Opinion ID: 4514998
Heading Depth: 2
Heading Rank: 1

Heading: Counterfeit Certification Mark

Text: In the Court of International Trade, summary judgment is available when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Ct. Int’l Trade R. 56(a). “We review the [Court of International Trade’s] Case: 19-1561 Document: 48 Page: 8 Filed: 03/11/2020 8 ICCS USA CORPORATION v. UNITED STATES grant of summary judgment without deference.” Home Depot U.S.A., Inc. v. United States, 915 F.3d 1374, 1377 (Fed. Cir. 2019). “We review the trial court’s legal conclusions de novo; we review questions of fact for clear error.” Volkswagen of Am., Inc. v. United States, 540 F.3d 1324, 1330 (Fed. Cir. 2008). “We review the interpretation of a contract—a question of law—without deference.” Id. at 1335. Generally, when imported merchandise that should not have been admitted into U.S. commerce has been released, Customs “shall promptly make demand for the redelivery of the merchandise” to its custody. See 19 C.F.R. §§ 133.26, 141.113(d). In this case, Customs issued the redelivery notice on the basis that the merchandise contained a counterfeit certification mark in violation of § 1526(e). In relevant part, § 1526(e) provides that any merchandise bearing a counterfeit mark (within the meaning of 15 U.S.C. § 1127) that is imported into the United States in violation of 15 U.S.C. § 1124 “shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws.” Section 1124 forbids the importation of merchandise that “copy or simulate” a registered trademark. Certification marks are covered by these provisions. See Audek Model Clock Radios, 220 F.3d at 540; Computer Towers, 152 F. Supp. 2d at 1196 (holding that § 1124 covers certification marks). Thus, under § 1526(e), the government “shall . . . seize[] and . . . forfeit[]” any merchandise that is of foreign manufacture, was imported in violation of § 1124, and bears a counterfeit certification mark within the meaning of § 1127. The question of whether Customs properly denied ICCS’s protest turns on whether the PREMIUM model canisters at the time of importation displayed a “counterfeit” certification mark within the meaning of § 1127. Section 1127 defines “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” The parties do not dispute that the mark Case: 19-1561 Document: 48 Page: 9 Filed: 03/11/2020 ICCS USA CORPORATION v. UNITED STATES 9 displayed on the PREMIUM model canisters at the time of importation was identical to UL’s registered certification mark. ICCS, 357 F. Supp. 3d at 1322. The only question, therefore, is whether the mark was “spurious.” A “spurious” mark is one that is false. See BLACK’S LAW DICTIONARY (10th ed. 2014); WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE UNABRIDGED (2002); see also Joint Statement on Trademark Counterfeiting Legislation, 130 Cong. Rec. 31673, 31675 (1984) (“As [an earlier] Senate bill indicated, ‘spurious’ means ‘not genuine or authentic.’”). “Counterfeit certification marks falsely imply that the merchandise has been tested and approved for safety.” Computer Towers, 152 F. Supp. 2d at 1197. The record shows that ICCS’s use of UL’s certification mark on the date of entry falsely communicated to consumers that the imported PREMIUM model merchandise had already passed UL’s safety standards and requirements, and that UL had already given its safety certification to the PREMIUM model—when that certification had not, in fact, happened. That is a misleading use of UL’s certification mark and renders the mark a “spurious” mark. On appeal, ICCS challenges the Court of International Trade’s conclusion that ICCS needed “express authorization” from UL prior to using the certification mark on new models that correspond to the MEGA-1 basic product. Appellant’s Br. at 21. We conclude, as did the Court of International Trade, that the relevant contract provisions required ICCS to obtain express authorization prior to using UL’s certification mark on new models. ICCS, 357 F. Supp. 3d at 1323–24. The Service Terms ¶ 8 prohibits ICCS from using UL’s certification mark “on any goods or their containers or packaging” “[e]xcept as otherwise expressly authorized by UL.” J.A. 265 (emphasis added); see also J.A. 310 (Global Services Agreement ¶ 8 providing that ICCS “ha[s] no rights in the [UL] Marks” “[e]xcept for Case: 19-1561 Document: 48 Page: 10 Filed: 03/11/2020 10 ICCS USA CORPORATION v. UNITED STATES [those] rights as specifically granted in a Service Agreement to use the Marks”). The Service Terms set forth a specific procedure for obtaining UL’s “express authoriz[ation]” for any new models. Specifically, the Service Terms ¶¶ 2, 4 require ICCS to make a “Multiple Listing Request[]” when it wants to “[a]dd . . . products . . . within an existing Multiple Listing Relationship.” J.A. 263–64. The Multiple Listing Request “shall inform UL . . . in writing of the Basic Product by name of [OJC] . . . and identify[] . . . [the] model . . . for which the [Multiple Listing] Service is desired,” according to ¶ 4(b). J.A. 264 (emphases added). “The product(s) for which [Multiple Listing] Service is requested shall not differ from the Basic Product(s) other than in . . . features that UL . . . deems to be superficial” pursuant to ¶ 6(a). Id. (emphases added). If UL finds “the product(s) . . . to be eligible for M[ultiple ]L[isting] Service, UL . . . will add a Multiple Listing, Recognition, Verification, or Classification Correlation Sheet . . . covering the Basic Product(s) to authorize the manufacturer of the Basic Product(s) to use the Mark on the product” pursuant to ¶ 7(a). Id. ICCS failed to carry out this specific procedure prior to using UL’s certification mark on the PREMIUM model canisters in question. As of the date of entry (on January 19, 2017), ICCS had yet to make a Multiple Listing Request to UL to add the PREMIUM model to UL’s multiple listing services, as directed by the Service Terms ¶¶ 2, 4. As a result, UL had not yet had an opportunity to evaluate whether any “differ[ences] from the Basic Product[]” were merely “superficial” and whether the PREMIUM model was “eligible . . . to use [UL’s] Mark” pursuant to Service Terms ¶¶ 6(a), 7(a). Therefore, we agree with the Court of International Trade that ICCS lacked UL’s “express authorization to display UL’s certification mark on the PREMIUM model on the date of importation.” ICCS, 357 F. Supp. 3d at 1324. We likewise agree with the court’s Case: 19-1561 Document: 48 Page: 11 Filed: 03/11/2020 ICCS USA CORPORATION v. UNITED STATES 11 analysis concluding that “the certification mark was spurious and, therefore, counterfeit.” Id. Audek Model Clock Radios, cited by the Court of International Trade, is a Seventh Circuit case with analogous facts addressing whether the UL certification mark displayed on imported merchandise was counterfeit. 220 F.3d at 540. That case involved the seizure and forfeiture of imported clock radios, bearing the UL certification mark, which had been manufactured in China, and the importer’s “attempt to regain possession of the . . . clock radios” from Customs. Id. Like ICCS, the importer in Audek Model Clock Radios had a valid contract with UL, which authorized affixing UL’s certification mark only on clock radios manufactured “at the location[s] of manufacture . . . specified in the [contract].” Id. at 541. Pursuant to the original contract, the importer “was allowed to affix UL’s [certification] mark to [clock] radios manufactured in China” because the original contract “list[ed] the factory in China . . . as an authorized manufacturing location,” and the importer had “arranged and paid for UL inspections of the clock radios manufactured in the plant in China.” Id. The original contract was then “modified” to “eliminat[e] China as an authorized location for radio production” and to specify a factory in Chicago as the only authorized manufacturing location. Id. at 541, 543. “UL [also] ceased their periodic inspections of clock radios manufactured at the Chinese factory.” Id. at 541. After the contract was modified, the importer attempted to import clock radios manufactured in China bearing UL’s mark despite the fact it was no longer authorized to do so. Id. at 541–42. The Seventh Circuit held that the importer’s use of UL’s certification mark was unauthorized and that the clock radios were properly seized by Customs. Id. at 540. The facts and rationale in Audek Model Clock Radios are similar in relevant part to the present case. ICCS makes various arguments for why its usage of UL’s certification mark on its PREMIUM model canisters Case: 19-1561 Document: 48 Page: 12 Filed: 03/11/2020 12 ICCS USA CORPORATION v. UNITED STATES was not counterfeit. ICCS contends that the absence of UL’s express authorization for the PREMIUM model on the date of entry should not be dispositive in this case, given that ICCS later successfully obtained UL’s authorization. See Appellant’s Br. at 17, 24–25. We disagree. It is of no moment that, post-importation, UL approved ICCS’s request to add the PREMIUM model to UL’s multiple listing services, because that occurred after the date of entry on January 19, 2017, and the counterfeiting analysis is focused on the time of importation. See 19 U.S.C. § 1526(a) (barring the importation of goods bearing a registered U.S. trademark without the trademark owner’s written consent “at the time of making entry”); see also Audek Model Clock Radios, 220 F.3d at 541–43 (holding that the UL certification mark displayed on imported merchandise manufactured in China was counterfeit because, even though the importer’s original contract with UL authorized it to do so, the modified contract in force at the time of importation no longer allowed for manufacturing in China). ICCS also asserts it was reversible error for the Court of International Trade to not analyze likelihood of confusion by applying the DuPont factors. Appellant’s Br. at 8, 32; Application of E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973) (listing thirteen factors relevant to likelihood of confusion determination). The Court of International Trade determined that the merchandise displayed a counterfeit certification mark under the proper legal framework. ICCS has not shown reversible error in the court’s counterfeiting analysis, given that it is undisputed that the PREMIUM model canisters display a mark that is identical to the UL certification mark. ICCS, 357 F. Supp. 3d at 1322. ICCS does not explain what more the Court of International Trade should have analyzed in this case once it found that ICCS used UL’s exact certification mark without UL’s prior approval, nor does ICCS explain how it was prejudiced. Case: 19-1561 Document: 48 Page: 13 Filed: 03/11/2020 ICCS USA CORPORATION v. UNITED STATES 13 Next, ICCS alleges that the addition of the “PREMIUM” brand label to the canisters was superficial, as it “did not materially alter the physical assembly of the product,” and that the PREMIUM model is the same physical product as the MEGA-1 basic product. Appellant’s Br. at 14–15; Oral Arg. at 2:40–4:10, 17:15–40. Along the same lines, ICCS argues that the delay in updating the multiple listing was a minor procedural oversight that caused no harm to UL. Appellant’s Br. at 11, 22, 24–25. ICCS’s arguments as to physical similarity between the PREMIUM model and other merchandise that UL had previously certified fail because the Service Terms dictate that it is UL—not ICCS—who determines whether any “differ[ences] from the Basic Product . . . [are] superficial.” See J.A. 264. The contract prohibits ICCS from unilaterally deciding to use UL’s certification mark on a new model. Thus, according to the contract, UL retained the right to police which models would be listed on its Online Certifications Directory and would receive approval to bear its certification mark. As of the date of entry, UL had not yet determined whether the PREMIUM model was physically similar to the MEGA-1 basic product because ICCS had not requested for UL to do so yet. The importer’s actions and arguments in this case raise serious concerns about the trademark owner’s ability to monitor the use of its certification mark. An owner of a certification mark has an affirmative duty to police the use of its certification mark in order to protect the public’s expectation that all products sold under the certification mark comply with applicable safety standards and requirements. Cf. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 992–93 (9th Cir. 2006) (“[W]hen the owner of a trademark licenses the mark to others, he retains a duty to exercise control and supervision over the licensee’s use of the mark . . . to protect the public’s expectation that all products sold under . . . [the] mark derive from a common source and are of like quality.”) (internal quotation marks omitted); Nitro Case: 19-1561 Document: 48 Page: 14 Filed: 03/11/2020 14 ICCS USA CORPORATION v. UNITED STATES Leisure Prods., L.L.C. v. Acushnet Co., 341 F.3d 1356, 1367 (Fed. Cir. 2003) (“Trademark law requires that the trademark owner police the quality of the goods to which the mark is applied.”) (Newman, J., dissenting). Common sense suggests that if an importer could unilaterally choose to use a certification mark on new models without first obtaining consent from the trademark owner, that would significantly compromise the trademark owner’s ability to police the mark. See Miller, 454 F.3d at 993. Moreover, on the date of entry, Customs had no way of ascertaining whether the PREMIUM model was the same physical product as the MEGA-1 basic product (or the US BUTANE model), without UL having first made that determination. ICCS would have Customs bear the burden of performing UL’s inspection, comparison, and authorization for use of UL’s trademark. That is an unreasonable burden to place on Customs; further, it is contrary to statute. See 19 U.S.C. §§ 1526(a), (e) (providing that an importer must have “written consent of the [U.S. trademark] owner” to import merchandise bearing that trademark and, if not, Customs may seize the merchandise, providing “noti[ce to] the owner of the trademark,” and, with the trademark owner’s consent “obliterate the trademark where feasible”). Customs, for its part, complied with all applicable statutes and regulations in requiring redelivery of ICCS’s imported merchandise in the absence of UL’s written consent, at importation, for use of its trademark on that merchandise. See, e.g., 19 C.F.R. § 133.26 (providing that, if Customs determines “that merchandise which has been released from [Customs’] custody” may bear a counterfeit mark, Customs “shall promptly make demand for [its] redelivery”). Finally, ICCS contends that the “extreme” remedies of seizure and forfeiture are unreasonable in its case because it is an importer with a valid license agreement with UL rather than a “rogue actor pawning off UL’s mark.” Appellant’s Br. at 10–11. Regardless of ICCS’s intent, the law is Case: 19-1561 Document: 48 Page: 15 Filed: 03/11/2020 ICCS USA CORPORATION v. UNITED STATES 15 clear that counterfeit merchandise “shall be seized and, in the absence of the written consent of the trademark owner, forfeited” and may not be released by removing the offending mark or by diverting the merchandise to another nation. § 1526(e); McCarthy on Trademarks § 29:45. Congress contemplated protecting both trademark owners and consumers from circumstances such as the one present here. In 1996, Congress amended 19 U.S.C. § 1526 to address concerns about the health and safety threats posed by counterfeit merchandise to United States consumers. See Anticounterfeiting Consumer Protection Act of 1996, Pub. L. No. 104–153, 110 Stat. 1386, § 2. Here, ICCS marketed counterfeit merchandise that not only risked damaging UL’s reputation, but also was potentially dangerous to consumers.