United States Court of International Trade

Third Redetermination Remanded to Commerce

Changzhou Hawd Flooring Co., Ltd. v. United States, Court No. 12-200, Slip Op. 15-7 (January 23, 2015), was before the court following a second redetermination and a voluntary partial third redetermination. In the third redetermination, the Department of Commerce (“Commerce”) reaffirmed the second redetermination of the final results of the antidumping (“AD”) duty investigation of multilayered wood flooring from the People’s Republic of China (“PRC” or “China”). Still at issue were the AD duty rates assigned to eight separate rate respondents – the Plaintiffs and Plaintiff- Intervenors here (collectively, “Plaintiffs”) – for the underlying AD duty investigation. Specifically,  Plaintiffs challenged Commerce’s decision to assign seven of  eight separate rate respondents, an unspecified, non-de minimis AD duty rate for the investigation, to provide for liquidation of their entries at the rates established for them in the first administrative review (as limited by the provisional measures deposit cap), and to initiate a full investigation of the remaining eighth Plaintiff, Changzhou Hawd Flooring Co. (“Changzhou Hawd”), as it had certified no shipment of subject merchandise in the first administrative review and therefore otherwise lacks any relevant calculated rate. 

While the assignment of a non-de minimis AD rate for seven rate respondents was supported by substantial evidence, the initiation of a full investigation against Changzhou Hawd, the court held, was arbitrary and capricious. The court held that Commerce’s decision to infer a more than de minimis but otherwise unspecified separate rate for the investigation, using instead the cash deposit rates from the first administrative review, as limited by the provisional measures deposit cap, was within a reasonable construction of the statute.  As for the individual investigation, the court held that it was arbitrary and capricious to initiate an investigation of a single separate rate respondent in the third reiteration of a contested proceeding where Commerce has declined to investigate separate rates for voluntary respondents citing lack of resources.  Here Commerce had both an investigation and first administrative review, each with three fully cooperative individually investigated respondents.  To the court, this was more than enough information available in a typical investigation.  For this reason, the court remanded the third redetermination.

Relaxed Origin Marking Requirements of 19 C.F.R. ‘134.47 Apply Only When Federally Registered Trademark is Involved

In a perplexing new decision, the United States Court of International Trade has ruled that the relaxed country of origin marking requirements set out in Section 134.47 of the Customs Regulations, which deal with geographic references other than a product=s country of origin  apply only in cases where the importer has a Federally-registered trademark. 

In the opinion, the CIT also appears to write out of Customs= marking regulations a protection for importers which was inserted a few years ago.

The issue in JBLU, Inc. v. United States, Slip Op. 15B8 (January 28, 2015) was whether certain jeans were correctly marked with country of origin. The front of the jeans= waistbands contained labels bearing the terms AC>Est Toi Jeans Los Angeles@, ACT Jeans USA@ and AC=est Toi Jeans USA@. The rear of the waistbands contained a label showing the jeans to originat in China. Customs demanded redelivery of various entries of the goods claiming that they were subject to the special marking requirements of 19 C.F.R. ‘134.46, which states that when imported goods bear a geographic reference other than the country of origin, and the reference is likely to cause confusion as to the origin of the goods, there must appear, in Aclose proximity@ to the reference, and in letters of Acomparable size@ a reference to the country of origin of the product.

The importer claimed that its jeans were subject to the more liberal origin rule set out in Section 134.47 of the Customs Regulations, which covers situations where, Aas part of a trademark or trade name or as part of a souvenir marking@, there appears a geographic reference other than the country of origin, the country of origin shall be marked Ain close proximity@ to the reference, Aor in some other conspicuous location@.

Customs granted the importer=s protest with respect to one type of label, which was the subject of a Federal trademark registration with the Patent and Trademark Office (PTO), but denied the protest with respect to jeans bearing two other types of labels for which the importer had, at the time of entry, only a common law trademark designated by use in commerce, and not a Federally registered mark.  The issue for the CIT was whether 19 C.F.R. ‘134.47’s relaxed marking rule for goods bearing a Atrademark@ with a geographic reference applies only to trademarks which are the subject of a Federal registration.

The Court ruled that only federally-registered trademarks were eligible for the relaxed marking rule of 19 C.F.R. ‘134.47. The Court relied on Customs rulings which held that a Federal registration is evidence that a trademark exists, expanding those rulings to preclude protection for common law trademarks recognized by the Lanham Act. The Court based its decision solely on deference to Customs= interpretation of its regulations.

The Court struck a second blow against importers in deciding whether there were triable issues of fact regarding the adequacy of marking. In particular, the Court held that there was no need for introduction of proof concerning whether the geographic references in the importer=s trademarks were likely to cause consumer confusion, ruling that Aby displaying text representing a locality different than from the merchandise=s country of origin, the text may >mislead or deceive the ultimate purchaser as to the actual country of origin of the merchandise=@. This appears to introduce a per se rule that a geographical reference is likely to deceive or mislead. While this was the case years ago, the relevant regulation, 19 U.S.C. ‘134.46, was amended some years ago to introduce the Amislead or deceive@ test. Since consumer confusion is clearly a question of fact, the CIT=s decision that no factual issue was presented appears to strip that language from the regulation B resulting in a double blow for importers.

The court also found no need to have a trial on whether the origin marking was in Aclose proximity@ to the trademark references, holding Bremarkably B that spacing of a few inches did not meet the regulations= Aclose proximity@ test.

This decision is likely to be appealed, and will bear close watching, as it appears to strip away protections which importers fought for in the marking regulations.

CITT

Golf Glub Covers are AGolf Equipment of HTS Heading 9506

 Textile golf club covers are Agolf equipment of HTS Heading 9506, rather than Amade up textile articles of Heading 6307, according to the Canadian International Trade Tribunal (CITT).

In G&G Golf Company v. President, Canada Border Services Agency, AP 2013-061, the Tribunal, relying largely on the Rules of Golf, held that the club covers were equipment for the sport of golf, as they protected clubs from damage which might be caused if they knocked together during a golf round. Because the covers were considered Aequipment@ in the Rules of Golf, this provided persuasive evidence of their classification for tariff purposes.

Note: The information contained in this memorandum is for general information only, and is not intended as advice or counsel regarding any specific situation. If you have an issue relating to the subject matter discussed in this memorandum, you should consult with counsel or your customs advisers concerning the proper course of action to be followed in your case.

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