Vivitar Corp. v. U.S.

• Decision Date: 06 May 1985
• Docket Number: No. 84-1638,84-1638
• Citation: 761 F.2d 1552,225 USPQ 990
• Parties: , 225 U.S.P.Q. 990, 1985-1 Trade Cases 66,597, 3 Fed. Cir. (T) 124 VIVITAR CORPORATION, Appellant, v. The UNITED STATES, et al., Appellees, and 47th Street Photo, Inc., Intervenor. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1552

761 F.2d 1552

6 ITRD 2169, 225 U.S.P.Q. 990, 1985-1

Trade Cases 66,597,

3 Fed. Cir. (T) 124

VIVITAR CORPORATION, Appellant, v. The UNITED STATES, et al., Appellees and 47th Street Photo, Inc., Intervenor.

Appeal No. 84-1638.

United States Court of Appeals Federal Circuit.

May 6, 1985.

James M. Johnstone, Wiley & Rein, Washington, D.C., argued for appellant. With him on brief was Thomas W. Kirby. Steven P. Kersner and Donald S. Stein, Brownstein, Zeidman and Schomer, Washington, D.C., were on brief for appellant.

R. Kenton Musgrave, General Counsel, Vivitar Corp., Santa Monica, Cal., of counsel.

Marjorie M. Shostak and James F. O'Hara, Stein, Shostak, Shostak & O'Hara, Washington, D.C., of counsel.

David M. Cohen, Director, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for appellees. With him on brief were Richard K. Willard, Acting Asst. Atty. Gen. and Velta A. Melnbrencis.

Nathan Lewin, Miller, Cassidy, Larroca & Lewin, Washington, D.C., argued for intervenor, 47th Street Photo, Inc. With him on brief was Jamie S. Gorelick. Marvin H. Wolf, Groman & Wolf, Mineola, N.Y., was on brief for intervenor.

Edward T. Borda, General Counsel, Ass'n of General Merchandise Chains, Inc., Washington, D.C., was on brief for amicus curiae.

Robert Ullman, Jacob Laufer and Steven R. Trost, Bass & Ullman, New York City, was on brief for amicus curiae, American Free Trade Ass'n.

John M. Hadlock, Max F. Schutzman and Katherine L. Frank, Whitman & Ransom, New York City, was on brief for amicus curiae, Olympus Corp.

Robert W. Steele, P.C., and Robert E. Hebda, Steele, Simmons & Fornaciari, of Washington, D.C., was on brief for amicus curiae, K Mart Corp. James C. Tuttle, Antitrust & Intern. Counsel, Troy, Mich., was on brief for K Mart Corp.

William H. Allen, Eugene A. Ludwig, Scott D. Gilbert and Daniel A. Rowley, Covington & Burling, Washington, D.C., were on brief for amicus curiae, Coalition to Preserve The Integrity of American Trademarks.

William F. Sondericker, Frank W. Gaines, Jr. and Robert L. Hoegle, Olwine, Connelly, Chase, O'Donnell & Weyher Before MARKEY, Chief Judge, and RICH, DAVIS, NIES and BISSELL, Circuit Judges.

Washington, D.C., were on brief for amicus curiae, Progress Trading Co., Inc.

NIES, Circuit Judge.

This appeal concerns the importation into the United States of what have come to be called "grey market" goods. Goods are produced and legitimately sold abroad under a particular trademark and are imported into the United States and sold in competition with goods of the owner of U.S. trademark rights in the identical mark. But for international boundaries and the territoriality of trademark rights, the use of the trademark in competition with the U.S. owner would not constitute infringement because of the relationship between the foreign entity from whom the goods were directly or indirectly obtained and the owner of U.S. rights in the mark. In this sense, grey market goods are "genuine" and bear a "genuine" trademark. In some instances, the U.S. trademark owner is an importer of the goods as well, in which case the grey market goods are known as "parallel importations."

Vivitar Corporation, a California corporation, brought suit in the U.S. Court of International Trade against the United States for a declaratory judgment to invalidate regulations of the Department of Treasury Customs Service which, in Vivitar's view, improperly allow importation of grey market goods contrary to the express provisions of 19 U.S.C. Sec. 1526 (Section 526, Tariff Act of 1930, hereinafter Sec. 1526). Specifically, Vivitar seeks to force the Customs Service to refuse importation of any foreign manufactured photographic equipment bearing its U.S. registered trademark VIVITAR unless Vivitar gives specific consent to such importation. Vivitar's position is that Sec. 1526(a) gives it an absolute right, as a U.S. company owning a U.S. trademark registration, to require Customs to prevent importation of foreign manufactured goods bearing the trademark VIVITAR, and that the regulations of the Customs Service which recognize some exceptions to the bar against importation without the consent of the U.S. trademark owner are invalid. The Court of International Trade upheld the regulations as the correct interpretation of the statute.

In this appeal, Vivitar urges reversal of the judgment of the Court of International Trade as a matter of law. The United States endorses the decision of the court on the merits, but challenges that court's holding that it had jurisdiction over the subject matter. ¹ Intervenor, 47th Street Photo, Inc., urges affirmance of the appealed judgment in its entirety. ²

We conclude that the Court of International Trade correctly held that it has jurisdiction over the subject matter of this action under 28 U.S.C. Sec. 1581(a), (i)(3), and/or (i)(4). With respect to the merits, we conclude that Customs' regulations do not define the limits of protection afforded a U.S. trademark owner under Sec. 1526. We, nevertheless, conclude that the regulations are a reasonable exercise of Customs' power to exclude under the statute as a matter of agency initiated enforcement. Since the factual situations involving grey market importations vary widely and not all may be in violation of Sec. 1526(a), we hold that Customs is not required to provide for automatic exclusion beyond that set forth in its current regulations. Exclusion of goods in situations involving common ownership and/or control of U.S. and foreign trademark rights may be left by Customs for determination in the first instance by the courts. When a U.S. trademark owner has Accordingly, we affirm the judgment of the Court of International Trade, but on narrower grounds.

successfully pursued a claim against a private party, Customs must, of course, give effect to any judicial determination that the owner has a right to bar importation of goods bearing its mark, even though the goods were obtained from or through a foreign related company.

I.

This appeal is from the grant of summary judgment in favor of the government and the denial of summary judgment in favor of Vivitar. Since no trial was conducted, there is little in the record with respect to the exact nature of Vivitar's activities in the United States and abroad. Nor do we have a specific import transaction before us which is challenged. The challenge by Vivitar is against the regulations per se. The material facts on which the parties rely are few and not in dispute. Essentially the facts establish Vivitar's standing to challenge the regulations.

Vivitar Corporation, a domestic corporation organized under the laws of the state of California, is the owner of U.S. Trademark Reg. No. 808,478, issued May 17, 1966, covering the trademark VIVITAR for some kinds of photographic equipment. ³ The registration has been recorded since 1969 with the U.S. Customs Service pursuant to regulations implementing exclusion provisions in the customs statute (Sec. 1526), as well as other exclusion provisions found in the trademark statute, 15 U.S.C. Sec. 1124.

Vivitar is engaged in the sale of photographic equipment in the United States and abroad. Apparently, Vivitar has little or no manufacturing facilities of its own, but rather has its products manufactured to specification by various foreign manufacturers, principally in Japan. ⁴ The trademark VIVITAR is affixed or displayed on this equipment at Vivitar's direction. Vivitar has set up a worldwide marketing arrangement so that the parent, appellant here, retains the U.S. market, and various foreign subsidiary corporations sell abroad. We will assume that Vivitar and its subsidiaries are selling the same products. No information is of record with respect to technical ownership of foreign trademark rights in the VIVITAR trademark.

In the United States, Vivitar has set up a network of independent authorized dealerships to whom it sells for resale to the public. VIVITAR products are, however, also reaching the U.S. market via independent importers who purchase VIVITAR products abroad (we do not know whether directly from Vivitar's subsidiaries or not), import them into the United States, and sell them through discount outlets, such as intervenor, 47th Street Photo. The price differential between U.S. and foreign markets on VIVITAR equipment makes the discount operations profitable. Vivitar seeks to justify its authorized dealers' higher prices as compared to those of discount houses by its extensive advertising costs, warranty costs, and other legitimate business expenses necessary to promote its VIVITAR products in the U.S. and maintain its goodwill in the mark. Vivitar accuses the discount houses of obtaining a free ride which will eventually destroy the reputation and sales value of its VIVITAR trademark. These matters were not, of course, litigated or resolved by the CIT in ruling on the motions for summary judgment. The sole question was whether Vivitar has a statutory right to have the Customs Service exclude imports of VIVITAR products except those consigned to Vivitar. This issue was not framed in terms of the particular facts of Vivitar's distribution system in the U.S. and abroad, but as a general proposition with respect to the rights The statutory provision in dispute, 19 U.S.C. Sec. 1526(a), reads as follows:

available under Sec. 1526 to every domestic owner of a registered U.S. trademark.

Except as provided in subsection (d) of this section, it shall be unlawful to import into the United States any merchandise of foreign manufacture if such merchandise, or the label, sign, print, package, wrapper, or receptacle, bears a trademark owned by a citizen of, or by a corporation or association created or organized within, the United States, and registered in the Patent and Trademark Office by a person domiciled in the United States, under the provisions of sections 81 to 109 of title 15, and if a copy of...