HQ 733889

September 13, 1991

Mar-2-05 CO:R:C:V 733889 RSD

CATEGORY: Marking

Kenneth G. Weigel, Esq.

Baker & Hostetler

Washington Square, Suite 1100

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

RE: Country of origin marking of plastic pens, conspicuous,

legible, economically prohibitive, 19 CFR 134.41, 19 CFR

134.32(c), 19 U.S.C. 1304(a)(3)(c)

Dear Mr. Weigel:

This is in response to your letter dated October 31, 1990,

submitted on behalf of your client, Senator Pen Corporation,

requesting a binding ruling on the country of origin marking

requirements for imported pens. We have also received several

supplemental submissions from you dated December 3, 1990, March

8, 1991, April 11, 1991, June 28, 1991, July 29, 1991, August 31,

1991, and September 10, 1991. Samples of the imported pens were

also submitted for our review. Three meetings were held at

Customs Headquarters with you and representatives of Senator Pen

Corporation, to discuss this case. You have requested that the

cost information contained in your ruling request be kept

confidential. This information is in brackets and will not be

included in the copies of the ruling made available to the

public. Although Senator Pen originally submitted 11 sample pens

for our review, after consultation with you, we have concluded

that we will rule on only the country of origin marking on four

of the sample pens, pen numbers 2, 3, 10, and 11, style numbers

2365, 2403, 2297, and 2093.

FACTS:

Senator Pen Corporation (Senator Pen) is a North Carolina

Corporation, which is a wholly-owned subsidiary of a German

Corporation, Merz & Krell. Senator Pen is seeking to import pens

into the U.S. made in Germany by Merz & Krell. These pens are

low cost writing instruments which are imported at prices of less

than \[XXXX\] apiece. They are intended to be used as pens that

are given away by businesses for advertising and promotional

purposes. Senator Pen will be imprinting the pens with an

advertising message in the U.S. The pens will be sold to

businesses through a network of distributors that market and sell

promotional items to businesses. The pens in question are not

solely intended for the U.S. market but are also sold in other

countries. Senator Pen\'s sales in the U.S. market only account

for about \[XX\] of Merz & Krell\'s total pen production.

The pens consist of a two-piece body, a clip, and other

small parts, such as the button on the top of the pen. The body

and in most cases, the clip are made of plastic. The plastic pen

parts are made in one-piece molds. In a one-piece mold, because

the article has to be able to slide out of the mold, the surface

of the sides of the article being molded must be extremely smooth

to allow it to be released from the mold. In designing the pen

part, any design attributes which might \"lock\" the molded part

into the mold must be avoided. The pens are produced in large

quantities in molds with multiple cavities. The molds are

designed to last 20 years and cost approximately \[XXXXXXXX\] a

mold for the body molds and \[XXXXXXX\] for each of the clip molds.

Presently, the country of origin marking is molded into the

plastic of the pens. Senator Pen states that it uses one-piece

molds to make the pens because it increases the amount space

available to print advertising messages and eliminates any mold

lines which would interfere with an advertising message.

These pens are marked to indicate their country of origin,

Germany, in very tiny letters which are cast-in-mold into the

plastic body of the pen or the clip. The lettering of the

country of origin marking tends to blend into the background of

the pens. Pen 2 is marked on the left side of the clip in non-

contrasting letters of less than 1/16th of an inch. It is also

marked to indicate its country of origin around the top of the

barrel in letters that are less 1/8th of an inch. Pen 3 is

marked on the left side of the clip in non-contrasting letters of

less than 1/16th of an inch. Pen 10 is marked in non-contrasting

letters less than 1/16th of an inch on the front of the clip and

the side of the clip. Pen 11 is marked in non-contrasting

letters less than 1/16th of an inch high on the side of the clip

and the front of the clip. Senator Pen maintains that the

marking described above is sufficiently legible and conspicuous

to satisfy the requirements of the marking statute.

Alternatively, Senator Pen claims that the present country of

origin marking on these pens is the only possible method of

marking which is not economically prohibitive. Senator Pen

maintains that changing the locations of the country of origin

marking or making the marking bigger would prevent the pens from

being released from the plastic molds.

Senator Pen has presented their cost for each of the four

pens. The pens cost Senator Pen \[XXXX, XXXX, XXXX, and XXXX\]

apiece to import into U.S., before they earn any profit, with

their present method of country of origin marking. They have

also presented figures on how much each pen would cost if four

alternative methods of marking, printing, using a two-piece mold,

die-stamping, and stickers, were used. In addition, they have

also presented the market prices of their competitors who sell

comparable type pens. Senator Pen\'s costs for marking the pens

to indicate their country origin by using stickers would

increase by 25-36% depending on the pen. Marking the pens by

die-stamping would increase their costs by 56-82%. Using a

two-piece mold to mark the country of origin on the pens would

increase their costs by 16-25%, not counting the cost of the

molds. Putting the country of origin marking on the pens by

printing would increase the costs of the pens by 19-55% depending

on the number of units produced. Senator Pen claims that the

market price for a pen similar to pen 2 ranges between \[XXXX-

XXXX\]; \[XXXX-XXXX\] for pen 3; \[XXXX-XXXX\] for pen 10 and \[XXXX-

XXXX\] for pen 11. In most cases, use of any alternative method

of marking would increase Senator Pen\'s cost to more than their

competitor\'s market price.

We referred the sample pens to the Office of Laboratories

and Scientific Services for their comments on the feasibly of

improving the marking. Although the Office of Laboratories and

Scientific Services indicated that a two-piece mold could be

designed to make the country of origin marking bigger and to move

it to a more conspicuous location, they did agree with Senator

Pen that, because of the technical difficulties, the country of

origin marking could not be improved by using a one-piece mold.

ISSUES:

Is the country of origin marking on the sample pens

sufficiently legible and conspicuous to satisfy the requirements

of 19 CFR 134.41(b) and 19 U.S.C. 1304?

Would it be economically prohibitive for the importer to

adopt an alternative method of marking which would make the

country of origin marking more conspicuous and legible?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.

1304), provides that, unless excepted, every article of foreign

origin imported into the U.S. shall be marked in a conspicuous

place as legibly, indelibly, and permanently as the nature of the

article (or container) will permit, in such a manner as to

indicate to the ultimate purchaser in the U.S. the English name

of the country of origin of the article. Congressional intent in

enacting 19 U.S.C. 1304 was that the ultimate purchaser should be

able to know by an inspection of the marking on the imported

goods the country of which the goods is the product. \"The

evident purpose is to mark the goods so that at the time of

purchase the ultimate purchaser may, by knowing where the goods

were produced, be able to buy or refuse to buy them, if such

marking should influence his will.\" United States v.

Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements

the country of origin marking requirements and exceptions of 19

U.S.C. 1304. As provided in section 134.41(b), Customs

Regulations (19 CFR 134.41(b)), the country of origin marking is

considered conspicuous if the ultimate purchaser in the U.S. is

able to find the marking easily and read it without strain.

Senator Pen argues that the present country of origin

marking on the pens is conspicuous. It contends that the

ultimate purchaser would see the marking when the button on the

pens is depressed. Alternatively, Senator Pen contends that it

would be economically prohibitive to improve the country of

origin marking on the pens.

After reviewing sample pens 2, 3, 10, and 11 we find that

the country of origin marking on these article cannot be readily

found from a casual examination. The country of origin marking

blends into the background of the pens. The ultimate purchaser

of the pens would probably have to spend a considerable amount of

time and search carefully to find the country of origin marking.

Moreover, the tiny print size of the country of origin marking on

these pens is very difficult to read. In other words, the

ultimate purchaser would be unable to find the country of origin

marking easily and could not read it without strain.

Accordingly, we find that the country of origin marking on these

pens is not in a conspicuous location and that it is not legible.

Therefore, the country of origin marking on the pens is not in

accordance with 19 CFR 134.41(b).

Although the country of origin marking on these pens would

normally be considered unacceptable, and if not improved, prevent

these pens from being able to be imported into the U.S., Senator

Pen maintains that due to the nature of the plastic molds, in

that the surfaces of the molded article must be smooth in order

to permit the release of the pen parts from the mold, the country

of origin marking cannot be made any larger or be moved to

another location on the pens. They further contend that adopting

another method of marking which would make the country of origin

marking more conspicuous and legible would be economically

prohibitive.

Section 134.32(c), Customs Regulations, (19 CFR 134.32(c)),

excepts from country of origin marking articles that cannot be

marked prior to shipment to the U.S. except at an expense

economically prohibitive of their importation. The question that

must be in answered in this case is whether improving the country

of origin marking on the pens would be economically prohibitive

of their importation. Although relatively little has been

written in explaining exactly what the term economically

prohibitive means, several factors have been considered to help

determine when marking an item would be economically prohibitive.

These include situations in which the requirement to mark the

article to indicate its country of origin would force the

producer to incur a cost that would require the item to be

marked at a price at which: (1) the item could not be sold since

an individual would not buy it; (2) no profit could have been

made; (3) the profit that could have been obtained would not

have been sufficient to induce the importer to handle the item.

See Note, Country of Origin Marking, 6 Law and Policy in Int\'l

Business 485, 501-502 (1974), citing Bur. Cust. Customs

Information Exchange Ruling 114/51 (1951).

In this case, any change in the method of marking would

represent a substantial increase in the cost of the pens. A

careful examination of the cost figures presented indicates that

the conversion to a two-piece mold (excluding the cost of molds

themselves) constitutes the least costly of the alternatives.

This option would increase Senator Pen\'s cost by approximately

16-25%. If stickers were used, the cost of the pens is increased

by approximately 25-36%. The cost of printing would raise the

cost of the pens by 19-55%, depending on the pens and the number

of production units. The most costly method of marking,

die-stamping, would increase Senator Pen\'s cost by approximately

56-82%. In addition, the least costly methods of marking

(two-piece molds and stickers) have practical problems. For

example, changing the molds from a one-piece mold to a two-piece

mold would change the nature of the article and would limit the

surface area available to print advertising messages for which

these pens are primarily designed. In addition, new two-piece

molds would have to be purchased at a substantial cost.

Moreover with the use of stickers, there is the problem of not

being able to use the stickers to mark the pens with their

country until after their importation because the stickers could

not be applied to the pens until after the pens were imprinted

with advertising messages in the U.S. If stickers were required

to be applied prior to importation they would have to be removed

before printing and reapplied at a prohibitive cost.

Consequently, it would be an exorbitant burden to require the

importer to mark the country of origin on the pens by changing

the molds or by using stickers. Requiring the importer to die-

stamp or print the pens with the country of origin would raise

the costs by an exorbitant amount and is not warranted.

Furthermore, in most cases, the use of any alternative method of

marking would make Senator Pen\'s costs, before any profit is

earned, greater than their competitor\'s market price.

We find it significant that the pens in question are

relatively low cost items. The basic reason why the relative

costs of making the country of origin marking on the pens

conspicuous and legible is so substantial is because they are

inexpensive items. A few cents increase in the costs of these

pens can mean a fairly large increase in their costs in

percentage terms. It appears likely, in view of the market

prices of their competitor\'s pens, that the increased costs

associated with changing the marking would seriously hinder

Senator Pen from successfully competing against their

competitors. Requiring Senator Pen to change its marking would

most likely prevent the company from a making profit sufficient

to induce them to continue to handle the merchandise.

Furthermore, although the pens are not satisfactorily

marked, we note that they are not totally unmarked at the time

they are imported into the U.S. The pens do have a country of

origin marking even if it is an inadequate marking. In some

cases the pens are marked with their country of origin in two

locations. We also note that these are give away pens, which

means that an ultimate purchaser may not be as concerned about

their country of origin as if he/she was buying them.

Based on the above considerations, we conclude that changing

the method of marking the four sample pens to make it legible and

conspicuous would be economically prohibitive of their

importation.

HOLDING:

The country of origin marking on the submitted sample pens

described above is not easy to find and read. Therefore, the

country of origin marking is not in a conspicuous location and is

not legible. However, the marking does not have to be changed

because any other method of marking would result in increasing

the cost to such an extent that it would become economically

prohibitive to import the pens. This ruling is limited to four

style pens discussed in this ruling; that is, sample pens 2, 3,

10, and 11, styles 2635, 2403, 2297, and 2093. Any new pens or

other products must be legibly marked in a conspicuous location

to indicate their country of origin in accordance with 19 U.S.C.

1304 at the time of their importation.

Sincerely,

John Durant, Director

Commercial Rulings Division