IP Law Daily Butane canisters properly seized by Customs in absence of permission to affix UL certifications
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Wednesday, March 11, 2020

Butane canisters properly seized by Customs in absence of permission to affix UL certifications

By Robert B. Barnett Jr, J.D.

The fact that UL later approved the canisters bearing the PREMIUM certification mark was irrelevant because the counterfeiting analysis focuses on the time of importation.

U.S. Customs had the right to seize imported canisters that contained fake Underwriters Laboratories (UL) labels because the certification mark was counterfeit at the time of importation, the U.S. Court of Appeals for the Federal Circuit has ruled, in upholding a decision by the Court of International Trade. The facts that ICCS USA Corporation had a contractual relationship with UL, that it had simply failed to obtain certification before importation, and that it later obtained certification—as opposed to a company that just slapped on fake certifications—were irrelevant. Regardless of intent, Customs had the right to seize the canisters because marketing counterfeit merchandise not only risked damaging UL’s reputation but was also potentially dangerous to consumers (ICCS USA Corporation v. U.S., March 11, 2020, Chen, R.).

Background. ICCS, as the U.S. affiliate of One Jung Mtf. Co. Ltd., imports butane gas canisters. In January 2017, it imported 56,616 canisters that displayed a "PREMIUM" brand label and a registered certification mark owned by UL. Customs determined that the canisters were counterfeit because ICCS did not have authority to display the UL mark on those canisters. Customs ordered a return of the 56,616 canisters. ICCS returned only 29,008 canisters (presumably because the other canisters had entered the marketplace). Customs then assessed damages against ICCS of $41,412 for the missing 27,608 canisters.

ICCS has two models of butane gas cannisters, PREMIUM and US BUTANE. At the time of importation, only the US BUTANE models had UL certification because ICCS never sought certification for the PREMIUM models. After entry, ICCS requested that UL add the PREMIUM model to its list of approved canisters, which, after inspection, it did. It was at this point that Customs learned that the ICCS PREMIUM canisters lacked certification at importation, and it demanded the seizure. ICCS then filed a complaint with the Court of International Trade challenging the demand for redelivery of the canisters. Customs agreed to drop the matter if UL would grant retroactive approval. UL refused, fearing that companies would forego initial certifications if they could simply seek retroactive approval once caught. The Court of International Trade granted summary judgment for Customs on the ground that express authorization from UL was required for each canister prior to the label being affixed. ICCS appealed that decision to the Federal Circuit.

Seizure. The court noted that the analysis of whether Customs had the right to seize the canisters turned on whether the PREMIUM model canisters displayed a "counterfeit" certification mark at the time of importation. A counterfeit mark is a "spurious" mark that is identical to and indistinguishable from a registered mark. The court rejected ICCS’s argument that the it did not need express authorization prior to using the mark. The relevant contract provisions required ICCS to do just that. ICCS failed to make a certification request prior to importation. As a result, UL had no opportunity to evaluate whether the PREMIUM model qualified for certification before the mark was affixed to the canisters.

ICCS then argued that the absence of express authorizations was not determinative in light of UL’s subsequent approval of the PREMIUM canisters. That fact was irrelevant, the appellate court said. The counterfeiting analysis focuses on the time of importation. What happens after that is not determinative. Various other arguments were similarly rejected, including that a likelihood of confusion analysis should be undertaken, that the failure to obtain certification was a minor procedural oversight in light of the similarities between PREMIUM brand and the US BUTANE brand, and that seizure and forfeiture were unreasonably severe penalties in light of ICCS’s contractual relationship with UL. The Federal Circuit noted that these arguments raised serious concerns about the trademark owner’s ability to monitor the use of its certification mark. "Common sense suggests," the court said, "that if an importer could unilaterally choose to issue a certification mark on new models without first obtaining consent from the trademark owner, that would significantly compromise the trademark owner’s ability to police the mark."

Ultimately, the court said, it agreed with the Court of International Trade that ICCS marketed counterfeit merchandise that not only risked damaging UL’s reputation but also was potentially dangerous to consumers.

The Federal Circuit, therefore, affirmed the decision of the Court of International Trade to grant summary judgment to Customs.

This case is No. 19-1561.

Attorneys: Elon Abram Pollack (Stein Shostak Shostak Pollack & O'Hara LLP) for ICCS USA Corp. Jamie Shookman (International Trade Field Office) for the United States.

Companies: ICCS USA Corp.

MainStory: TopStory Trademark FedCirNews GCNNews

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