Minnetonka Brands, Inc. v. U.S.
| Decision Date | 24 July 2000 |
| Docket Number | Court No. 97-05-00894.,No. SLIP OP. 00-862.,SLIP OP. 00-862. |
| Parties | MINNETONKA BRANDS, INC., Plaintiff, v. The UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Ross & Hardies, New York City (Joseph S. Kaplan); Caramagno & Griffin (William L. Griffin), of counsel, for Plaintiffs.
David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Mikki Graves Walser); Sheryl A. French, Office of Assistant Chief Counsel, United States Customs Service, of counsel, for Defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff, Minnetonka Brands, Inc. ("Minnetonka") is an importer of certain hollow, plastic bodies and heads in the shape of such well-known Sesame Street and Peanuts children's characters as "Big Bird," "Cookie Monster" and "Snoopy Flying Ace." This merchandise, which is used to package and sell bubble bath, was classified by the U.S. Customs Service ("Customs") under Harmonized Tariff Schedule of the United States ("HTSUS") subheadings 3923.30.00 and 3923.50.00. These subheadings, which respectively cover plastic bottles for the conveyance of goods and plastic lids or caps, carried respective duty rates of 3 % and 5.3 %, ad valorem. Plaintiff claims that the subject merchandise should have been entered duty free under HTSUS subheading 9503.49.00, which covers toys representing animals or non-human creatures.
A bench trial was held on February 23 and 24, 2000. Pursuant to USCIT R 52(a), the court enters judgment for Plaintiff pursuant to the following Findings of Fact and Conclusions of Law.
1. This action involves the classification of merchandise contained in two entries (Entry Nos. 3501-96-3264174-5 and 3501-96-3264572-0) which were imported in late 1995. This merchandise was entered at the Port of Minneapolis, Minnesota, and was liquidated in March, 1996.
2. Each piece of subject merchandise has three components: (1) a blow-molded bottle shaped in the form of a character's body (e.g., the body of "Big Bird" or "Cookie Monster") which can hold up to 10 ounces of liquid; (2) a bottle cap; and (3) a cap cover in the form of a character's head.
3. Customs classified the empty bottles imported separately, as well as the complete sets of empty bottles with overcaps, as "[c]arboys, bottles, flasks and similar articles" under HTSUS subheading 3923.30.00 (1995). Imports under this subheading carried a rate of 3 % ad valorem. Bottle caps imported separately were classified by Customs as "[s]toppers, lids, caps and other closures" under subheading 3923.50.00 (1995), dutiable at 5.3 % ad valorem.
5. Plaintiff claim that the subject merchandise is more properly classified as a "[t]oys representing animals or nonhuman creatures ... Other" under HTSUS subheading 9503.49.00 (1995).
6. Examination shows the subject merchandise to be blow-molded, three-dimensional, plastic objects in the form of well-recognized children's characters ("Big Bird," "Elmo," "Cookie Monster," "Snoopy Flying Ace," "Ernie," and "Zoe"). The merchandise is intricately shaped to provide full and accurate representation of these characters in all respects. The various, well-recognized colors used on the subject merchandise enhances the accuracy of these representations (e.g., Snoopy's body is white, his nose is black, and he wears a brown flying helmet and a yellow scarf; Big Bird is yellow with white eyes with pink and blue rims, orange feet and a red bath brush). Although the heads of these characters are removable, none of the limbs are moveable.
7. Because the subject merchandise is shaped and colored like well-recognized children's characters, it is not immediately obvious, absent marking or other indication, that the bottom part of the merchandise is a bottle. The "bottle" aspect of the merchandise only becomes apparent when the "head" of the merchandise is removed, revealing a screw-cap top on the "body" section of the merchandise.
8. The court finds highly probative and credible the testimony of Larry J. Wilhelm, Minnetonka's founder, former president and current chairman of the board, that the subject merchandise was specifically designed as three-dimensional character representations in order to add toy or play value to Minnetonka's product line of children's bubble bath. Trial Transcript ("Tr.") at 29.
9. Although the relevant licensing agreements with Colgate-Palmolive Co. (Children's Television Workshop) and United Feature Syndicate, Inc. do not explicitly cover the production of "toys," see Defendant's Exs. C and D, Minnetonka personnel understood the agreements as prohibiting them from selling strictly toys or referring to the merchandise as "toys" in advertisements. They did not understand the agreements as prohibiting Minnetonka from marketing products with a significant play or toy element. See Tr. at 42, 48-49, 52, 86, 102, 108, 109, 144 (testimony of Larry Wilhelm), 286 (testimony of Julie Beno, marketing manager and independent consultant for Minnetonka).
10. The development of the subject merchandise, using artists' renderings and clay and wax sculptures, involved a different process than that used to designed a conventional oval or cylindrical bottle. Id. at 30, 35 (testimony of Larry Wilhelm).
11. The production of the subject merchandise is much more complicated, less efficient, and up to ten times as expensive as the production of the "flat" bottles sold by Minnetonka. Id. at 35-37 (testimony of Larry Wilhelm).
12. Minnetonka selected a toy manufacturer, rather than their regular domestic bottle suppliers, to make the subject merchandise, since the bottle suppliers were technically unable to do the detailed blow-molding or hand-painting that was necessary. Id. at 30-31 (testimony of Larry Wilhelm).
13. The subject merchandise is never sold empty. Rather, the goods are always filled with bubble bath for retail sale. See, e.g., id. at 66, 98-100, 146-47 (testimony of Larry Wilhelm).
14. The threads on the cap and neck of the subject merchandise are standard within the packaging industry, meaning that they can work with a variety of different bottles. Id. at 208 ().
15. The bottom part of the subject merchandise has the qualities of a "bottle," and also fulfills the four basic functions of a "package": containment, protection, utility (i.e., the dispensing feature of the package), and communication of information. Id. at 176-77, 186-89, 240 (expert testimony of Dr. Sher Paul Singh). Defendant's sole witness also stated, however, that he was unable to testify that the subject merchandise was not also a toy. Id. at 196, 240-41 (testimony of Dr. Sher Paul Singh).
16. The "heads" of the subject merchandise are not containers and do not enhance the containment or utility of the bottom ("bottle") portion of the merchandise. Id. at 206-07 (expert testimony of Dr. Sher Paul Singh).
17. The subject merchandise is not as efficient a container as a typical flat bottle, since the intricate details of the three-dimensional characters make the merchandise prone to leakage and breakage. Id. at 56-57 (testimony of Larry Wilhelm); see also id. at 211 ().
18. The heavy metal content of the subject merchandise is tested regularly, in accordance with toy industry standards, and the cap for the subject merchandise was produced to be oversized, so that it would pass the toy industry's "choke test." Id. at 75-80, 112 (testimony of Larry Wilhelm).
19. The court finds highly probative and credible the expert testimony of Dr. Elizabeth Hirschman in the field of semiotics (the study of cultural signs or cultural meaning). Dr. Hirschman stated that, in her expert opinion, the subject goods are anthropomorphized icons ("iconic figures"), meaning that people project human-like traits onto the merchandise. Id. at 400-01, 413, 427-28, 430-31. This is true notwithstanding the fact that the merchandise contains or could contain bubble bath. Id. at 430. Dr. Hirschman testified that it is very easy for children to project the particular personality and character traits of well-known characters (such as "Big Bird") onto the subject merchandise, and see the merchandise "as a person like...
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