H. M. Young Associates, Inc. v. United States
Decision Date | 18 February 1970 |
Docket Number | R.D. 11695 |
Citation | 64 Cust. Ct. 642 |
Parties | H. M. YOUNG ASSOCIATES, INC. <I>v.</I> UNITED STATES |
Court | U.S. Court of Customs and Patent Appeals (CCPA) |
West & Egan (Lawrence I. West of counsel); Rode & Qualey (Ellsworth Qualey of counsel) associate counsel; for the plaintiff.
William D. Ruckelshaus, Assistant Attorney General (Steven R. Sosnov and Bernard J. Babb, trial attorneys), for the defendant.
When these appeals for reappraisement were originally before me, a decision and judgment were entered sustaining the appraised value. H. M. Young Associates, Inc. v. United States, 60 Cust. Ct. 842, R.D. 11517 (1968). Subsequently a motion for rehearing was granted and additional evidence was presented.
The merchandise consists of elastic waistband material exported from West Germany in May and June 1965 and invoiced and entered at 62 cents per yard, f.o.b. port of exportation. It was appraised on the basis of constructed value, as that value is defined in section 402(d) of the Tariff Act of 1930, as amended by the Customs Simplification Act of 1956, at 98 cents per yard, net, packed.
According to the record, the merchandise consisted of a particular type of elastic waistband material manufactured by the firm of HCH Kalbskopf of West Germany and sold to H. M. Young Associates, Inc., of New York. It was resold to Jaymar-Ruby, Inc., of Indiana, which firm used it in the manufacture of trousers pursuant to a patent of which it is a licensee.
Plaintiff originally claimed that the proper basis for appraisement was either constructed value or export value, as those values are defined in section 402 of the Tariff Act of 1930, as amended, and that such value was 64 cents per yard. The increase of 2 cents per yard over the invoiced and entered value was alleged to be due to a price increase in effect at the time of exportation. Plaintiff has now limited its claim to constructed value at 64 cents per yard.
In both the original case and on rehearing, plaintiff contended that the difference of 36 cents between the invoice price and the appraised value represented royalty and trademark certification payments and that such payments were not part of dutiable value.
I previously found that the record presented did not show that the appraisement was predicated upon the basis of the invoice unit value plus the royalty fees. I held that the appraisement was not separable and that plaintiff was required to establish every material element of either export value or constructed value. The record was found insufficient to establish export value since it did not appear that the merchandise was freely offered to all purchasers nor that the buyers were selected purchasers within the meaning of the statute. As to constructed value, it was held that plaintiff had failed to prove the general expenses and profit of manufacturers of merchandise of the same class or kind or that diligent efforts to obtain such proofs had been unavailing. H. M. Young Associates, Inc. v. United States, supra.
At the second trial, plaintiff called Thomas F. Sweeney, import specialist, who testified as follows: In the course of his duties he examines, classifies, and values elastic fabrics of the kind in issue. As the line examiner, he is ordinarily responsible for the appraisement of this type of merchandise. In this case he instructed the examiner at the airport as to the basis on which he was to make appraisement. The invoice price on each invoice was 62 cents per yard and the merchandise was appraised at 98 cents per yard on the basis of constructed value. Mr. Sweeney said that at the time he made his appraisement he had received copies of a patent royalty agreement and a certification mark agreement by which Jaymar-Ruby, Inc. was to pay to the licensors 24 cents a yard as a royalty for the elastic used in the manufacture of slacks and 12 cents per yard for use of a certification mark known as NB. In arriving at the appraised value, he added to the invoice unit price 24 cents representing the patent royalty payment, and 12 cents representing the certification mark payment. He did not allocate these amounts to any particular element of constructed value and made no breakdown of the invoice value of 62 cents. The report of value was adopted by the appraiser.
At the original trial there was received in evidence a copy of patent # 2,757,381, granted to Yves Le Cottier and André Gérard Trentesaux, relating to trousers which had an elastic waistband and which did not require any other supporting means (exhibit 3).
Michael G. Berkman, a patent attorney, described the nature of the patent as follows:
The patent claims a particular trouser structure. The novel features relating to the trousers include, among other elements, a waistband. That waistband is also defined in the claims. The waistband as called for is an elastic band which includes two almost laterally joined bands comprising an upper and a lower band, both elastic. The upper band being more resistant to elongation than the lower band; the two bands being integrally joined in this particular case along a zone. The trousers which form the subject matter of the invention are trousers in which a band is fastened to the trousers at the top or upper edge of the trousers, that being fastened by sewing to the zone between the two laterally joined bands. In other words, the structure of the trousers is such that the upper band, which is the band more resistant to elongation, extends above the trousers while the lower band, which is the band least resistant to elongation, extends downwardly in the trousers and hangs free. This is the unique structure of the trousers which is the subject matter of the Le Cottier and Trentesaux patent.
In the opinion of Mr. Berkman, the merchandise involved herein could be manufactured and sold without violation of the patent, as the bands themselves were not within its scope. As long as they were used in a manner other than that described by the patent there would be no infringement.
There was also received in evidence an agreement of May 1959 between Yves Le Cottier and André Gérard Trentesaux, referred to as the licensor, and Jaymar-Ruby, Inc., referred to as the licensee, by which the latter was granted the right to use the patented invention and manufacture men's slacks in accordance therewith and to use the trademark NB. In return, the licensee was to pay the licensor a royalty of 12 cents for the trademark and 24 cents for the patent rights for each yard of resilient waistband received by the licensee from any manufacturer or supplier of such waistbands manufactured in conformity with the invention and used by the licensee (exhibit 9).
Another licensing agreement was entered into by the same parties on October 23, 1962, under which Jaymar-Ruby, Inc., was to pay the licensor 24 cents for each yard of waistband material used in the manufacture of trousers pursuant to the patent. (Exhibit 13.) At about the same time an agreement was entered into by Curacao Certifications, N.V., as the licensor, and Jaymar-Ruby, Inc., pursuant to which the licensor granted to Jaymar-Ruby, Inc., a license to use the trademark NB on trousers manufactured by it in accordance with the unique method developed by the licensor and its predecessor, for which Jaymar-Ruby, Inc., was to pay a royalty of 6 cents per yard for each yard of elastic waistband material used by it in the manufacture of trousers to which it applied the trademark. (Exhibit 14.)
At the original trial, H. M. Young, president of the importing company, testified that his firm imported the merchandise involved herein and stated that the prices appearing on the invoices were the prices actually paid and that no further sums of any kind were paid to the seller or to anyone else for the merchandise. After importation, his firm sold it to Jaymar-Ruby, Inc., at a price which covered the cost of acquiring the material plus import and duty costs and the firm's usual expenses and profits. His firm received no further sums in connection with the sale or use of the material from anyone. His firm does not do any manufacturing but simply imports and resells the merchandise.
Burton B. Ruby, president of Jaymar-Ruby, Inc., testified that his firm had been handling merchandise such as that involved herein for about 8 years. It has purchased about two million yards thereof from different countries where it was made, such as, France, Germany, Spain and the United States. It does not resell such material but uses it in the construction of men's slacks, under the patent represented by exhibit 3. Jaymar-Ruby, Inc., had become a licensee of such patent in May 1959. The licensing agreement (exhibit 9) did not relate to the purchase of any material. It did provide for the payment of royalties measured by the amount of waistband actually used in the manufacture of slacks. No royalty was paid for elastic webbing used in some other way than on trousers.
Harold Leinwand, executive controller and assistant treasurer of Jaymar-Ruby, Inc., testified that he was familiar with the method of computing and paying royalties under the patent license agreement He testified that no certification mark royalties were paid on elastic waistband which did not have the NB mark thereon. Royalties under the patent license agreement were paid solely on the amount of webbing actually incorporated into completed trousers. In making his computation, he deducts the amount of material which may be returned to any supplier, any incidental sales made to other licensees, and waistband used to replace defective material in any slacks which are returned.
In view of the testimony of the import specialist at the rehearing, it is proper to reexamine the question of separability of the appraisement herein.
It is well settled that in a proper case, an appealing party in reappraisement proceedings may challenge one or more of the items entering into an...
To continue reading
Request your trial-
United States v. BARR SHIPPING COMPANY
...States, 64 Cust.Ct. 628, R.D. 11693 (1970), decided on rehearing Id. v. Id., 67 Cust.Ct. ___, R.D. 11757 (1971); H. M. Young Associates, Inc. v. United States, 64 Cust.Ct. 642, R.D. 11695 (1970), we find substantial evidence that the appraisement at £218,005, plus 10 percent, plus cost of p......
-
Nichols & Co., Inc. v. United States
...fabric, and found that the merchandise, the parties and the facts were the same as those in the earlier case of H. M. Young Associates, Inc. v. United States, 64 Cust.Ct. 642, R.D. 11695 (1970). The appellate court noted that the only outstanding question was whether the issues were the sam......
-
United States v. Barr Shipping Company, Inc.
...64 Cust. Ct. 628, R.D. 11693 (1970), decided on rehearing, Id. v. Id., 67 Cust. Ct. 536, R.D. 11757 (1971); H. M. Young Associates, Inc. v. United States, 64 Cust. Ct. 642, R.D. 11695 (1970), we find substantial evidence that the appraisement at £218,005, plus 10 percent, plus cost of packi......
-
Concord Electronics Corp. v. United States, R.D. 11744
... ... Ct. 714, 716-17, A.R.D. 145 (1962). See also e.g., United States v. Chadwick-Miller Importers, Inc., et al., 54 CCPA 93, C.A.D. 914 (1967); United States v. Bud Berman Sportswear, Inc., 55 CCPA 28, ... M. Young Associates, Inc. v. United States, ... 64 Cust. Ct. 642, 646, R.D. 11695 (1970), and cases cited ... ...