# United States **Court of Appeals**  **for the Federal Circuit**

______________________ GRK CANADA, LTD., Plaintiff

- Appellee,

v.

UNITED STATES, Defendant

- Appellant.

______________________

2013

- 1255

______________________ Appeal from the United States Court of International Trade in No. 09

- CV

- 0390, Senior Judge Judith M. Barz ilay.

______________________
ON PETITION FOR REHEARING EN BANC

______________________

C RAIG E. Z IEGLER , Montgomery, McCracken, Walker & Rhoads, LLP, of Philadelphia, Pennsylvania, filed a petition for rehearing en banc for plaintiff -appellee.

J ASON M. K ENNER , Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, New York, filed a response for defendant

- appell ant

. With him on the response were J OYCE R. B RANDA , Acting Assistant Attorney General, J EANNE E. D AVIDSON , Director, and A MY M. R UBIN , Assistant Director. Of counsel on the response was B ETH C. B ROTMAN , Office of the Assi s-GRK CANADA , LTD

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tant Chief Counsel, International Trade Litigation, Uni ted States Bureau of Customs and Border Protection, of New York, New York.

______________________ Before P ROST , Chief Judge

, N EWMAN , L OURIE , C LEVENGER , 1 D YK , M OORE , O’M ALLEY , R EYNA , W ALLACH , T ARANTO , and C HEN , Circuit Judges. 2

N EWMAN , Circuit Judge , dissents from the denial of the petition for rehearing en banc without opinion.

R EYNA , Circuit Judge

, with whom W ALLACH , Circuit Judge, joins, dissents from the denial of the petition for rehearing en banc.

W ALLACH , Circuit Judge , with whom R EYNA , Circuit Judge , joins, dissents from the denial of the petition for rehearing en banc.

P ER C URIAM

. O R D E R
A petition for rehearing en banc was filed by plaintiff

appell ee GRK Canada, Ltd. , and a response thereto was invited by the court and filed by defendant

- appell ant United States. The petition was first referred as a pet ition for rehearing to the panel that heard the appeal, and thereafter, the petition for rehearing en banc was referred to the circuit judges who are authorized to request a poll of whether to rehear the appeal en banc. A poll was requested, taken, and failed.

Upon consideration thereof,

I T I S O RDERED T HAT :

(1) The petition for panel rehearing is denied.

(2) The petition for rehearing en banc is denied.GRK CANADA , LTD

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(3) The mandate of the court will issue on December 15 , 2014

. F OR THE C OURT

December 8 , 2014 /s/ Daniel E. O’Toole Date Daniel E. O’Toole Clerk of Court

1 Circuit Judge Clevenger participated only in the decision on the petition for panel rehearing.

2 Circuit Judge Hughes did not participate.

# United States **Court of Appeals**  **for the Federal Circuit**

______________________ GRK CANADA, LTD., Plaintiff

- Appellee,

v.

UNITED STATES, Defendant

- Appellant.

______________________

2013

- 1255

______________________ Appeal from the United States Court of International Trade in No. 09

- CV

- 0390, Senior Judge Judith M. Barz ilay.

______________________

R EYNA , Circuit Judge

, with whom W ALLACH , Circuit Judge , joins, dissenting from the deni al of the petition for rehearing en banc.

For the reasons set forth in GRK Canada, LTD. v. U.S. , 761 F.3d 1354, 1361

– 66 (Fed. Cir. 2014) ( Reyna, J., dissenting), I respectfully dissent from this Court’s denial of the petition for rehearing en banc

.

# United States Court of Appeals **for the Federal Circuit**

______________________ GRK CANADA, LTD.

, Plaintiff

- Appellee,

v.

UNITED STATES

, Defendant

- Appellant

.

______________________

2013

- 1255

______________________ Appeal from the United States Court of International Trade in No. 09

- CV -0 0390, Senior Judge Judith M. Barz ilay.

______________________

W ALLACH , Circuit Judge , with whom R EYNA , Circuit Judge , joins, dissenting from the den ial of the petition for rehearing en banc

. This court has consistently analyzed the headings of the Harmonized Tariff Schedule of the United States (“HTSUS”) by first determining whether the heading is defined by name or by use , and then applying the corr esponding classification analysis . This analysis is required not only by our case law, but by the HTSUS itself, a statutory enactment that contains contrasting interpret ative frameworks for each type of head ing. Indeed, class ification is governed by the General Rules of Interpretation (“GRI”) and the Additional United States Rules of Interpretation (“ARI”), which are part of theGRK CANADA , LTD

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HTSUS statute

. BenQ Am. Corp. v. United States , 646 F.3d 1371, 1376 (Fed. Cir. 2011).
The majority opinion in GRK Canada, Ltd. v . United States ( GRK II ) , 761 F.3d 1354 (Fed. Cir. 2014)

, impermissibly departs from th is required framework by inco rporating elements of a use analysis into its analysis of an eo nomine heading without providing a justificatio n why an exception should be made in this case. In doing so, the majority opinion creates a conflict within our classific ation cases and confuses what should be a pronounced distinction between eo nomine and use headings. For these reasons, this case should be reconsidered en banc. I respectfully dissent from this court’s contrary ruling.

I.
The two distinct types of headings in the HTSUS, eo nomine and use provisions, require different analyses. Compare Kahrs Int’l, Inc. v. United States , 713 F.3d 640 (Fed. Cir. 2013) (eo nomine analysis)

, with Aromont USA, Inc. v. United States , 671 F.3d 1310 (Fed. Cir. 2012) (principle use analysis). This court “consider[s] a HTSUS heading or subheading an eo nomine provision when it describes an article by a specific name.” CamelBak P rods., LLC v. United States , 649 F.3d 1361, 1364 (Fed. Cir. 2011); see also Black’s Law Dictionary 265 (9th ed. 2009) (The term “eo nomine” means “by or in that name.”).

I n an eo nomine analysis, the court first construes the headings at issue as a matter of law by enumerating and defining each named element of the headings ; t he court then moves to the second classification step, a factual inquiry, to determine whether the subject merchandise fulfills each element of a properly

- construed heading. See,
e.g. , R.T. Foods, Inc. v. United States , 757 F.3d 1349 (Fed. Cir. 2014) ; Link Snacks, Inc. v. United States , 742 F.3d 962 (Fed. Cir. 2014). By contrast, the ARIs govern class ification of imported merchandise under use headings. I nGRK CANADA , LTD

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a use analysis, the court first construes the headings at issue by defining the uses of the goods described by the heading as directed by ARI 1(a) for principal use headings or by ARI 1(b) for actual use headings

. For principal use headings, the court then d etermines the principal use of the subject merchandise by analyzing the goods using the

so

- called Carborundum factors to determine whether they fall within one of the headings. See, e.g.

, Aromont , 671 F.3d at 131 3– 14 (citing United States v. Carborundum Co.

, 536 F.2d 373, 377 (CCPA 1976) ).

Mindful of th ese distinction s , consideration of use in an eo nomine analysis is an exception , and , indeed, a very limited one. See Kahrs , 713 F.3d at 646 (Fed. Cir. 2013) (“[W]e should not read a use limitation into an eo nomine provision unless the name itself inherently suggests a type of use.”) (emphasis added); see also Carl Zeiss, Inc. v. United States , 195 F.3d 1375, 1379 (Fed. Cir. 1999) (“[A] use limitation should not be read into an eo nomine prov ision unless the name itself inherently suggests a type of use.”) (emphasis added).
Nonetheless, the majority opinion appears to question our longstanding definition of eo nomine provisions when it attributes the following quotation to the United States Court of Internatio nal Trade’s (“CIT”) opinion under review: “[The CIT] noted that the subheadings were eo nomine provisions and that, as such, they described ‘an article by a specific name, not by use .’” GRK II , 761 F.3d at 1356 (quoting GRK Can., Ltd. v. United States ( GR K I )

, 884 F. Supp. 2d 1340, 1345 (Ct. Int’l Trade 2013)) (e mphasis in original) . However, the majority opinion fails to acknowledge the CIT was directly and accurately quoting this court’s case law. See GRK I

, 884 F. Supp. 2d at 1345 (“The subheadings ar e eo nomine provisions, or more simply, provisions ‘that describe[ ] an article by a specific

name, not by use .’”) (quoting Aromont , 671 F.3d at 1312) (citing CamelBak , 649 F.3d at 1364). The CIT’s chara cterization reflects how our cases define eo nomine prov i-GRK CANADA , LTD

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sions

— by distinguishing them from use provisions. See,
e.g. , Aromont , 671 F.3d at 1312 (“[T]his heading is an eo nomine provision, that is, a provision that describes an article by a specific name, not by use .”) (emphasis added); BASF Corp. v. United States , 497 F.3d 1309, 1315 (Fed. Cir. 2007) (same); Carl Zeiss , 195 F.3d at 1379 (same).
Further, t he majority opinion makes the following u nsettling declaration : [U] se of subject articles may, under certain ci rcumstances, be considered in tarif f classification according to eo nomine provisions. This may o ccur at the stage of establishing the proper mea ning of a designation when a provision’s name “inherently suggests a type of use.” Or, once tariff terms have been defined, it may be the case t hat the use of subject articles defines an articles’ ide ntity when determining whether it fits within the classification ’ s scope.
GRK II , 761 F.3d at 1359 (quoting Carl Zeiss , 195 F.3d at 1379). Not only is th is more permissive rule contrary to our case l aw , it also blurs the distinction between the legal question of what the subheadings cover

— a pure question of law analyzed in a vacuum without regard to the particular merchandise involved in the case

— and the factual second step of determining whether the goods fall within that properly

- construed heading.
More troubling is the majority opinion’s explicit e ndorsement of a use analysis and adoption of the ARIs in the context of an eo nomine heading : [U] se may be considered as part of the definition of eo nomine provisions, where, even if the eo no mine provision describes goods with respect to their names, the name itself may “ inherently suggest[ ] a type of use. ” . . . C lassification of subject artic les may then need to reach the [ARIs] , which disti n-GRK CANADA , LTD

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guish the treatment of articles based on whether tariff classifications are controlled by princi pal or actual use.

Id. (quoting Carl Zeiss

, 195 F.3d at 1379 ) & n.2. Any suggestion that the ARIs may need to be reached in the context of an eo nomine analysis is foreign to our classification case law, and conflict s with the clear statutory language of the ARIs. See , e.g. , Dependable Packaging Solutions, Inc. v. United States , 757 F.3d 1374, 1378 (Fed. Cir. 2014) (“ All the relevant HTSUS headings in this case

are principal use provisions, which are governed by ARI 1(a).”); Aromont , 671 F.3d at 1312 (“Principal use prov isions are governed by ARI 1(a).” ); see also ARI 1(a) (“[A] tariff classification controlled by use

. . . is to be dete rmined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods

o f that class or kind to which the imported goods belong, and th e controlling use is the principal us e.”) (emphasis added); ARI 1(b) (“[A] tariff classification control led by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entere d.”)

. In addition, the majority opinion repeatedly refe rences “intended use,” “predominant use,” and “primary use” within the context of its eo nomine analysis. GRK II

, 761 F.3d at 135 8– 60 . This exemplifies the rampant confusion among actual use, intended us e, and principal use. These are terms of art governed by the ARI s , and are not synonymous or interchangeable

. Existing confusion should be left to cases involving use provisions

, and not be allowed to infiltrate our eo nomine cases. See Aromont

, 671 F.3 d 1310, 1313 (discussing the differences between principal use and actual use).GRK CANADA , LTD

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II

. In support of its holding that use plays a proper role in the eo nomine analysis, the majority opinion relies heavily on the Court of Customs and Patent Appeals’ (“CCPA”) 1959 decision in United States v. Quon Quon Co. , 46 CCPA 70 (1959), ignoring this court’s contemp orary classification cases, such as Link Snacks , 742 F.3d 962, Kahrs , 713 F.3d 640, BASF , 497 F.3d 1309, et al

. Although the majority opinion acknowledges that “ Quon Quon is a case determined under the old [Tariff Schedule of the United States (‘TSUS’)] that has now been replaced by the HTSUS,” GRK II , 761 F.3d at 1358 , the opinion fails to recognize the crucial point that the statutory interpretative framework required by the contemporary HTSUS, namely, the GRI s and the ARIs, did not govern interpretations of TSUS . While this court has acknow ledged that “TSUS cases may be instructive in interpre ting identical language in the HTSUS,” JVC Co. of Am., Div. of US JVC Corp. v. United States , 234 F.3d 1348, 1355 (Fed. Cir. 2000) (emphas e s added), such cases are not helpful in defining an interpretative framework that did not exist under the TSUS . Not only are the GRIs and ARIs part of the HTSUS statute, this court has made clear they govern the classification of merchandise. BenQ , 646 F.3d at 1376

. The majority opinion’s characterization of Quon Quon and similar TSUS cases is also not entirely accurate. The opinion states: “In TSUS cases, courts had considered t he use of articles in interpreting eo nomine provisions.” GRK II , 761 F.3d at 1356 . No citation is given for this propos ition because even under the TSUS it was uncommon for use to be considered in the eo nomine analysis. In Quon Quon , for example, the CCPA took issue with the Go vernment’s argument that “since the merchandise comes within the meaning of [an eo nomine] term, its actual use is immaterial .” Quon Quon , 46 CCPA at 72 (emphas i s added). The court found “no support in [other TSUS]GRK CANADA , LTD

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cases for th e allegation that use is immaterial because the designation is eo nomine.” Id. In support, the CCPA identified three out of “numerous cases” cited by the Government where “use [was] an important factor in determining classification though an eo nomine de sign ation [was] involved.” Id. Thus, beyond its inapplicability to this case, Quon Quon stands only for the narrow prop osition that, as a limited exception, use can sometimes be considered in the eo nomine analysis. In this way, the CIT’s conclusion that it “cannot support this instance of reading use into an eo nomine tariff provision under the HTSUS,” GRK , 884 F. Supp. 2d at 1353 (emphasis added), does not conflict with Quon Quon ; it recognizes th at use may be an appropriate consideration in other instances

. III

. To be sure, there are limited circumstances where this court has considered use in the eo nomine analysis, such as those described in CamelBak

, a unique case among our classification cases that has led to some confusion as to the role of use in the eo nomine analysis. In CamelBak

, this court acknowledged that an eo nomine provision “‘include[s] all forms of the named article[,]’ even i mproved forms.” CamelBak , 649 F.3d at 1365 (quoting Ca rl Zeiss , 195 F.3d at 1379). Nonetheless, the court articula ted a test to determine when an additional component or function of an article, otherwise named by an eo nomine provision, so significantly transforms the article that it is no longer prima facie classifiable under the eo nomine heading. Thus, CamelBak describes the exceptional case where a good that was classifiable in an eo nomine hea ding undergoes “a change in identity [that] removes [the] article from an eo nomine provision.” Id. at 1367; id

. at 1369 (“[T]he hydration component of the subject articles is not merely incidental to the cargo component but, instead, provides the articles with a unique identity and use that removes them from the scope of the eo nomine backpack provision.”). To ai d in this inquiry, CamelBak went on toGRK CANADA , LTD

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identi f y “several analytical tools or factors [used] to assess whether the subject articles are beyond the reach of [an] eo nomine . . . provision,” which include the design, use, and function of the subject articles. Id. at 1367. Yet, CamelBak’s discussion of “use/function” and “design” was in the context of th is significant transformation test

, and this discussion can not be read to obscure the difference between eo nomine and use provisions. Id. at 1367

– 68.
Thus, consideration of use in the eo nomine analysis is a narrow exception that has rarely been used by this
court. 1 Indeed, if an eo nomine heading did “inherently suggest[] a type of use,” it would be proper to convert it to a use provision. See StoreWALL, L LC v. United States

, 644 F.3d 1358, 1365

– 67 (Fed. Cir. 2011) (Dyk, J., concu r1 In addition to Quon Quon and CamelBak , the m ajority opinion finds support for its position from one other

case: Len

- Ron Mfg. Co., Inc. v. United States , 334 F.3d 1304, 1311 (Fed. Cir. 2003) , a sui generis case in which this court may have applied an exception; it is unclear. This court affirmed the CIT’s proper construction of the eo nomine heading “vanity case,” but added a clarification that reads like a use limitation: “In affirming the [CIT’s] conclusion that ‘vanity case’ means ‘a sm all handbag or case used to hold cosmetics,’ however, we clarify that for a handbag or case to be classified as a vanity case, contai ning, carrying, or organizing cosmetics must be its predo minant use, rather than simply one possible use.” Id. Thus, d esp ite undertaking an eo nomine analysis, the court in this instance relied on an analysis used only for use headings. Indeed, in support of its analysis, the court cited Sports Graphics, Inc. v. United States , 24 F.3d 1390, 1393

– 94 (Fed. Cir. 1994). Not on ly was Sport s Graphics a case involving a use provision, the heading at issue was a “chief use” provision of the TSUS. “Chief use” headings no longer exist in the HTSUS.GRK CANADA , LTD

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ring). Therefore , if, as the majority holds, the subhea dings at issue are truly defined by use, the majority should have re consider ed the parties’ legal stipulation that the relevant subheadings are eo nomine. A narrower holding that, although the subheadings appear to be eo nomine, they are as a matter of law use provision governed by the use analysis, would have avoid ed disruption of our well

settled precedent.

IV

. Cognizant of these issues, in its Petition for Rehearing En Banc, GRK recognizes that “the majority decision of the panel improperly

— and contrary to well

- established and longstanding precedent of this Court

— introduced an ‘i ntended use’ analysis into the analytical framework for construing eo nomine classifications, which is only appr opriate for those classifications that are defined by how they are used.” Pet. a t 2. It also recognizes “[t]he major ity decision is directly contrary to numerous precedents of this Court” and “[b]y requiring considerations of ‘use’ even with eo nomine provisions, it unnecessarily blurs (if not erases entirely) the well

- established, and crucial, distin ction between eo nomine provisions and ‘use’ provisions

— each of which employs, according to this Court’s prec edents, a different analytical framework.” Id. at 11. In an attempt to downplay the importance of the di stinction between use and eo nomine provisions, the Go vernment suggests that “GRK’s pet ition confuses the Panel Majority’s discussion of intended use with the term of art ‘principal use.’” Resp. at 2. Furthermore , it states

, “GRK and the Panel Dissent misconstrue the Panel Majority’s Opinion. Although the Panel Majority referred to ‘the

m aterial that screws are principally intended to pass through,’ and used the phrase ‘principal intended use’

. . . , the Panel Majority did not direct the trial court to undertake a principal use analysis.” Id. at 4 (citations omitted).GRK CANADA , LTD

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T he Government’s argument ignores the majority opinion’s explicit statement endorsing a use analy sis. See GRK II , 761 F.3d at 1359 (“[U] se may be considered as part of the definition of eo nomine provisions

. . . . Class ification of subject artic les may then need to reac h the [ARIs] , which distinguish the treatment of articles based on whether tariff classifications are controlled by princ ipal or actual use. ”). This explicit directive that the ARIs, which are unquestionably used only in the use analysis, may be reached, refu tes the Government’s argument that “the Panel Majority did not order the trial court to co nduct a principal use analysis on remand. It in no way directed the trial court to apply ARI 1(a).” Resp. at 5.

V.

A final concern with the majority opinion is that it is unclear whether the correct analysis was performed or whether the correct standard of review was applied. It is well- established that classification decisions involve a
two

- step analysis: (1) ascertai ning “the proper meaning of the tariff provisions, which is a question of law reviewed de novo”; and (2) determining “whether merchandise falls within a particular heading, which is a question of fact we review only for clear error.” Lemans Corp. v. Unite d States , 660 F.3d 1311, 1315 (Fed. Cir. 2011) (citing Cu mmins Inc. v. United States , 454 F.3d 1361, 1363 (Fed. Cir. 2006) ). It is also well

- settled that when “the nature of the merchandise is undisputed, the inquiry collapses into a question of law we review de novo.” Id. While the major ity opinion correctly articulates the two

- step process, it is unclear whether “the nature of the merchandise is undi sputed” in this case, and, if so, whether only a question of law remains.
Instead, the opinion describ es at length the CIT’s analysis, both in the background and the analysis se ctions, and notes the errors the CIT made in its decision. But this court do es not review classification decisions forGRK CANADA , LTD

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error; rather, it perform s a de novo review. In this way, th e majority opinion fails to answer the legal question of the proper construction of the competing subheadings. This court has “an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms.” Link Snacks , 742 F.3d at 965. Although unclear, it may be that the majority disagrees with the CIT’s construction of the competing subheadings . T he opinion

, however, offers no answer, as a matter of law, on their proper construction, other than that the use of the subject

mer chandise involved in this case should have a bearing on the legal construction of the subheadings.
In addition to failing to fulfill its responsibility to determine the proper meaning of the competing subhea dings, the majority opinion does not identify the governing GRI for this case. It faults the CIT for sequentially pr oceeding through the GRIs, as required by our case law, and then “end[ing] up at the rarely used ‘tie

- breaker’ step of GRI 3(c).” GRK II , 761 F.3d at 1360 . However, it is unclear which G RI the majority believes should apply. That vital question , this court must answer. As to the majority opinion’s disposition, it does not specify whether remand is warranted because (1) there are genuine disputes of material fact precluding summary judgme nt, such that the CIT erred in granting summary judgment and the case should be remanded for trial; (2) there was legal error in the construction of the subhea dings; and/or (3) there was clear error in the factual fin dings. The grounds for vacation must b e specified if we are to provide any guidance on the issues involved in this

case.
VI

. It is evident that this is indeed “‘a challenging case.’” GRK II , 761 F.3d at 1356 (quoting GRK I

, 884 F. Supp. 2d at 1345). In disagreeing with the CIT’s ultimate classification conclusion, however, the opinion undermine s ourGRK CANADA , LTD

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case law requiring a distinction between use and eo nomine provi sions without articulating whether an exce ption applies in this case, or whether the subheadings at issue should be properly recl assified as use provisions at the beginning of the analysis.

Because the majority opinion upends a once

- clear analytical framework and will breed confusion in future

cases , t he concerns raised are “of exceptional importance” and “en banc consideration is n ecessary to secure or maintain uniformity of the court’s decisions.” See Fed. R. App. P. 35(a). Therefore, I respectfully dissent from the court’s refusal to reconsider this case en banc.