United States v. Nippon Miniature Bearing Corp.

Slip Op. 01-72
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES,
Plaintiff,
BEFORE: Pogue, Judge
v. Court No. 96-12-02853
NIPPON MINIATURE BEARING CORPORATION
and MINEBEA CO., LTD.,
Defendants.
[This slip opinion was previously issued as a memorandum opinion
and order dated August 15, 2000. It is being published as a
precedential disposition pursuant to the Court’s June 19, 2001,
order granting Plaintiff’s motion to publish.]
Decided: June 19, 2001
Stewart E. Schiffer, Acting Assistant Attorney General; David M.
Cohen, Director; A. David Lafer, Senior Trial Counsel; Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Michele D. Lynch); AnnMarie Highsmith, Office of the Chief
Counsel, United States Customs Service, Of Counsel; and Jeffrey B.
Whalen, Of Counsel, Attorney, Office of Regulations & Rulings,
United States Customs Service, for Plaintiff.*
Coudert Brothers (Steven H. Becker, Robert L. Eisen, Paul A.
Horowitz, Scott D. Schauf); Shaw Pittman (Jack McKay, Michele N.
Tanaka), for Defendants.
*
Ms. Lynch has in the meantime been substituted by Ada E.
Bosque as the attorney of record for the Plaintiff in this
action. Ms. Lynch appears in the caption because she wrote the
Plaintiff’s motion to publish and represented the Plaintiff when
the August 15, 2000 Memorandum and Order was issued.
Court No. 96-12-02853 Page 2
OPINION
Pogue, Judge: United States, Plaintiff, asserts that, "pursuant to
section [43](b) of the Lanham Act[, 19 U.S.C. § 1125(b) (1988)],
Customs was authorized to bar the goods [at issue] from entry into
the United States." See Pl.’s Pretrial Mem. at 51. Defendants
contest Customs’ authority to make independent determinations that
Section 43(a) of the Lanham Act, 19 U.S.C. § 1125(a), has been
violated, and allege that Customs can only bar admission of
merchandise under Section 43(b) pursuant to a court order finding
a violation of Section 43(a). See Def.’s Pretrial Mem. at 17-31.
The plain language of Section 43(b) and Customs regulation 19
C.F.R. § 11.13(a) indicate that Customs may deny entry to
merchandise that violates Section 43(a). The key issue is
therefore whether Customs may deny entry upon an independent
determination that imported merchandise is in violation of Section
43(a), or if Customs may deny entry only pursuant to a court order
finding that Section 43(a) has been violated. The Court resolves
this issue in favor of Plaintiff prior to trial pursuant to CIT
Rules 1 and 16(e).
For convenient reference, the Court quotes Section 43 of the
Lanham Act in full:
§ 1125. False designations of origin and false
descriptions forbidden
(a) Civil action
(1) Any person who, on or in connection with any goods
or services, or any container for goods, uses in commerce
Court No. 96-12-02853 Page 3
any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin,
false or misleading description of fact, or false or
misleading representation of fact, which B
(A) is likely to cause confusion, or to cause
mistake, or to deceive as to the affiliation,
connection, or association of such person with
another person, or as to the origin,
sponsorship, or approval of his or her goods,
services, or commercial activities by another
person, or
(B) in commercial advertising or promotion,
misrepresents the nature, characteristics,
qualities, or geographic origin of his or her
or another person’s goods, service, or
commercial activities
shall be liable in a civil action by any person who
believes that he or she is or is likely to be damages by
such act.
(b) Importation
Any goods marked or labeled in contravention of the
provisions of this section shall not be imported into the
United States or admitted to entry at any customhouse of
the United States. The owner, importer, or consignee of
goods refused entry at any customhouse under this section
may have any recourse by protest or appeal that is given
under the customs revenue laws or may have the remedy
given by this chapter in cases involving goods refused
entry or seized.
15 U.S.C. § 1125(a)-(b) (1988).1
Customs’ regulation for enforcing Section 43 provides:
Articles which bear, or the containers of which bear,
1
The entries in question occurred between 1986 and 1989.
Thus, the Court notes that the 1982 version of Section 43(a) is
essentially the same as the 1988 version. The 1982 version,
however, does not contain the language of 43(a)(1)-(2) found in
the 1988 version. The 1982 version defines a "false description
or representation" as "words or other symbols tending falsely to
describe or represent." 15 U.S.C. § 1125(a) (1982). This
language is identical to that used in Customs regulation 19
C.F.R. § 11.13(a). The 1982 version of Section 43(b) is
identical.
Court No. 96-12-02853 Page 4
false designations of origin, or false descriptions or
representations, including words or other symbols tending
falsely to describe or represent the articles, are
prohibited importation and shall be detained.
19 C.F.R. § 11.13(a)(1986).2
The Court holds that Customs may make an independent
determination that Section 43(a) has been violated. First, it has
been held that Customs may make such a determination in other
contexts. For example, in Ross Cosmetics Distribution Centers,
Inc. v. United States, 18 CIT 979 (1994), Customs issued a letter
ruling pursuant to a pre-importation request from Ross Cosmetics
that found that Ross Cosmetics’ merchandise was marked so as to
constitute a counterfeit use of trademarks. Id. at 979. The court
held that Customs had authority to protect the trademarks at issue,
regardless of whether they had been registered with the Patent and
Trademark Office or recorded with Customs, "[b]y virtue of th[e]
broad coverage of Section 43." Id., 18 CIT at 983; see also Reebok
International Ltd. v. Marnatech Enterprises, Inc., et. al 737 F.
Supp. 1515, 1517 (S.D.Cal., 1989). In the context of the
protection of trademark rights, Customs’ determination in the form
of letter ruling finding a violation of Section 43(a) was held to
be a permissible exercise of its authority. No court order was
required to deny entry of the merchandise pursuant to Section
43(b).
2
The footnote to this regulation quotes, among other
statutory provisions, 15 U.S.C. § 1125. The 1987 and 1988
versions of the regulation are identical. The 1989 version of
the regulation includes the text of 15 U.S.C. § 1125 in the body
of the regulation.
Court No. 96-12-02853 Page 5
Customs may also make an independent determination that
merchandise has been marked with a false indication of origin
pursuant to several statutes, including Section 43(b). As noted in
the treatise Customs Law and Administration, "[Section 43(b)] also
prohibits the importation of merchandise bearing a false country of
origin or false description. . . . As a practical matter, this
provision is redundant of 19 U.S.C. § 1304." [1 Commentary] Customs
Law and Administration, Booklet 4, Part 1, § 12.1 at 68 (Dec.
1999). And "[p]ursuant to 19 U.S.C. § 1304 all merchandise
imported into the United States must be marked with the country of
origin. If the merchandise is not properly marked with the country
of origin, it cannot be released from Customs custody and admitted
into the country. . . . Customs may utilize [enforcement
procedures] when it finds that goods were not properly marked."
Id. at 67. This discussion suggests that Customs may make an
independent finding that the provisions of Section 43(a) have been
violated, and thus need not obtain a court order to act pursuant to
Section 43(b).
The Court sees no reason why Customs should not be allowed to
exercise similar authority in the context of false descriptions of
merchandise. In this case, Defendants did not request a pre-
importation letter from Customs, although they could have. Rather,
Customs made its determination to deny entry to the merchandise
because of a Section 43(a) violation following its own
investigation of the matter. The Court does not, however, consider
this difference in procedural circumstance to require a different
Court No. 96-12-02853 Page 6
decision regarding Customs’ authority. The language of Section
43(b) does not specify that Customs is required to obtain a court
order before acting to deny entry to merchandise that is in
violation of the statute, and the Court refuses to read such a
provision into the statute. See VE Holding Corp. v. Johnson Gas
Appliance Co., 917 F.2d 1574, 1579 (Fed. Cir. 1990) ("It is
axiomatic that statutory interpretation begins with the language of
the statute. If . . . the language is clear and fits the case, the
plain meaning of the statute will be regarded as
conclusive.")(citations omitted). See also SKF v. United States,
24 CIT __, __, 94 F. Supp. 2d 1351, 1357 (2000).
Moreover, the second part of Section 43(b) provides the
importer with a right to challenge Customs’ determination to bar
entry to falsely described goods. It is inconsistent to argue that
Customs may exclude falsely described goods only pursuant to a
court order, and that the statute permits challenges to Customs’
decisions to deny entry to goods in violation of Section 43(a).
While a civil action by a third party is one way to enforce the
provisions of Section 43(a), Section 43(b) and 19 C.F.R. § 11.13(a)
allow Customs to act independently, though subject to review, to
enforce Section 43(a) at the border by denying entry to merchandise
that violates its provisions. See Vivitar Corp. v. United States,
761 F.2d 1552, 1569 (1985) ("Customs’ administrative determination
[pursuant to 15 U.S.C. § 1124] that importations bear a mark that
is not likely to cause confusion with a recorded mark has no effect
on a trademark owner’s right to obtain a judicial determination of
Court No. 96-12-02853 Page 7
infringement and, thereafter, to have such goods excluded (or vice
versa).") (cites omitted).
Therefore, upon consideration of Plaintiff’s Pretrial
Memorandum, and Defendants’ and Counterclaim Plaintiff’s Pretrial
Memorandum, and upon all other papers and proceedings herein, it is
hereby
ORDERED that Customs, pursuant to its authority set forth at
Section 43(b) of the Lanham Act, 15 U.S.C. § 1125(b) (1994), may
prevent importation of merchandise that Customs determines violates
Section 43(a) of that Act, 15 U.S.C. § 1125(a).
Donald C. Pogue
Judge
Dated: June 19, 2001
New York, New York