115.10.40 as “[o]ther graduated compression hosiery: . . .
[o]f synthetic fibers.”
SIGVARIS, INC. v. UNITED STATES 5
The Court of International Trade began its analysis
by ascertaining the proper meaning and scope of the
terms under HTSUS heading 9817. To determine the
meaning of “physically . . . handicapped persons,” the
Court of International Trade consulted Subchapter Note
4(a) to Chapter 98, which provides that the term “includes
any person suffering from a permanent or chronic[,]
physical or mental impairment which substantially limits
one or more major life activities, such as caring for one’s
self, performing manual tasks, walking, seeing, hearing,
speaking, breathing, learning, or working.” Sigvaris, 227
F. Supp. 3d at 1335.
To determine the scope and meaning of “specially de-
signed,” the Court of International Trade consulted dic-
tionaries to conclude that “articles specially designed for
handicapped persons must be made with the specific
purpose and intent to be used by or benefit handicapped
persons rather than the general public.” Id.
Next, the Court of International Trade considered
whether the subject merchandise qualifies as duty free
under the above definitions of the terms contained in
HTSUS heading 9817. Sigvaris had argued that the
subject merchandise should be classified as duty free
because it is designed to benefit persons who suffer from
Chronic Venous Disorder (“CVD”), which is “a mechanical
problem of the lower limbs that results in a deficiency in
the flow of blood due to weak, damaged, or otherwise
compromised veins.” Id. at 1337. Accordingly, in its
analysis, the Court of International Trade “determine[d]
first whether CVD constitutes a physical handicap,” id.,
and then “next whether [Sigvaris]’s compression hosiery
is specially designed for the use of physically handicapped
persons,” id. at 1338.
Following this framework, the Court of International
Trade found that only the more severe stage of CVD,
known as Chronic Venous Insufficiency (“CVI”), consti-
6 SIGVARIS, INC. v. UNITED STATES
tutes a physical handicap, but that early stages of CVD do
not. Id. at 1337. It based its finding on the fact that
“[s]evere cases of CVI can interfere with and impair
certain life functions, such as walking, standing, and
working,” id. at 1331, whereas patients suffering from
“early stages” of CVD are ambulatory and able to perform
daily tasks, id. at 1338.
The Court of International Trade then determined
that the subject merchandise is not specially designed for
the physically handicapped because it is designed for
patients suffering from early stages of CVD and not for
patients suffering from CVI. In reaching this conclusion,
the Court of International Trade found significant that
Sigvaris’s own advertising materials state that the subject
merchandise is not for patients who are bedridden or
immobilized.
Thus, the Court of International Trade denied
Sigvaris’s motion for summary judgment seeking classifi-
cation of the subject merchandise as duty free under
HTSUS subheading 9817.00.96, and granted the govern-
ment’s motion for summary judgment classifying the
subject merchandise under HTSUS subheading
6115.10.40. Sigvaris appeals. This court has jurisdiction
to review the Court of International Trade’s decision
under 28 U.S.C. § 1295(a)(5).
II. DISCUSSION
“We review the Court of International Trade’s grant
or denial of summary judgment for correctness as a mat-
ter of law, deciding 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 Assurance Co., 789 F.3d 1313, 1319 (Fed. Cir.
2015). “We employ the same standard employed by the
Court of International Trade in assessing Customs’ classi-
fication determinations.” Otter Prods., LLC v. United
States, 834 F.3d 1369, 1375 (Fed. Cir. 2016).
SIGVARIS, INC. v. UNITED STATES 7
A classification determination involves two steps.
First, we must “ascertain[] the meaning of specific terms
in the tariff provisions.” Id. (quoting Victoria’s Secret
Direct, LLC v. United States, 769 F.3d 1102, 1106 (Fed.
Cir. 2014)). Second, we must determine “whether the
subject merchandise comes within the description of those
terms.” Id.
The HTSUS scheme “is organized by headings, each of
which has one or more subheadings; the headings set
forth general categories of merchandise, and the subhead-
ings provide a more particularized segregation of the
goods within each category.” Wilton Indus., Inc. v. United
States, 741 F.3d 1263, 1266 (Fed. Cir. 2013). General
Rules of Interpretation (“GRIs”) of the HTSUS govern the
proper classification of merchandise entering the United
States and are applied in numerical order. 2 Id. Accord-
ing to GRI 1, we look first to the HTSUS headings and
any relevant section or chapter notes. Otter Prods., 834
F.3d at 1375. We construe terms from the HTSUS accord-
ing to their common and commercial meanings, which we
presume are the same. Id. We may consult dictionaries,
scientific authorities, and other reliable information
sources to discern the common meanings. Id.
We conclude that the Court of International Trade
reached the correct result, but that it should have focused
more narrowly on the “persons” for whose use and benefit
the subject merchandise is specially designed. We also
find that it construed the term “specially designed” too
2 The Additional U.S. Rules of Interpretation
(“ARIs”) also bear on the classification analysis. See
Schlumberger, 845 F.3d at 1163 & n.5. However, it is not
necessary for us to reach the ARIs in this case, because,
even though HTSUS heading 9817 is a use provision, no
aspect of the ARIs is dispositive of the issues raised here.
8 SIGVARIS, INC. v. UNITED STATES
broadly. 3 We apply the correct analysis and interpreta-
tion below to find that the subject merchandise is not
specially designed for the use or benefit of any class of
persons, let alone physically handicapped persons. We
therefore affirm the Court of International Trade’s ulti-
mate holding that the subject merchandise is not classifi-
able under HTSUS subheading 9817.00.96.
3 The government argues that this court need not
consider whether the subject merchandise is classifiable
under HTSUS heading 9817 because it is undisputed that
HTSUS heading 6115 describes the subject merchandise
in its entirety. Appellant’s Br. at 12. We agree that it is
undisputed that the subject merchandise may be classi-
fied under HTSUS heading 6115, but we disagree that
this means that the subject merchandise cannot also be
classified as duty free. Rather, we interpret the HTSUS
provisions and chapter notes to mean that HTSUS head-
ing 6115’s duty rate does not apply if the subject mer-
chandise is also entitled to duty free classification under
HTSUS heading 9817. Note 1 of ch. 98, HTSUS (“The
provisions of this chapter are not subject to the rule of
relative specificity in general rule of interpretation 3(a).
Any article which is described in any provision in this
chapter is classifiable in said provision if the conditions
and requirements thereof and of any applicable regulation
are met.”); see also GRI 3(a) (providing that “[w]hen . . .
goods are . . . classifiable under two or more headings, . . .
[t]he headings which provides the most specific descrip-
tion shall be preferred to headings providing a more
general description.”). Thus, a finding that the subject
merchandise is classifiable under HTSUS heading 6115
does not end the inquiry where a party requests duty-free
treatment under HTSUS heading 9817.
SIGVARIS, INC. v. UNITED STATES 9
A. The Inquiry Begins with the “Persons” for
Whose Use & Benefit the Merchandise
Is “Specially Designed”
As provided above, HTSUS subheading 9817.00.96 al-
lows for duty-free classification of “[a]rticles specially
designed . . . for the use or benefit of . . . physically . . .
handicapped persons.” The parties dispute whether the
relevant inquiry under this subheading should focus on
the disorder that the subject merchandise purportedly
addresses or, instead, on the persons for whose use and
benefit the subject merchandise is “specially designed.”
The Court of International Trade began its inquiry by
first determining that only CVI, the more severe stage of
CVD, constitutes a physical handicap, and next, consider-
ing whether the subject merchandise is specially designed
for the use and benefit of persons suffering from CVI.
Sigvaris contends that the Court of International
Trade erred in its approach and that the appropriate
inquiry is “whether there is a handicap that the subject
merchandise is ‘specially designed’ to address,” and not on
“the degree of symptoms a particular sufferer may be
experiencing.” Appellant’s Br. at 17. According to
Sigvaris, “HTSUS 9817.00.96 focuses on the nature of the
handicap, not on the person.” Reply Br. at 11.
The government argues that Sigvaris’s interpretation
of the heading is incorrect because it allows “articles that
are not specially designed for persons with a condition
that substantially limits their ability to perform a major
life activity” to “nevertheless be afforded duty-free status”
so long as the importer “show[s] that the ‘condition’ may,
in some people, present with severe and debilitating
symptoms.” Appellee’s Br. at 27.
We generally agree with the government. Under
Sigvaris’s suggested approach, it would not matter that
persons with early stage CVD may not be physically
handicapped, so long as some persons who use the subject
10 SIGVARIS, INC. v. UNITED STATES
merchandise happen to have a version of CVD which does
qualify as a handicap. Such an approach is too broad and
ignores the “specially designed” language of the heading.
The plain language of the heading focuses the inquiry on
the “persons” for whose use and benefit the articles are
“specially designed,” and not on any disorder that may
incidentally afflict persons who use the subject merchan-
dise. We therefore find Sigvaris’s approach inconsistent
with the plain language of the heading.
We also find the Court of International Trade’s ap-
proach at the outset, focused on the wrong question. The
Court of International Trade began its analysis by asking
whether CVD is a handicap. But this approach not only
incorrectly focuses the inquiry on who suffers from an
alleged disorder, and to what degree, but it also presup-
poses that the subject merchandise is “specially designed”
at all. Instead, we must ask first, “for whose, if anyone’s,
use and benefit is the article specially designed,” and
then, “are those persons physically handicapped?” Here,
because we find that the subject merchandise is not
“specially designed” under our interpretation of the term,
we conclude that the subject merchandise is not classifia-
ble under HTSUS heading 9817 and therefore not entitled
to duty-free treatment under HTSUS subheading
9817.00.96.
B. The Subject Merchandise Is Not
“Specially Designed” for the Use or
Benefit of Any Class of Persons
The HTSUS does not provide a definition for “special-
ly designed,” but, as noted above, we may consult diction-
ary definitions to discern the common meaning of the
term. Webster’s Third International Dictionary defines
“specially” as “particularly,” which, in turn, is defined as
“to an extent greater than in other cases or towards
others.” Specially, Webster’s Third International Diction-
ary (2002); Particularly, Webster’s Third International
SIGVARIS, INC. v. UNITED STATES 11
Dictionary (2002). “Designed” is defined as something
that is “done, performed, or made with purpose and intent
often despite an appearance of being accidental, sponta-
neous, or natural.” Designed, Webster’s Third Interna-
tional Dictionary (2002); accord Marubeni Am. Corp. v.
United States, 35 F.3d 530, 534 (Fed. Cir. 1994) (defining
“designed” as “done by design or purposefully opposed to
accidental or inadvertent; intended, planned”). The Court
of International Trade relied on these dictionary defini-
tions to conclude that “articles specially designed for
handicapped persons must be made with the specific
purpose and intent to be used by or benefit handicapped
persons rather than the general public.” Sigvaris, 227 F.
Supp. 3d at 1336. While this reading of “specially de-
signed” is accurate as far as it goes, it is incomplete; it
does not consider that the subject merchandise must be
designed for the use or benefit of a class of persons to an
extent greater than for others.
We conclude that, to be “specially designed,” the sub-
ject merchandise must be intended for the use or benefit
of a specific class of persons to an extent greater than for
the use or benefit of others. This definition of “specially
designed” is consistent with factors that Customs uses in
discerning for whose use and benefit a product is “special-
ly designed.” Customs considers “the physical properties
of the merchandise, whether the merchandise is solely
used by the handicapped, the specific design of the mer-
chandise, the likelihood the merchandise is useful to the
general public, and whether the merchandise is sold in
specialty stores.” Id. at 1337 (citing Customs Implemen-
tation, 28 Cust. Bull. & Dec. at 242–45). These factors aid
in assessing whether the subject merchandise is intended
for the use or benefit of a specific class of persons to a
greater extent than for the use or benefit of others.
Accordingly, we adopt them in our analysis below.
Here, the Court of International Trade’s findings of
fact demonstrate that the subject merchandise is not
12 SIGVARIS, INC. v. UNITED STATES
specially designed for the use or benefit of any specific
class of persons, and instead, is designed for use by a
variety of persons. One of the defining physical properties
of the subject merchandise is that it exerts only 15–20
mmHg of compression, which Sigvaris’s medical expert
testified “is only slightly greater than ordinary socks.” Id.
at 1339. Similarly, Sigvaris’s advertising materials
confirm that compression garments that exert compres-
sion of 15–20 mmHg are best suited for persons with “(1)
heavy, fatigued, tired legs; (2) prophylaxis during preg-
nancy; (3) prophylaxis for legs predisposed to risk; and (4)
long hours of standing or sitting.” Id. Sigvaris’s expert
further elaborated on this, stating that “target consumers
for hosiery with 15–20 mmHg of compression are ‘people
who have a profession or live a lifestyle that results in
tired, achy, heavy feeling in their legs’ and ‘people who
are sitting for prolonged periods of time,’ such as people
who take long flights in an airplane or drive long distanc-
es.” Id. Sigvaris’s advertising materials also state that
these “products really appeal to people with an active
lifestyle,” and that “[n]ot only do they promote healthy
legs, but they are also fashionable.” J.A. 42. Thus,
Sigvaris’s own evidence demonstrates that the subject
merchandise is generally designed for the use or benefit of
a variety of persons, including those who lead an active
lifestyle, are in professions that require sitting for long
periods of time, are pregnant, or desire fashionable hosi-
ery.
Sigvaris argues that the subject merchandise is spe-
cially designed for the use and benefit of patients suffer-
ing from CVD. But none of the evidence introduced by
Sigvaris indicates that the subject merchandise was
designed for use by patients suffering from CVD to an
extent greater than it is intended for use by others. And,
while the Court of International Trade found that the
subject merchandise “impart[s] levels of compression that
can alleviate CVD symptoms,” id. at 1332, that fact does
SIGVARIS, INC. v. UNITED STATES 13
no more than establish that the subject merchandise
incidentally alleviates certain symptoms in people suffer-
ing from CVD. Such incidental benefits do not establish
that a product is “specially designed” under the definition
that we adopt.
Thus, the subject merchandise is not specially de-
signed for the use or benefit of a specific class of persons.
We need not assess, therefore, if the persons who might
use the subject merchandise are physically handicapped
persons.
CONCLUSION
Although the Court of International Trade erred in its
analysis, we find that it reached the correct result for the
reasons stated above. Thus, we affirm its conclusion that
the subject merchandise is not classifiable under HTSUS
heading 9817 and therefore not entitled to duty-free
treatment under HTSUS subheading 9817.00.96.
AFFIRMED
COSTS
No costs.