U.S. v. 10,510 Packaged Computer Towers, C99-4041 CAL.

• Decision Date: 27 June 2001
• Docket Number: No. C99-4041 CAL.,C99-4041 CAL.
• Citation: 152 F.Supp.2d 1189
• Court: U.S. District Court — Northern District of California
• Parties: UNITED STATES of America, Plaintiff, v. 10,510 PACKAGED COMPUTER TOWERS, More or Less, 200 Packaged External Hard Drives, More or Less, and 449 Retail Boxes, More or Less, All Bearing One or More of the Following Marks on the Packaging, "UL" Within a Circle, "UL ... approved," or a Reverse "UR", Defendants.

152 F.Supp.2d 1189

UNITED STATES of America, Plaintiff, v. 10,510 PACKAGED COMPUTER TOWERS, More or Less, 200 Packaged External Hard Drives, More or Less, and 449 Retail Boxes, More or Less, All Bearing One or More of the Following Marks on the Packaging, "UL" Within a Circle, "UL ... approved," or a Reverse "UR", Defendants.

No. C99-4041 CAL.

United States District Court, N.D. California.

June 27, 2001.

Patricia J. Kenney, Assistant U.S. Attorney, Office of U.S. Attorney, San Francisco, CA, for plaintiff.

Mattaniah Eytan, Mattaniah Eytan Law Offices, San Francisco, Gary C. Cooper, Horton Whiteley & Cooper, Oakland, CA, for defendant.

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

LEGGE, District Judge.

This is an in rem seizure and forfeiture case, which is now before the court on cross-motions for summary judgment. It concerns the disposition of 10,510 packaged computer towers, imported from Taiwan and seized at the Port of Oakland, bearing certification marks registered to United Laboratories. The parties—the U.S. Customs Service (the "government") and Antec, Inc. ("Antec" or "claimant")— have stipulated to the essential facts of the case. The case is therefore now one of statutory construction. The statute at issue, 19 U.S.C. section 1526, governs the government's rights and duties in seizing imported merchandise bearing counterfeit marks.

Having considered the moving and opposing papers, the record, the arguments of counsel, and the applicable law, the court now issues the following order and directs judgment thereon.

I.

The United States Customs Service administratively seized several shipments of packaged computer towers between November 18, 1998 and February 1, 1999 as they came into the Port of Oakland. Claimant Antec was importing the towers from Taiwan. A computer tower is basically the shell of a computer, without the internal hardware such as disk drives and circuit boards installed. The computer towers do contain a power supply, but they need to have more hardware installed before they become working machines.

In this case, the packaged computer towers and retail boxes shipped along with them bear several key markings. The parties submitted several photographs of the packaged towers, the best of which is found attached as Exhibit K to the Joint Statement of Undisputed Facts. The photographs show the markings on which the administrative seizure was based, which are: (1) the reverse "UR" located on the line just below the Weight; and (2) the line below, indicating that the contents are "UL ... approved." See Joint Statement, Exh. K.

The reverse-"UR" and "UL"-in-a circle marks are certification marks owned by Underwriters Laboratories Inc. Underwriters Laboratories is an independent, not-for-profit testing laboratory that tests representative samples of products to determine whether they comply with nationally recognized safety standards and requirements. See United States v. 4500 Audek Model No. 5601 AM/FM Clock Radios, 220 F.3d 539, 540-541 (7th Cir.2000) (explaining the role of Underwriters Laboratories and the process it uses to certify goods). The reverse-"UR" and "UL"-in-a-circle marks signify that the electrical and related components have been inspected and satisfy the safety standards of Underwriters Laboratories. The reverse-"UR" is placed exclusively on electrical components (for instance, a power source or a fan) of multi-component devices. The familiar "UL"-in-a-circle is placed on a wide variety of primarily electrical devices. Underwriters Laboratories has registered both marks with the United States Patent & Trademark Office ("PTO"), and the registrations were valid and subsisting at the time of the seizure. See Joint Statement, Exhs. L & M.

The Customs Service administratively seized the packaged computer tower shipments at issue in this case after confirming that: (1) the items bear the reverse-"UR" and "UL ... approved" marks; (2) the marks are owned by and validly registered to Underwriters by the PTO; and (3) Underwriters did not authorize the reverse-"UR" or "UL ... approved" marks to be used on the seized goods. Concluding that the goods were therefore counterfeit within the meaning of the applicable statutes, the Customs Service sent notice of their administrative seizure to claimant Antec. Antec filed a claim and cost bond to cover the shipments, and the Customs Service referred the matter to the U.S. Attorney for institution of judicial forfeiture proceedings. This complaint for forfeiture was then filed in this court.

II.

Summary judgment should be granted if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). "At the summary judgment stage, the district court is not to weigh the evidence or determine the truth of the matter but should only decide whether there is a genuine issue for trial." Washington v. Garrett, 10 F.3d 1421, 1428 (9th Cir.1993) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

The moving party bears the responsibility of "informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). When the nonmoving party will bear the burden of proof at trial on a dispositive issue, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 56(c) & (e)). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S., at 249-50, 106 S.Ct. 2505 (citations omitted).

III.

19 U.S.C. section 1526(e), entitled "Merchandise bearing counterfeit mark; seizure and forfeiture; disposition of seized goods," provides in relevant part:

Any [merchandise of foreign manufacture] bearing a counterfeit mark (within the meaning of section 1127 of Title 15) imported into the United States in violation of the provisions of section 1124 of Title 15, shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws.

Under the statute the government "shall" seize merchandise if it: (1) is of foreign manufacture; (2) bears a counterfeit mark within the meaning of 15 U.S.C. section 1127; and (3) was imported in violation of 15 U.S.C. section 1124. Such merchandise is then subject to forfeiture in the absence of the written consent of the trademark owner.¹

The parties do not dispute that computer towers in this case are "of foreign manufacture" within the meaning of the statute. Thus the first prong of the inquiry is satisfied. The two remaining prongs of section 1526(e) are therefore the focus of the analysis.

The second prong of section 1526(e) requires that the contested merchandise bear a counterfeit mark within the meaning of 15 U.S.C. section 1127, commonly known as the Lanham Act. The Lanham Act states: "The term `mark' includes any trademark, service mark, collective mark, or certification mark." 15 U.S.C. § 1127. The parties agree that the marks at issue here are certification marks.<sup>2</sup> The next question is whether the marks are counterfeit. The Lanham Act provides: "A `counterfeit' is a spurious mark which is identical with, or substantially indistinguishable from, a registered mark." Id. Federal courts have held that the inquiry into whether a mark is "counterfeit" must be conducted "from the standpoint of an average purchaser." Montres Rolex, S.A. v. Snyder, 718 F.2d 524, 530-32 (2d Cir. 1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1594, 80 L.Ed.2d 126 (1984).

Finally, the third prong of section 1526(e) requires that the contested merchandise have been imported into the United States in violation of 15 U.S.C. section 1124, another section of the Lanham Act. 15 U.S.C. section 1124 provides in pertinent part:

[N]o article of imported merchandise which shall copy or simulate the name of any domestic manufacture, or manufacturer, or trader, or of any manufacturer or trader located in any foreign country which, by treaty, convention, or law affords similar privileges to citizens of the United States, or which shall copy or simulate a trademark registered in accordance with the provisions of this chapter or shall bear a name or mark calculated to induce the public to believe that the article is manufactured in the United States, or that it is manufactured in any foreign country or locality other than the country or locality in which it is in fact manufactured, shall be admitted to entry at any customhouse of the United States[.]

IV.

Claimant Antec makes four arguments for summary judgment: (1) trademarks not certification marks, are the only type of marks covered by 19 U.S.C. section 1526(e); (2) the marks on the seized merchandise are not "counterfeit" within the meaning of 19 U.S.C. section 1526(e) and any dispute as to the reverse-"UR" should be determined on the basis of an agreement between Underwriters and Antec; (3) only the most egregious violations are proscribed by 19 U .S.C. section 1526(e), and the alleged counterfeiting in this case is not sufficiently egregious; and (4)...