Manufacture de Machines du Haut-Rhin v. Von Raab, Court No. 83-2-00286.

• Citation: 569 F. Supp. 877,6 CIT 60
• Decision Date: 25 July 1983
• Docket Number: Court No. 83-2-00286.
• Parties: MANUFACTURE DE MACHINES DU HAUT-RHIN, Plaintiff, v. William VON RAAB, Commissioner of Customs, United States Customs Service and International Armament Corp., Defendants.
• Court: U.S. Court of International Trade

569 F. Supp. 877

6 CIT 60

MANUFACTURE DE MACHINES DU HAUT-RHIN, Plaintiff, v. William VON RAAB, Commissioner of Customs, United States Customs Service and International Armament Corp., Defendants.

Court No. 83-2-00286.

United States Court of International Trade.

July 25, 1983.

Klein & Vibber, New York City (Arthur O. Klein, and Thomas Abbott Gallagher, New York City, on the motion), for plaintiff.

J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Attorney in Charge, International Trade, Commercial Litigation Branch, New York City (Michael P. Maxwell, New York City, on the motion), for federal defendants.

Crowell & Moring, Washington, D.C. (Peter B. Work, Washington, D.C., on the motion), for defendants.

MEMORANDUM

CARMAN, Judge:

This matter is before me on plaintiff's motion for a preliminary injunction and federal defendants' cross-motion to dismiss. Defendant, International Armament Corporation ("Interarms") has responded to both motions.

The issues presented by these motions include whether this court has jurisdiction either pursuant to 28 U.S.C. § 1581(h), 28 U.S.C. § 1581(i) or 28 U.S.C. § 1585 (Supp. IV 1980) and if jurisdiction does exist whether or not the elements necessary for a preliminary injunction are present.

This action contests a ruling by the United States Customs Service ("Customs"), excluding from the United States, pistols manufactured by plaintiff, Manufacture de Machines du Haut-Rhin ("Manurhin"), which held the imprint of the words "LIC. EXCL. WALTHER" and "LIC. WALTHER PP" infringed upon Walther trademarks owned by defendant Interarms.

Carl Walther, Gmbh ("Carl Walther"), a German manufacturing firm, registered in 1925 its "WALTHER IN DESIGN" trademark in Germany. In the early 1930's, it became the registered owner of the United States trademark "WALTHER IN DESIGN". Pistols manufactured by Carl Walther bearing the trademark gained a reputation for high quality, reliability and performance.

Carl Walther lost its production facilities after World War II and was unable to continue manufacturing pistols. As a result of this loss of production capability, Carl Walther licensed Manurhin to manufacture "WALTHER PP and PPK" pistols according to Walther specifications. Manurhin has continued to manufacture the pistols without interruption pursuant to similar license renewal agreements. The most recent license renewal was in 1982 for a term of five years.

Interarms has for twenty years been an importer of Walther firearms. Although the facts are not entirely clear, it seems Interarms obtained, in 1969, a representative agreement from Carl Walther to distribute Walther firearms in the United States. In 1977, Interarms apparently secured from Carl Walther a license for 15 years with an automatic extension of 10 years for the exclusive right to manufacture and distribute "PP, PPK and PPK/S" type Walther pistols in North America. The license agreement purportedly granted Interarms the exclusive right to import and distribute all other Walther firearm products in the United States.

Carl Walther assigned in 1981 its trademark "WALTHER IN DESIGN" Reg. No. 303,701, to Interarms. The trademark was recorded with Customs for import protection effective November 2, 1981.

The Customs Service, acting in February, 1982 pursuant to section 526 of the Tariff Act of 1930, 19 U.S.C. § 1526 (1976 & Supp. III 1979)¹, detained two small shipments of pistols marked "LIC. EXCL. WALTHER." These pistols were manufactured by Manurhin. Manurhin was not the importer. The pistols were imported by two companies, EJK Devco, Inc., and Heckler and Koch.

Customs decided in June, 1982, that the terms "LIC WALTHER PP" and "LIC. EXCL. WALTHER" had no trademark significance and appeared on the pistols in question merely to indicate that the patent holder had licensed Manurhin to manufacture and sell pistols under their patent rights. The Customs decision expressed the opinion that the name "WALTHER" was a trade name usage rather than a trademark, and noted the presence of the Manurhin (water wheel) trademark in a prominent location on the pistols.

Carl Walther assigned to Interarms the U.S. trademark "Walther", Reg. No. 1,120,867, which was then duly recorded on July 14, 1982, with Customs for import protection.

Interarms asked Customs to reconsider its June, 1982 decision which found the terms "LIC. Walther PP" and "LIC. EXCL. WALTHER" had no trademark significance. Customs upon reconsideration found, on January 20, 1983, that since Interarms was the owner in the United States of the trademark "WALTHER" and had recorded both the "WALTHER" and "WALTHER IN DESIGN" trademarks with Customs for import protection, that pistols bearing the words "LIC. EXCL. WALTHER" and "LIC. WALTHER PP" should be prohibited from entry into the United States. The reconsideration decision observed that the manner and number of times the term "WALTHER" was used on the pistols was evidence that the term was being employed in a trademark sense to associate the pistols with Walther and not merely in a descriptive sense to indicate the pistols were manufactured under a license granted by Walther to Manurhin.

Manurhin filed an action in November, 1982, in the United States District Court for the Eastern District of Virginia, challenging Interarms' trademark rights in the name "WALTHER". The action was dismissed without prejudice².

Manurhin filed this action demanding declaratory judgment relief. Manurhin requested this court find that defendant Interarms could not register the trademark "WALTHER" and "WALTHER IN DESIGN" because the assignment from Carl Walther (not a party in this action) to Interarms did not transfer ownership in the marks to Interarms. Defendant Interarms filed an answer and a counterclaim. The counterclaim requested this court to enjoin Manurhin from dealing in merchandise bearing the same mark or any mark confusingly similar to either of the Walther trademarks. Manurhin moved subsequently for a preliminary injunction. The federal defendants cross-moved to dismiss. Interarms responded to both motions.

JURISDICTION

Although a variety of issues have been presented, the threshold question, raised by federal defendants' motion to dismiss, is whether or not this court has jurisdiction to review the ruling of Customs.

When a jurisdictional issue is raised, the burden rests on the plaintiff to prove that jurisdiction exists. United States v. Biehl & Co., 3 CIT 158, 160, 539 F.Supp. 1218, 1220 (1982).

Plaintiff argues that the court has jurisdiction pursuant to 28 U.S.C. § 1581(h) and (i), and 28 U.S.C. § 1585 (Supp. IV 1980). Defendants contend that none of the above sections confer jurisdiction upon the court and judicial review should be entertained pursuant to section 1581(a), after plaintiff has exhausted its administrative remedies. It is with this general argument of the defendants that the court agrees. A discussion of each assertion of jurisdiction follows.

28 U.S.C. § 1581(h)

Plaintiff contends that it should not be required to exhaust its administrative remedies in the traditional sense by completing an import transaction, filing a protest and contesting the denial of the protest. Plaintiff asserts, although not alleged in the complaint, that the court has jurisdiction pursuant to section 1581(h) and the traditional method of obtaining judicial review should be circumvented because it will suffer irreparable harm if further delay is encountered. Subsection (h) of section 1581 provides:

* * * The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawbacks, vessel repairs, or similar matters, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.

It is clear that section 1581(h) grants this court jurisdiction to review pre-importation rulings under limited circumstances where an importer may suffer irreparable harm if he is unable to obtain judicial review of a ruling until a contemplated transaction is completed, the duties are paid and a suit is commenced.³ In the case at hand, the determination made by Customs was not a pre-importation ruling, since the goods in question were detained when there was an attempt to import them. Furthermore, plaintiff has not demonstrated that it would suffer irreparable harm as contemplated by section 1581(h).

The irreparable harm contemplated by section 1581(h) is the harm that may be visited upon an importer by requiring the importation of merchandise and requiring the importer to go through the administrative process of protesting its exclusion. The harm argued by Manurhin is harm resulting from the exclusion of merchandise— lost profits, lost opportunities to make agreements for sale of its product, lost goodwill, and tarnished good name. See affidavit of Daniel Chovet⁴.

In addition to the court finding Mr. Chovet's arguments highly speculative, the harm addressed was not that of importing merchandise and going through the administrative process, but rather the possible harm of the exclusion. To permit the plaintiff to use section 1581(h) as requested, would circumvent the system of review Congress created and use section 1581(h) in a way that was not intended by Congress. Section 1581(h) is generally to be applied on occasions where an importer can show that it should be granted an anticipatory ruling from Customs in order to avoid incurring irreparable harm in connection with the commencement of an import transaction. Plaintiff in this case has not attempted to import nor has it made a showing that such an import...