Customs often seizes goods bearing allegedly counterfeit marks which were shipped from a foreign country through the United States with a third country as the final destination. The seizure notice always cites 19 USC 1526(e)[1]. Generally speaking, US trademark laws are intended only for US consumers and US trademark owners[2]. By definition, goods in-transit are never intended for entry into US commerce; therefore there is no potential confusion for US consumers or potential damage(s) to US trademark owner’s goodwill within the territorial US. Why then can Customs seize counterfeit goods when in-transit? The answer must reside with the statutory interpretation of “import,” “imported,” or “importation.”
Neither the Tariff Act nor the Lanham Act expressly defines “import” or “importation.” In order to render an accurate interpretation, the courts should inquire as to the legislative intent because the first purpose of statutory construction is to ascertain the intent of the legislature [3]. As discussed above, the prohibition against the “importation” of infringing goods in the Lanham Act only pertains to goods that are intended for subsequent distribution into US commerce. Therefore, “importation” should be interpreted as bringing goods into the United States for subsequent distribution into US commerce. If so, Customs would not have authority under 19 USC 1526 to seize in-transit counterfeit goods.
Litigation on this issue is limited, mainly because litigating against the agency is lengthy and costly. Many foreign importers end up abandoning their goods rather than choosing to litigate against the agency. The only available decision to date is a 1987 Southern District of Florida case where the Court held that Customs had authority to seize goods in-transit [4]. In that case, watches bearing counterfeit marks were shipped from Hong Kong and transited Florida in route to Paraguay. One of the arguments offered by the defendants in the action was that the infringing goods were neither “imported” nor “entered” into the United States and, therefore, not subject to the trademark laws of the United States.The court rejected the defendants’ argument and held that the counterfeit goods were imported because they had been brought within the territory of the United States and the goods were admitted for entry for the purpose of applying the trademark laws.
Congress amended 18 USC 2320 to provide criminal sanctions against trafficking in counterfeit goods. 18 USC 2320(i) explicitly prohibits that transshipment of counterfeit goods[5]. Arguably, even if Customs initially lacks authority to seize counterfeit goods under 19 USC 1526(e), it nevertheless has the authority to seize counterfeit goods under 18 USC 2320 because transshipment will be deemed as a violation of 15 USC 1124, and 19 USC 1526 provides authority of seizure for violation of 15 USC 1124. But still, the element of “importation” of 19 USC 1526(e) is missing.
What do you think about Customs’ authority or statutory interpretation of “import”?If you would like to share your thoughts you can do so by replying to this blog, emailing sliang@customscourt.com, or via our Twitter or Facebook pages. Be sure to subscribe to our blog so you don’t miss Part Two of this series!
[1]19 USC 1526(e) provides that “[a]ny such merchandise bearing a counterfeit mark (within the meaning of section 1127 of title 15) imported into the United States in violation of the provisions of section 1124 of title 15, shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws.”
[2]See Weil Ceramics & Glass, Inc. v. Dash, 878 F.2d 659, 671 (3d Cir. 1989) (Congress only intended the trademark laws to “provide a remedy only to domestic trademark holder who is injured by the distribution of like goods, which bear facsimile marks that result in confusion to consumers or detriment to the goodwill developed by the trademark holder in the trademarked goods.”) see also Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 636 (1992) (The two principles that fueled the Lanham Act are the protections of consumers and the protection of the goodwills of the trademark owners).
[3]Tennessee Valley Auth. v. Hill, 437 U.S. 153, 207 (1978).
[4]U.S. v. Watches, Watch Parts, Calculators & Misc. Parts, 692 F. Supp. 1317, 10 Int’l Trade Rep. (BNA) 1988, 8 U.S.P.Q.2d 1529 (S.D. Fla. 1988).
[5]18 USC 2320 provides:
“No goods or services, the trafficking in of which is prohibited by this section, shall be transshipped through … the United States. Any such transshipment … shall be deemed a violation of [15 USC 1124].”
