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Importer of Fake 'Tommy' Watch May Be Liable Under Tariff Act: Ninth Circuit
United States v. Able Time
No. 06-56033, U.S. Court of Appeals for the Ninth Circuit, 09/25/2008
Companies Mentioned: Able Time, Inc.
Holding
In this case involving imported watches bearing the "Tommy" mark, the U.S. Court of Appeals for the Ninth Circuit ruled that the Bureau of Customs and Border Protection ("Customs") may impose a civil penalty under the Tariff Act upon an importer of merchandise bearing a counterfeit mark, even though the owner of the registered mark does not manufacture the same type of merchandise. Tommy Hilfiger Licensing, Inc. is the registered owner of the mark in dispute, but does not manufacture watches. Customs filed a civil penalty action against the watch importer, Able Time, Inc. ("Able"), which responded by filing a motion for summary judgment. The U.S. District for the Central District of California granted Able's motion. It reasoned that the imported watches could not be counterfeit because Tommy Hilfiger did not make watches at the time of the seizure. On appeal, the Ninth Circuit reversed. Construing the Lanham Act and the Tariff Act together, the Ninth Circuit held the imposition of a civil penalty under the Tariff Act does not require a trademark holder to manufacture or sell the same good as the goods imported with the offending counterfeit mark. The Ninth Circuit, however, remanded for the district court to determine whether (1) the mark on the watches is identical to or substantially indistinguishable from the registered mark pursuant to the Lanham Act and (2) whether the offending mark copies or simulates the registered mark pursuant to the same statute, which amounts to the traditional likelihood of confusion test for infringement.
Detailed Summary
Defendant-appellee Able imported a shipment of watches into the United States. The watches bore the mark “TOMMY,” which is a registered trademark owned by Tommy Hilfiger Licensing, Inc. The Bureau of Customs and Border Protection seized the watches pursuant to the Tariff Act, which authorizes seizure of any “merchandise bearing a counterfeit mark.” Opinion, p. 13656, citing 19 U.S.C. § 1526(e). Tommy Hilfiger did not make or sell watches at the time of the seizure.
Customs later issued Able Time several notices of civil penalty in February and March of 2004. Customs filed this civil penalty action pursuant to the Tariff Act, 19 U.S.C. § 1526(f), on April 15, 2004. Able Time filed a motion for summary judgment which the district court initially denied, concluding that jurors could reasonably return a verdict for the government that the watches bore a counterfeit mark. The district court subsequently issued sua sponte an order to show cause why it should not reconsider its decision. After further briefing, the district court granted Able Time’s motion for summary judgment, concluding as a matter of law that the imported watches could not be counterfeit because Tommy Hilfiger did not make watches at the time of the seizure. Id., p. 13659. The government timely appealed.
In this appeal, the government argued that the Tariff Act and the statutes that it incorporates do not require the owner of the trademark to manufacture the same goods as those bearing the offending mark. Id., p. 13660. Able Time responded by arguing that other sources, such as other statutory language and legislative history, show Congress’s intent to require identity of goods or services in the Tariff Act.
The applicable rule in this appeal, the Tariff Act, prohibits the importation of merchandise bearing a registered trademark without the permission of the owner of the trademark . Id., p. 13661, citing 19 U.S.C. § 1526(a). The Tariff Act also authorizes seizure and forfeiture if the merchandise bears a counterfeit mark. Id., citing 19 U.S.C. § 1526(e). The Tariff Act authorizes the imposition of a civil penalty upon an importer whose goods are seized, in an amount not more than the value the merchandise would have had if it were genuine. Id., pp. 13661-13662, citing 19 U.S.C. § 1526(f).
According to the Ninth Circuit, none of these provisions require the owner of the registered mark to make or sell the same goods as those bearing the offending mark. Id.
Subsection (e) of the Tariff Act incorporates two other statutes, 15 U.S.C. § 1127 and 15 U.S.C. § 1124. Both are part of the Trademark Act of 1946, known as the Lanham Act, and neither contains an identity of goods or services requirement, stated the Ninth Circuit. Id., p. 13662. The Tariff Act incorporates the definition of the term “counterfeit” from the first statute: “A ‘counterfeit’ is a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” Id., citing 15 U.S.C. § 1127.
The Ninth Circuit further wrote that to run afoul of the civil penalty provision of the Tariff Act, then, the offending merchandise must bear a mark identical to or substantially indistinguishable from a registered trademark owned by a United States citizen or corporation, where the offending merchandise copies or simulates the registered trademark, meaning that it is likely to cause the public to associate the offending merchandise with the registered trademark under the Sleekcraft factors. Id., p. 13663, citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979); 19 U.S.C. § 1526(e)-(f); 15 U.S.C. §§ 1124, 1127; 19 C.F.R. § 133.22(a). Construing all these statutes together, the Ninth Circuit held that nowhere does this statutory scheme require the owner of the registered mark to make the same goods as those bearing the offending mark. Id.
On the basis of the foregoing discussion, the Ninth Circuit concluded that Customs may impose a civil penalty pursuant to 19 U.S.C. § 1526(f) upon an importer of merchandise bearing a counterfeit mark, even though the owner of the registered mark does not manufacture the same type of merchandise.
The Ninth Circuit however remanded for the district court to determine whether (1) the mark on the watches is identical to or substantially indistinguishable from the registered mark pursuant to 15 U.S.C. § 1127, and (2) whether the offending mark copies or simulates the registered mark pursuant to 15 U.S.C. § 1124, which amounts to the traditional likelihood of confusion test for infringement.
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