Iccs USA Corporation v. United States

Citation: Not availableDocket: 19-1561

Court: Court of Appeals for the Federal Circuit; March 11, 2020; Federal Appellate Court

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ICCS USA Corporation (ICCS) appealed a summary judgment from the United States Court of International Trade, which ruled in favor of the United States government regarding a notice issued by U.S. Customs and Border Protection (Customs). The court found that Customs lawfully demanded the redelivery of butane gas canisters imported by ICCS that displayed a counterfeit certification mark owned by Underwriters Laboratories Inc. (UL), violating 19 U.S.C. § 1526(e).

On January 19, 2017, ICCS imported 56,616 butane gas canisters labeled “PREMIUM,” which improperly used UL's registered certification mark. After determining the canisters were counterfeit, Customs issued a redelivery notice on February 23, 2017. ICCS returned only 29,008 canisters, resulting in a penalty for the remaining 27,608 canisters, with damages assessed at $41,412.00.

UL, a non-profit certification entity, tests products for safety compliance and grants manufacturers permission to use its certification mark. Although UL had certified OJC's MEGA-1 canisters in 2001, ICCS’s PREMIUM model had not received certification by the time of import. ICCS’s relationship with UL began in October 2015 under an agreement allowing OJC to market its certified products through ICCS. The appeal focused on the legality of Customs' demand for the non-returned canisters.

The contract involved in this case consists of two documents: the Service Terms and the Global Services Agreement. Under the Service Terms, ICCS was allowed to use UL’s certification mark on its MEGA-1 canister, provided it was branded with ICCS’s label, and only after UL verified that any differences between ICCS's models and the MEGA-1 were superficial. The ICCS models in question are the PREMIUM and US BUTANE models. Between October 2015 and February 2017, only the US BUTANE model was listed on UL's Online Certifications Directory as authorized to display the certification mark, while the PREMIUM model was not authorized until February 8, 2017. Customs issued a notice to ICCS to redeliver 56,616 PREMIUM model canisters, citing a violation of 19 U.S.C. 1526(e), as the PREMIUM model lacked UL's authorization at the time of entry. ICCS returned 29,008 canisters but did not return the remaining 27,608, as they had already entered commerce. 

On April 6, 2017, ICCS protested Customs' redelivery demand, claiming a valid license with UL for the PREMIUM model. However, UL confirmed to Customs that the PREMIUM model was not authorized to display its certification mark on the date of entry. Customs denied ICCS's protest, leading ICCS to file a complaint in the Court of International Trade on May 11, 2017. Customs indicated it would stipulate the case if ICCS could provide a letter from UL permitting retroactive use of its mark on the PREMIUM model. However, UL refused to consent, stating that its certifications are not retroactive, maintaining a strict policy to protect the integrity of its registered marks.

UL denied ICCS's waiver request because it believed granting such a waiver would enable other companies to misuse the UL Mark without consequence. The Court of International Trade supported Customs' determination that the UL certification mark on ICCS's products was counterfeit, requiring ICCS to have "express authorization" from UL for each model of butane gas canister before using the UL mark. The court emphasized that ICCS must request the addition of new models to UL’s services, and the use of UL’s certification mark on any goods is strictly prohibited unless explicitly authorized. ICCS's PREMIUM model canisters were deemed counterfeit as they lacked prior authorization from UL at the time of importation, and any subsequent authorization was not retroactive. ICCS is appealing this ruling under jurisdiction from 28 U.S.C. 1295(a)(5). 

The court noted that summary judgment is appropriate when there are no genuine disputes of material fact, and it reviewed the legal conclusions de novo. Customs is mandated to seize merchandise with counterfeit marks under 19 U.S.C. 1526(e), which aligns with 15 U.S.C. 1124 that prohibits the importation of goods that imitate a registered trademark. A counterfeit mark is defined as one that is identical or nearly identical to a registered mark. In this case, the mark on the PREMIUM canisters was identical to UL's registered mark, and the critical issue was whether it was "spurious," meaning false. The evidence indicated that ICCS falsely implied that its products had been tested and certified by UL, misleading consumers regarding their safety compliance.

The use of UL’s certification mark by ICCS on new models, specifically the PREMIUM model canisters, is deemed misleading and classified as a “spurious” mark. The Court of International Trade held that ICCS was required to obtain “express authorization” from UL before using the mark, as stipulated in their Service Terms. These Terms explicitly prohibit the use of UL’s certification mark on any goods without prior authorization from UL, outlining a procedure for making a “Multiple Listing Request” for new models.

ICCS did not follow this procedure before using the mark on the PREMIUM model canisters, failing to submit the necessary request prior to the date of entry (January 19, 2017). Consequently, UL had not assessed whether the PREMIUM model was eligible for the mark based on any superficial differences from the Basic Product. The court agreed that ICCS lacked the required authorization, thus rendering the certification mark counterfeit.

The court referenced the Audek Model Clock Radios case, where the Seventh Circuit ruled similarly regarding unauthorized use of UL’s mark on imported products manufactured outside authorized locations. ICCS argued that its later authorization from UL should negate the counterfeiting claim, but the court disagreed, emphasizing that the analysis must focus on the circumstances at the time of importation, not subsequent events.

ICCS claims the Court of International Trade erred by not applying the DuPont factors to analyze likelihood of confusion regarding the use of a counterfeit UL certification mark on its PREMIUM model canisters, which are identical to UL's mark. The court found no reversible error in its counterfeiting analysis, as ICCS has not demonstrated any additional considerations the court should have examined, nor how ICCS was prejudiced by the findings. ICCS argues that the addition of the “PREMIUM” label was superficial and that the PREMIUM model is essentially the same as the MEGA-1 basic product. However, the Service Terms stipulate that UL, not ICCS, determines the significance of any differences in products. The contract prohibits ICCS from using UL's certification mark on new models without prior approval. UL retains the right to control which models are listed in its Online Certifications Directory. At the time of entry, UL had not assessed whether the PREMIUM model was similar to the MEGA-1, as ICCS had not requested such a determination. Concerns are raised about the trademark owner's ability to monitor its certification mark, emphasizing the duty to ensure that products under the mark meet safety standards. Allowing an importer to unilaterally use a certification mark without consent undermines the trademark owner's ability to police the mark. Customs cannot determine the similarity of products without UL's input, and placing this burden on Customs is unreasonable and contrary to statute. ICCS's argument against seizure and forfeiture of its merchandise, based on having a valid license agreement with UL, is dismissed; the law mandates that counterfeit goods be seized and forfeited without the trademark owner's written consent. This legal framework aims to protect both trademark owners and consumers against the dangers posed by counterfeit products, as highlighted in the 1996 amendment to 19 U.S.C. 1526.

ICCS marketed counterfeit merchandise that posed risks to UL's reputation and consumer safety. ICCS contended that Customs improperly relied on UL's lack of consent, effectively delegating its enforcement duties to UL and acting as an enforcement arm of private interests. However, Section 1526(e) stipulates that forfeiture of merchandise requires the trademark owner's written consent, mandating Customs to notify UL upon seizure of ICCS's merchandise to determine consent for use of its mark. Customs communicated with UL to investigate potential consent regarding the certification mark on PREMIUM model canisters, as UL had the best evidence on this matter, and ICCS could challenge UL's evidence. Additionally, ICCS argued that the Court of International Trade abused its discretion by granting a limited discovery period instead of a full one. Under Rule 56(d), a party must demonstrate by affidavit why it cannot present essential facts to oppose a motion for summary judgment and specify how further discovery would aid its case. ICCS only provided vague assertions regarding the need for additional discovery and failed to articulate how it would meet its burden in opposing summary judgment. Consequently, the court did not abuse its discretion, leading to the affirmation of the summary judgment granted to the government.