[Federal Register Volume 63, Number 58 (Thursday, March 26, 1998)]
[Proposed Rules]
[Pages 14662-14668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7969]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 133
RIN 1515-AB49
Gray Market Imports and Other Trademarked Goods
AGENCY: Customs Service, Department of the Treasury.
ACTION: Proposed rule.
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SUMMARY: This document proposes to amend the Customs Regulations in
light of the 1993 decision of the U.S. Court of Appeals for the
District of Columbia in Lever Bros. Co. v. United States. In line with
that decision, the proposed rule would, upon application by the U.S
trademark owner, restrict importation of certain gray market articles
that bear genuine trademarks identical to or substantially
indistinguishable from those appearing on articles authorized by the
U.S. trademark owner for importation or sale in the U.S., and that
thereby create a likelihood of consumer confusion, in circumstances
where the gray market articles and those bearing the authorized U.S
trademark are physically and materially different. The proposed
restrictions would apply notwithstanding that the U.S. and foreign
trademark owners are the same, are parent and subsidiary companies, or
are otherwise subject to common ownership or control. The proposed
restrictions would not be applicable if the otherwise restricted
articles are labeled in accordance with proposed standards to eliminate
consumer confusion.
In addition, it is proposed to reorganize the Customs Regulations,
with respect to importations bearing recorded trademarks or trade
names, in order to clarify Customs enforcement of trademark rights as
they relate to products bearing counterfeit, copying, or simulating
marks and trade names, and to clarify Customs enforcement against gray
market goods.
DATES: Comments must be received on or before May 26, 1998.
ADDRESSES: Comments (preferably in triplicate) must be submitted to and
may be inspected at the Regulations Branch, U.S. Customs Service, 1300
Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 20229.
FOR FURTHER INFORMATION CONTACT: Michael Smith, Intellectual Property
Rights Branch, (202-927-2330).
SUPPLEMENTARY INFORMATION:
Background
On January 15, 1993, the United States Court of Appeals for the
District of Columbia issued a decision in Lever Bros. Co. v. United
States, 981 F.2d 1330 (D.C. Cir. 1993) (Lever) regarding certain
prohibitions against the importation of certain ``gray market'' goods.
In general, gray market goods are articles that are genuine but are not
authorized for importation by the U.S trademark owner. In light of this
decision, a number of regulatory changes to part 133, Customs
Regulations (19 CFR part 133) are proposed.
The Lever Decision
Lever Brothers Company (``Lever U.S.'') owned the domestic
trademarks ``SHIELD'' and ``SUNLIGHT,'' and manufactured products in
the United States bearing those trademarks. Lever Brothers Limited
(``Lever U.K.'') owned the foreign trademarks ``SHIELD'' and
``SUNLIGHT,'' and manufactured products abroad bearing those
trademarks. Lever U.S. and Lever U.K. were affiliated through Unilever,
a Dutch company. The Lever court proceeded on the uncontested
assumption that the articles produced for the U.S. and foreign markets
respectively differed in terms of composition, and performance
characteristics, among other things.
A third party, unrelated to either Lever U.S. or Lever U.K.,
imported into the United States, without the authorization of Lever
U.S., ``SHIELD'' deodorant soap and ``SUNLIGHT'' dishwashing products
manufactured abroad by Lever U.K. Customs declined to restrict these
importations, based on Sec. 133.21(c)(2) of the Customs Regulations, 19
CFR 133.21(c)(2), which states that no protection against unauthorized
genuine goods bearing otherwise restricted marks is provided when the
foreign and domestic trademark owners are subject to common ownership
or control.
Lever U.S. brought suit to compel Customs to deny entry, claiming
that the differences between the Lever U.K. and Lever U.S. products
resulted in consumer confusion and deception about the nature and
origin of the imported merchandise, thereby constituting a violation of
section 42 of
[[Page 14663]]
the Lanham Act, 15 U.S.C. 1124. The Appellate Court found that section
42 of the Lanham Act precludes the application of Customs' affiliate
exception with respect to physically, materially different goods. The
Court of Appeals affirmed the District Court's ruling that section 42
of the Lanham Act bars the importation of such goods. The District
Court was directed to issue an injunction requiring Customs to exclude
from entry the ``SHIELD'' and ``SUNLIGHT'' products at issue.
Protection Against Gray Market Goods
Currently, Customs enforces restrictions against trademarked gray
market goods with two exceptions found in Sec. 133.21(c): the
``affiliate'' exception of Sec. 133.21(c)(2), and the ``same owner''
exception of Sec. 133.21(c)(1). (In this document, for the sake of
simplicity, except where the ``same owner'' exception and the
``affiliate'' exception are separately mentioned and distinguished,
these exceptions will be referred to generically as the ``affiliate
exception'', the term used in Lever.)
Restrictions Under Section 42 and the Lever Decision
Section 42 of the Lanham Act, 15 U.S.C. 1124, protects against
consumer deception or confusion about an article's origin or
sponsorship by restricting the importation of trademarked goods under
certain circumstances. When an article is the domestic product of the
U.S. trademark owner, that owner exercises control over the use of the
trademark and the resulting goodwill. Similarly, Customs has taken the
position that an article bearing an identical trademark and produced
abroad by the U.S. trademark owner, a parent or subsidiary of the U.S.
trademark owner, or a party subject to common ownership or control with
the U.S. trademark owner, would be under the constructive control of
either the U.S. trademark owner or a party who owned or controlled the
U.S. trademark owner. Enforcement of the distribution rights of such an
article produced abroad by a party related to the U.S. trademark holder
was a matter to be addressed through private remedies. Therefore,
Customs regulations do not provide for restrictions on the importation
of such gray market goods. Prior to Lever, the applicability of this
``affiliate exception'' depended simply on the presence of the genuine
trademark and the existence of the relevant intracompany relationship,
and was not contingent on whether the gray market articles were the
same as, or different from, the articles authorized for importation or
sale in the United States.
However, the Court of Appeals in Lever drew a distinction between
identical goods produced abroad under one of the scenarios contemplated
by the affiliate exception and goods that are physically and materially
different from the goods authorized by the U.S. trademark owner.
Although the injunction in Lever was specifically limited to the
articles at issue therein--``SHIELD'' deodorant soap and ``SUNLIGHT''
detergent--the Court of Appeals'' interpretation of the Lanham Act was
not so limited and, absent some specially differentiating feature,
would apply equally to other physically and materially different ``gray
market'' goods. In addition, it seems clear that the Lever opinion
should also apply not only to the ``affiliate'' exception of
Sec. 133.21(c)(2), but also to the ``same owner'' exception of
Sec. 133.21(c)(1). Customs proposes to make its regulations consistent
with Lever to protect against consumer confusion as to the source or
sponsorship of imported goods--notwithstanding that they are (1)
produced by the owner of the U.S. trademark, (2) a parent or subsidiary
of the U.S. trademark owner, or (3) a party subject to common ownership
or control with the U.S. trademark owner--when the goods bear a mark
identical to, or substantially indistinguishable from, a domestically
registered trademark and are found to be physically and materially
different from goods authorized by the U.S. trademark owner.
Customs proposes regulations that will continue to apply the
current restrictions on the importation of gray market goods bearing
legitimate trademarks that are identical to or substantially
indistinguishable from trademarks on articles authorized for
importation or sale in the United States under scenarios where the
affiliate exception does not apply. The new restrictions that are being
proposed also will ban, upon application by the trademark owner, even
in affiliate exception scenarios, the importation into the United
States of articles bearing genuine trademarks but that are materially
and physically different and which are not authorized by the U.S.
trademark owner. In the latter case, however, the restrictions will not
apply when the imported article also bears a label that would inform
the ultimate retail purchaser in the United States of the gray market
identity of the product. This exception is contained in an exception to
the restrictions that is outlined more fully below.
The Proposed Labeling Exception
In Lever, the Court of Appeals specifically notes that section 42
of the Lanham Act forbids importation of merchandise bearing a mark
that shall copy or simulate a trademark registered in accordance with
its provisions. In the Court's opinion, the Lanham Act appears on its
face to aim at deceit and consumer confusion; when identical trademarks
have acquired different meanings in different countries, one who
imports the foreign version to sell it under that trademark will (in
the absence of some ``specially differentiating feature'') cause the
confusion Congress sought to avoid. The Customs Service believes that
an informative label appearing prominently on such trademarked gray
market goods would constitute a ``specially differentiating feature''
of the kind referred to by the Court.
Customs believes that a label can serve as an appropriate means of
eliminating potential harm if the label makes clear that an article is
materially and physically different from the product authorized by the
trademark owner for importation or sale in the U.S. and is imported
without authorization. Customs believes that a labeling exception to
the new restrictions is consistent with the principles enunciated in
Lever. In other words, where an article which is produced abroad by a
party authorized to do so, bearing a genuine trademark, and imported
without the authorization of the U.S. trademark owner, also bears a
label in accordance with the proposed rule, Customs will regard the
label as qualifying possible erroneous inferences regarding the
characteristics of the article that might be drawn by the consumer from
the trademark alone. Where such a label is present to modify the
message regarding product characteristics that ordinarily may be
communicated by the trademark standing alone, so as to eliminate the
likelihood of consumer confusion, the Customs Service will conclude
that the trademark, under those circumstances, does not ``copy or
simulate'' the U.S.-registered mark. Such a label would modify any
inference that may be drawn by the consumer from the trademark so as to
eliminate the likelihood of consumer confusion.
The proposed regulations implement the responsibility of the
Customs Service as the agency charged with the enforcement of the law
to do so in a reasonable manner, and to promulgate appropriate rules
regarding how it will interpret and apply section 42 of the Lanham Act.
The proposed rules
[[Page 14664]]
establish the criteria that Customs will apply in carrying out its
responsibilities concerning the importation of gray market goods. These
rules are limited to the importation requirements of section 42 of the
Lanham Act and do not apply to other provisions of the Act. To be
eligible for the exception to the restriction, the label must be
conspicuous and legible and appear in proximity to the trademark in its
most prominent location on the article or retail packaging of the
product. Where the likelihood of consumer confusion is eliminated by an
acceptable, qualifying label which clearly informs the consumer about
the nature of a product, Customs will except the product bearing such a
label from the restrictions on importing physically and materially
different gray market products.
The Customs Service is not imposing a regulatory requirement for
the labeling of gray market goods. Customs proposes herein an exception
to the new restriction on physically and materially different gray
market products as described above. The proposed rule is intended to
ensure that an acceptable label will be sufficiently conspicuous and
legible and in sufficient proximity to the most prominent display of
the trademark on the good or its package so as to eliminate inferences
which might be drawn in the absence of such label.
In the view of Customs, the information conveyed by a label of the
type proposed herein would eliminate consumer confusion and inform any
reasonably alert or informed customer as to the characteristics of the
goods. Armed with that information, the consumer would then be free to
proceed based on his own determination of self-interest, weighing
quality, price and other factors. The proposed exception for
conspicuously labeled gray market imports would preserve the integrity
and commercial value of the U.S. registered mark and eliminate consumer
confusion regarding the source or sponsorship of the goods. Further, it
would prevent the Lanham Act protection from being invoked
inappropriately as a barrier to trade, while permitting consumer
choice, promoting price competition, and avoiding injecting the Customs
Service into intracompany world market division arrangements or
disputes.
Customs is proposing standard language for the label that will
except gray market goods from the new restriction on importation of
such goods that are physically and materially different. The purpose of
the proposed rule is to implement the Lever decision, and the label
language has been designed to address simply and narrowly the factors
on which the Court of Appeals for the D.C. Circuit focused in its
ruling, namely, the gray market identity of the goods and the fact of
physical and material difference. To the extent that an individual
importer chooses to design a label that contains additional, product
specific data, this is expressly permitted by the proposed rule.
A single label will reduce the administrative burden on Customs and
promote consistency in the treatment of gray market imports subject to
the rules. Customs believes that it will simplify the labeling process
for importers, reducing costs and the risk that a process of individual
label review and approval by Customs could cause delay and serve as a
barrier to trade. Finally, Customs believes that a single label may
achieve general recognition among consumers as a gray market label
whereas a multiplicity of individual labels actually might create
consumer confusion as to the significance of the labels.
The Customs Service believes that the proposed rule extends the
appropriate protection under the trademark laws to owners of a U.S.
trademark while not permitting those laws to be used as a shield
against competition. In eliminating the risk of consumer confusion, the
interest of the consumer in product choice and price competition in the
marketplace should be considered along with the interest of the U.S.
trademark holder in protecting its goodwill and reputation. The Customs
Service believes that the right of the mark owner is limited to
protection that addresses the potential damage to the mark owner. The
identity and reputation of the domestic mark owner can be preserved and
the public interest served by effectuating open and informed
competition.
The Proposed Amendments
A critical step in applying the Lever decision is defining the
scope of ``physically and materially different.'' The Lever court did
not provide specific criteria for determining when products should be
considered physically and materially different. Customs recognizes that
no bright line test can be established which would delineate the
relevant difference(s) among the multitude of products that may be
involved in the gray market. Such determinations are inherently fact
specific and must be made on a case-by-case basis. Customs also
recognizes, however, that without certain guidelines, the importing
public cannot reasonably expect Customs consistently to protect owners
of U.S.-registered trademarks while facilitating the flow of legitimate
commercial trade. With that in mind, Customs proposes to amend its
regulations to include categories of information that trademark owners
may provide to Customs for consideration in its determination as to
whether certain trademarks may be entitled to protection under the
rationale of Lever and the new rules promulgated herein (``Lever-rule''
protection).
Thus, in addition to the current information described in
Sec. 133.2, Customs Regulations (19 CFR 133.2), Customs will consider
the following:
1. The composition of both the authorized and gray market
product(s) (including chemical composition);
2. Formulation, product construction, structure, or composite
product components, of both the authorized and gray market product(s);
3. The performance and operational characteristics of both the
authorized and gray market product(s);
4. Differences between the authorized and gray market products
resulting from legal or regulatory requirements, certification, etc.;
5. Other characteristics that can be described with particularity
by the U.S. owner claiming gray market protection. Such characteristics
must clearly distinguish authorized articles from gray market articles,
applying criteria which establishes the protection of the statute,
namely protection from consumer confusion and deception.
In each case, any proffered characteristic must be supported by
competent evidence. Customs recognizes that it cannot anticipate all of
the considerations that may lead to a finding of ``physical and
material difference,'' but Lever suggests certain categories of
information which are appropriate. The last criterion above leaves open
the possibility that unspecified information may be considered at
Customs' discretion.
Owners claiming gray market protection under the proposed provision
should be aware that Customs will require the grounds for claiming
physical and material differences to be stated with particularity. Any
such request lacking in specificity will be rejected.
T.D. 92-60
On June 26, 1992, Customs published in the Federal Register (57 FR
28605) a Notice of Court Order, notifying owners of trademarks recorded
with Customs that the Lever court had ordered Customs to provide
protection against physically and materially different gray market
products. To date, two applications have been received,
[[Page 14665]]
requesting protection. The first, on behalf of the owner of the
``Duracell'' trademark, was denied. See 57 FR 46063. The second, on
behalf of the owner of the ``Yamaha'' trademark, was suspended
following the public comment period, following the issuance of the
decision of the appellate court in Lever. Customs will no longer accept
applications under the June 26, 1992, Federal Register notice. Any
further applications must be made after the final amendments resulting
from this notice of proposed rulemaking become effective, and must be
in compliance therewith. The ``Yamaha'' application will be evaluated
in this fashion, and a decision thereon published in the Federal
Register.
Proposed Amendment of Recordations
Customs anticipates that the owners of U.S. registered trademarks
currently recorded with Customs who believe that they may now be
entitled to protection (``Lever-rule'' protection) from gray market
importations under the regulatory changes, if adopted, may submit
requests to Customs concerning their eligibility, along with detailed
explanations of the reasons for their perceived eligibility. Any party
applying for ``Lever-rule'' protection must also submit a summary of
the physical and material differences relied on in support of its
application. At approximately 30-day intervals, Customs will publish in
the Federal Register a list of those trademarks for which ``Lever-
rule'' protection for physically and materially different gray market
products has been requested including summaries of the physical and
material differences. Interested parties shall then have 30 days in
which to comment on the request(s). At the end of the 30-day comment
period, Customs shall examine the request(s) and any comments from the
public before issuing a determination on whether ``Lever-rule''
protection is granted. For parties requesting protection, the
application for trademark protection will not take effect until Customs
has made and issued this determination.
If protection is granted, Customs will publish in the Federal
Register a notice that a trademark will receive ``Lever-rule''
protection. Subsequent importations of physically and materially
different products will be denied entry; the merchandise will be
detained under the procedures described in proposed Sec. 133.25 of the
Customs Regulations (proposed 19 CFR 133.25), and be subject to seizure
after 30 days pursuant to 19 U.S.C. 1595a(c)(2)(C), unless the
physically and materially different product bears in a conspicuous
location a legible label stating that ``This product is not the product
authorized by the United States trademark owner for importation and is
physically and materially different.'' Other information designed to
dispel consumer confusion may also be added. Proposed Sec. 133.23(d)
will permit an importer to establish, during the 30-day detention
period, that the detained merchandise is not physically and materially
different from the product authorized for importation or sale in the
U.S. by the U.S. trademark owner. Merchandise seized under the
regulations may be subject to a petition for relief under the
provisions of Secs. 133.51 and 133.52 and part 171, Customs Regulations
(19 CFR part 171).
Additional Proposed Regulatory Changes
In addition to the gray market regulation changes being proposed
herein, Customs proposes to reorganize and renumber the remainder of
subpart C, part 133. These changes are intended to clarify Customs
enforcement of trademark rights as they relate to products bearing
counterfeit, or copying or simulating marks and names, and to clarify
Customs enforcement generally against gray market goods. None of the
clerical proposals made in this connection, other than those stemming
from the Lever decision, alters Customs enforcement practices.
Comments
Before adopting this proposal, consideration will be given to any
written comments that are timely submitted to Customs. All such
comments will be available for public inspection in accordance with the
Freedom of Information Act (5 U.S.C. 552), Sec. 1.4, Treasury
Department Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs
Regulations (19 CFR 103.11(b)), during regular business days between
the hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch, 1300
Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 20229.
Regulatory Flexibility Act and Executive Order 12866
The proposed rule would generally reflect case law intended to
protect products with valid U.S. trademarks against infringing imports.
Hence, pursuant to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), it is hereby certified that the proposed rule, if
adopted, will not have a significant economic impact on a substantial
number of small entities. Accordingly, the rule is not subject to the
regulatory analysis requirements of 5 U.S.C. 603 and 604. Nor does the
proposed rule meet the criteria for a ``significant regulatory action''
as specified in E.O. 12866.
Paperwork Reduction Act
The collection of information related to this notice of proposed
rulemaking has been previously reviewed and approved by the Office of
Management and Budget (OMB) in accordance with the Paperwork Reduction
Act of 1995 and assigned OMB Control Number 1515-0114. An agency may
not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid control number
assigned by OMB. Although this document restates the collection(s) of
information without substantive change, comments are specifically
requested concerning:
Whether the collection of information is necessary for the proper
performance of the functions of the Customs Service, including whether
the information will have practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information (see below);
How to enhance the quality, utility, and clarity of the information
to be collected;
How to minimize the burden of complying with the proposed
collection of information, including the application of automated
collection techniques or other forms of information technology; and
Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
The collection of information related to this proposed regulation
is in Sec. 133.2. This information is necessary in order to enable
Customs to protect products with valid U.S. trademarks against
infringing imports. The collection of information is voluntary. The
likely respondents are businesses.
Estimated total annual reporting and/or recordkeeping burden:
________ hours.
Estimated average annual burden hours per respondent and/or
recordkeeper:
Estimated number of respondents and/or recordkeepers:
Estimated annual frequency of responses:
Comments on the collection of information should be directed to the
Office of Management and Budget, Attention: Desk officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503. A copy should also be sent to the
Regulations Branch,
[[Page 14666]]
Office of Regulations and Rulings, U.S. Customs Service, 1300
Pennsylvania Avenue, NW., Washington, DC 20229. Comments should be
submitted within the same time frame as comments on the substance of
the proposal.
Drafting Information
The principal author of this document was Russell Berger,
Regulations Branch, U.S. Customs Service. However, personnel from other
offices participated in its development.
List of Subjects in 19 CFR Part 133
Copyrights, Customs duties and inspection, Fees assessment,
Imports, Penalties, Prohibited merchandise, Reporting and recordkeeping
requirements, Restricted merchandise (counterfeit goods), Seizures and
forfeitures, Trademarks, Trade names, Unfair competition.
Proposed Amendment
It is proposed to amend part 133, Customs Regulations (19 CFR part
133), as set forth below.
PART 133--TRADEMARKS, TRADE NAMES, AND COPYRIGHTS
1. The general authority citation for part 133 would continue to
read as follows, and the specific sectional authority for part 133
would be revised to read as follows:
Authority: 17 U.S.C. 101, 601, 602, 603; 19 U.S.C. 66, 1624; 31
U.S.C. 9701.
Section 133.1 also issued under 15 U.S.C. 1096, 1124;
Sections 133.2 through 133.7, 133.11 through 133.13, and 133.15
also issued under 15 U.S.C. 1124;
Sections 133.21 through 133.25 also issued under 15 U.S.C. 1124,
19 U.S.C. 1526;
Sections 133.26 and 133.46 also issued under 19 U.S.C. 1623;
Section 133.52 also issued under 19 U.S.C. 1526;
Section 133.53 also issued under 19 U.S.C. 1558(a).
2. It is proposed to amend Sec. 133.2 by adding new paragraphs (e)
and (f) to read as follows:
Sec. 133.2 Application to record trademark.
* * * * *
(e) ``Lever-rule'' protection. For owners of U.S trademarks who
desire protection against gray market articles on the basis of physical
and material differences (see Lever Bros. Co. v. United States, 981
F.2d 1330 (D.C. Cir. 1993)), a description of any physical and material
difference between the articles authorized for importation or sale in
the United States and those not so authorized. In each instance, owners
who assert that physical and material differences exist must state the
basis for such a claim with particularity, and must support such
assertions by competent evidence and provide summaries of physical and
material differences for publication. Customs determination of physical
and material differences may include, but is not limited to,
considerations of:
(1) The composition of both the authorized and gray market
product(s) (including chemical composition);
(2) Formulation, product construction, structure, or composite
product components, of both the authorized and gray market product;
(3) Performance and/or operational characteristics of both the
authorized and gray market product;
(4) Differences resulting from legal or regulatory requirements,
certification, etc.;
(5) Other distinguishing and explicitly defined factors that would
likely result in consumer deception or confusion as proscribed under
applicable law.
(f) At approximately 30-day intervals, Customs will publish in the
Federal Register a list of those trademarks for which gray market
protection for physically and materially different products has been
requested and summaries of physical and material differences.
Interested parties shall then have 30 days in which to comment on the
request(s). At the end of the 30-day comment period, Customs shall
examine the request(s) and any comments from the public before issuing
a determination whether gray market protection is granted. For parties
requesting protection, the application for trademark protection will
not take effect until Customs has made and issued this determination.
If protection is granted, Customs will publish in the Federal Register
a notice that a trademark will receive Lever rule protection.
3. It is proposed to amend part 133 by revising subpart C to read
as follows:
Subpart C--Importations Bearing Recorded Trademarks or Trade Names
Sec.
133.21 Articles bearing counterfeit trademarks.
133.22 Restrictions on importation of articles bearing copying or
simulating trademarks.
133.23 Restrictions on importation of gray market articles.
133.24 Restrictions on articles accompanying importer and mail
importations.
133.25 Procedure on detention of articles subject to restriction.
133.26 Demand for redelivery of released merchandise.
Subpart C--Importations Bearing Recorded Trademarks or Trade Names
Sec. 133.21 Articles bearing counterfeit trademarks.
(a) Counterfeit trademark defined. A ``counterfeit trademark'' is a
spurious trademark that is identical to, or substantially
indistinguishable from, a registered trademark.
(b) Seizure. Any article of domestic or foreign manufacture
imported into the United States bearing a counterfeit trademark shall
be seized and, in the absence of the written consent of the trademark
owner, forfeited for violation of the customs laws.
(c) Notice to trademark owner. When merchandise is seized under
this section, Customs shall disclose to the owner of the trademark the
following information, if available, within 30 days, excluding weekends
and holidays, of the date of the notice of seizure:
(1) The date of importation;
(2) The port of entry;
(3) A description of the merchandise;
(4) The quantity involved;
(5) The name and address of the manufacturer;
(6) The country of origin of the merchandise;
(7) The name and address of the exporter; and
(8) The name and address of the importer.
(d) Samples available to the trademark owner. At any time following
seizure of the merchandise, Customs may provide a sample of the suspect
merchandise to the owner of the trademark for examination, testing, or
other use in pursuit of a related private civil remedy for trademark
infringement. To obtain a sample under this section, the trademark/
trade name owner must furnish Customs a bond in the form and amount
specified by the port director, conditioned to hold the United States,
its officers and employees, and the importer or owner of the imported
article harmless from any loss or damage resulting from the furnishing
of a sample by Customs to the trademark owner. Customs may demand the
return of the sample at any time. The owner must return the sample to
Customs upon demand or at the conclusion of the examination, testing,
or other use in pursuit of a related private civil remedy for trademark
infringement. In the event that the sample is damaged, destroyed, or
lost while in the possession of the trademark owner, the owner shall,
in lieu of return of the sample, certify to Customs that: ``The sample
described as (insert description) and provided pursuant to 19 CFR
133.21(d) was (damaged/
[[Page 14667]]
destroyed/lost) during examination, testing, or other use.''
(e) Failure to make appropriate disposition. Unless the trademark
owner, within 30 days of notification, provides written consent to
importation of the articles, exportation, entry after obliteration of
the trademark, or other appropriate disposition, the articles shall be
disposed of in accordance with Sec. 133.52, subject to the importer's
right to petition for relief from the forfeiture under the provisions
of part 171 of this chapter.
Sec. 133.22 Restrictions on importation of articles bearing copying or
simulating trademarks.
(a) Copying or simulating trademark or trade name defined. A
``copying or simulating'' trademark or trade name is one which may so
resemble a recorded mark or name as to be likely to cause the public to
associate the copying or simulating mark or name with the recorded mark
or name.
(b) Denial of entry. Any articles of foreign or domestic
manufacture imported into the United States bearing a mark or name
copying or simulating a recorded mark or name shall be denied entry and
subject to detention as provided in Sec. 133.25.
(c) Relief from detention of articles bearing copying or simulating
trademarks. Articles subject to the restrictions of this section shall
be detained for 30 days from the date on which the goods are presented
for Customs examination, to permit the importer to establish that any
of the following circumstances are applicable:
(1) The objectionable mark is removed or obliterated as a condition
to entry in such a manner as to be illegible and incapable of being
reconstituted, for example by:
(i) Grinding off imprinted trademarks wherever they appear;
(ii) Removing and disposing of plates bearing a trademark or trade
name;
(2) The merchandise is imported by the recordant of the trademark
or trade name or his designate;
(3) The recordant gives written consent to an importation of
articles otherwise subject to the restrictions set forth in paragraph
(b) of this section or Sec. 133.23(c) of this subpart, and such consent
is furnished to appropriate Customs officials;
(4) The articles of foreign manufacture bear a recorded trademark
and the one-item personal exemption is claimed and allowed under
Sec. 148.55 of this chapter.
(d) Exceptions for articles bearing counterfeit trademarks. The
provisions of paragraph (c)(1) of this section are not applicable to
articles bearing counterfeit trademarks at the time of importation (see
Sec. 133.26).
(e) Release of detained articles. Articles detained in accordance
with Sec. 133.25 may be released to the importer during the 30-day
period of detention if any of the circumstances allowing exemption from
trademark or trade name restriction set forth in paragraph (c) of this
section are established.
(f) Seizure. If the importer has not obtained release of detained
articles within the 30-day period of detention, the merchandise shall
be seized and forfeiture proceedings instituted. The importer shall be
promptly notified of the seizure and liability to forfeiture and his
right to petition for relief in accordance with the provisions of part
171 of this chapter.
Sec. 133.23 Restrictions on importation of gray market articles.
(a) Restricted gray market articles defined. ``Restricted gray
market articles'' are foreign-made articles bearing a genuine trademark
or trade name identical with or substantially indistinguishable from
one owned and recorded by a citizen of the United States or a
corporation or association created or organized within the United
States and imported without the authorization of the U.S. owner.
``Restricted gray market goods'' include goods bearing a genuine
trademark or trade name which is:
(1) Independent licensee. Applied by a licensee (including a
manufacturer) independent of the U.S. owner, or
(2) Foreign owner. Applied under the authority of a foreign
trademark or trade name owner other than the U.S. owner, a parent or
subsidiary of the U.S. owner, or a party otherwise subject to common
ownership or control with the U.S. owner (see Secs. 133.2(d) and
133.12(d) of this part), from whom the U.S. owner acquired the domestic
title, or to whom the U.S. owner sold the foreign title(s); or
(3) ``Lever-rule''. Applied by the U.S. owner, a parent or
subsidiary of the U.S. owner, or a party otherwise subject to common
ownership or control with the U.S. owner (see Secs. 133.2(d) and
133.12(d) of this part), to goods that the Customs Service has
determined to be physically and materially different from the articles
authorized by the U.S. trademark owner for importation or sale in the
U.S. (as defined in Sec. 133.2 of this part).
(b) Labeling of physically and materially different goods. Goods
determined by the Customs Service to be physically and materially
different under the procedures of this part, bearing a genuine mark
applied under the authority of the U.S. owner, a parent or subsidiary
of the U.S. owner, or a party otherwise subject to common ownership or
control with the U.S. owner (see Secs. 133.2(d) and 133.12(d) of this
part), shall not be detained under the provisions of paragraph (c) of
this section where the merchandise or its packaging bears a conspicuous
and legible label designed to remain on the product until the first
point of sale to a retail consumer in the United States stating that:
``This product is not the product authorized by the United
States trademark owner for importation and is physically and
materially different.''
The label must be in close proximity to the trademark as it appears in
its most prominent location on the article itself or the retail package
or container. Other information designed to dispel consumer confusion
may also be added.
(c) Denial of entry. All restricted gray market goods imported into
the United States shall be denied entry and subject to detention as
provided in Sec. 133.25, except as provided in paragraph (b) of this
section.
(d) Relief from detention of gray market articles. Gray market
goods subject to the restrictions of this section shall be detained for
30 days from the date on which the goods are presented for Customs
examination, to permit the importer to establish that any of the
following exceptions, as well as the circumstances described above in
Sec. 133.22(c), are applicable:
(1) The trademark or trade name was applied under the authority of
a foreign trademark or trade name owner who is the same as the U.S.
owner, a parent or subsidiary of the U.S. owner, or a party otherwise
subject to common ownership or control with the U.S. owner (in an
instance covered by Secs. 133.2(d) and 133.12(d) of this part); and/or
(2) For goods bearing a genuine mark applied under the authority of
the U.S. owner, a parent or subsidiary of the U.S. owner, or a party
otherwise subject to common ownership or control with the U.S. owner,
that the merchandise as imported is not physically and materially
different, as described in Sec. 133.2(e), from articles authorized by
the U.S. owner for importation or sale in the United States.
(e) Release of detained articles. Articles detained in accordance
with Sec. 133.25 may be released to the importer during the 30-day
period of detention if any of the circumstances allowing exemption from
trademark restriction set forth in Sec. 133.22(c) of this subpart or in
paragraph (d) of this section are established.
[[Page 14668]]
(f) Seizure. If the importer has not obtained release of detained
articles within the 30-day period of detention, the merchandise shall
be seized and forfeiture proceedings instituted. The importer shall be
notified of the seizure and liability of forfeiture and his right to
petition for relief in accordance with the provisions of part 171 of
this chapter.
Sec. 133.24 Restrictions on articles accompanying importer and mail
importations.
(a) Detention. Articles accompanying importer and mail importations
subject to the restrictions of Secs. 133.22 and 133.23 shall be
detained for 30 days from the date of notice that such restrictions
apply, to permit the establishment of whether any of the circumstances
described in Sec. 133.22(c) or Sec. 133.23(d) are applicable.
(b) Notice of detention. Notice of detention shall be given in the
following manner:
(1) Articles accompanying importer. When the articles are carried
as accompanying baggage or on the person of persons arriving in the
United States, the Customs inspector shall orally advise the importer
that the articles are subject to detention.
(2) Mail importations. When the articles arrive by mail in
noncommercial shipments, or in commercial shipments valued at $250 or
less, notice of the detention shall be given on Customs Form 8.
(c) Release of detained articles.--(1) General. Articles detained
in accordance with paragraph (a) of this section may be released to the
importer during the 30-day period of detention if any of the
circumstances allowing exemption from trademark or trade name
restriction(s) set forth in Sec. 133.22(c) or Sec. 133.23(d) of this
subpart are established.
(2) Articles accompanying importer. Articles arriving as
accompanying baggage or on the person of the importer may be exported
or destroyed under Customs supervision at the request of the importer,
or may be released if:
(i) The importer removes or obliterates the marks in a manner
acceptable to the Customs officer at the time of examination of the
articles; or
(ii) The request of the importer to obtain skillful removal of the
marks is granted by the port director under such conditions as he may
deem necessary, and upon return of the article to Customs for
verification, the marks are found to be satisfactorily removed.
(3) Mail importations. Articles arriving by mail in noncommercial
shipments, or in commercial shipments valued at $250 or less, may be
exported or destroyed at the request of the addressee or may be
released if:
(i) The addressee appears in person at the appropriate Customs
office and at that time removes or obliterates the marks in a manner
acceptable to the Customs officer; or
(ii) The request of the addressee appearing in person to obtain
skillful removal of the marks is granted by the port director under
such conditions as he may deem necessary, and upon return of the
article to Customs for verification, the marks are found to be
satisfactorily removed.
(d) Seizure. If the importer has not obtained release of detained
articles within the 30-day period of detention, the merchandise shall
be seized and forfeiture proceedings instituted. The importer shall be
promptly notified of the seizure and liability to forfeiture and his
right to petition for relief in accordance with the provisions of part
171 of this chapter.
Sec. 133.25 Procedure on detention of articles subject to restriction.
(a) In general. Articles subject to the restrictions of
Secs. 133.22 and 133.23 shall be detained for 30 days from the date on
which the merchandise is presented for Customs examination. The
importer shall be notified of the decision to detain within 5 days of
the decision that such restrictions apply. The importer may, during the
30-day period, establish that any of the circumstances described in
Sec. 133.22(c) or Sec. 133.23(d) are applicable. Extensions of the 30-
day time period may be freely granted for good cause shown.
(b) Notice of detention and disclosure of information. From the
time merchandise is presented for Customs examination until the time a
notice of detention is issued, Customs may disclose to the owner of the
trademark or trade name any of the following information in order to
obtain assistance in determining whether an imported article bears an
infringing trademark or trade name. Once a notice of detention is
issued, Customs shall disclose to the owner of the trademark or trade
name the following information, if available, within 30 days, excluding
weekends and holidays, of the date of detention:
(1) The date of importation;
(2) The port of entry;
(3) A description of the merchandise;
(4) The quantity involved; and
(5) The country of origin of the merchandise.
(c) Samples available to the trademark or trade name owner. At any
time following presentation of the merchandise for Customs examination,
but prior to seizure, Customs may provide a sample of the suspect
merchandise to the owner of the trademark or trade name for examination
or testing to assist in determining whether the article imported bears
an infringing trademark or trade name. To obtain a sample under this
section, the trademark/trade name owner must furnish Customs a bond in
the form and amount specified by the port director, conditioned to hold
the United States, its officers and employees, and the importer or
owner of the imported article harmless from any loss or damage
resulting from the furnishing of a sample by Customs to the trademark
owner. Customs may demand the return of the sample at any time. The
owner must return the sample to Customs upon demand or at the
conclusion of the examination or testing. In the event that the sample
is damaged, destroyed, or lost while in the possession of the trademark
or trade name owner, the owner shall, in lieu of return of the sample,
certify to Customs that: ``The sample described as (insert description)
and provided pursuant to 19 CFR 133.25(c) was (damaged/destroyed/lost)
during examination or testing for trademark infringement.''
(d) Form of notice. Notice of detention of articles found subject
to the restrictions of Sec. 133.22 or Sec. 133.23 shall be given the
importer in writing.
Sec. 133.26 Demand for redelivery of released merchandise.
If it is determined that merchandise which has been released from
Customs custody is subject to the restrictions of Sec. 133.22 or
Sec. 133.23 of this subpart, the port director shall promptly make
demand for the redelivery of the merchandise under the terms of the
bond on Customs Form 301, containing the bond conditions set forth in
Sec. 133.62 of this chapter, in accordance with Sec. 141.113 of this
chapter. If the merchandise is not redelivered to Customs custody, a
claim for liquidated damages shall be made in accordance with
Sec. 141.113(g) of this chapter.
Samuel H. Banks,
Acting Commissioner of Customs.
Approved: March 5, 1998.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-7969 Filed 3-25-98; 8:45 am]
BILLING CODE 4820-02-P