Trademark Letter Rulings from Customs Service Are Expeditious, But Under-Used Tool

[Editor's Note: The challenging impact of digital piracy on entertainment industry revenues has dominated industry headlines. But intellectual property infringement from the illegal sale of physical products is still a major concern. The following article takes a general intellectual-property approach to trademark infringement from the perspectives of both trademark holders and product importers, while providing much useful, technical information for entertainment industry professionals.]

United States Customs and Border Protection (CBP), part of the Department of Homeland Security, offers interested parties the right to request letter rulings ' advisory opinions about contemplated imports. CBP procedures provide trademark owners an avenue to obtain quick decisions that are “binding on all Customs Service personnel,” 19 C.F.R. '177.9(a), and that address concrete, forward-looking problems related to specific infringing or counterfeit imported products. While a CBP letter ruling does not provide for damages for breach, it is in many ways similar in effect to a ruling from the International Trade Commission (ITC), and can be obtained at a fraction of the price and in much less time. CBP letter rulings are an inexpensive, powerful, and somewhat underused weapon in the arsenal of trademark owners.

When Are Letter Rulings Available?

The Office of Regulations and Rulings (ORR) of CBP will provide a “full and careful consideration” of letter requests, in the form of written rulings on import-related questions posed by importers or interested parties on questions. This includes questions that typically relate to whether sample goods bear marks that violate the trademark rights of another party that are recorded with the CBP. See, 19 C.F.R. ”177.1-177.13. If the item in question is already pending before a specific office by reason of arrival or entry, that office will deal with any questions, although local offices always have the authority to forward requests to the headquarters in Washington, DC. (In practice, these requests are delegated to the ORR.) See, 19 C.F.R.”177.1(a)(2)(i), 177.11. Letter rulings are similarly unavailable for matters pending before most other courts, see, CBP, “Requirements for Electronic Rulings,” at www.cbp.gov/xp/cgov/trade/legal/rulings/eRulingRequirements.xml (updating and superseding 19 C.F.R. '177.7) or that relate to import transactions that have already been completed, 19 C.F.R. '177.1(a)(2)(ii).

If a matter becomes “live” while a letter ruling is pending, the requesting party must immediately advise Customs and the local field office; the local office typically suspends action until the letter ruling is issued. See, 19 C.F.R. '177.5. Rulings are considered “published” once a decision is published in the Customs Bulletin. See, 19 C.F.R. '177.1(d)(1). Within 90 days of issuing the decision, CBP is required to publish its final decisions. Trademark decisions are effective immediately unless the ruling provides otherwise. See, 19 C.F.R. '177.10.

CBP has the authority to find that a proposed import would either infringe a trademark previously recorded with CBP pursuant to the provisions of 19 C.F.R. ”133 et seq. or that a proposed import would be a counterfeit. See, HQ 459018 (Jan. 5, 1995), available at http://rulings.cbp.gov/detail.asp?ru=459018&qu=459018. The term “counterfeit” is defined as “a spurious mark that is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. '1127; 19 C.F.R. '133.21(a). For example, an importer acting on behalf of Cheveux Corp. asked the CBP to rule on whether any or all of five patterns were likely to infringe upon or constitute counterfeits of Burberry Limited's well-known plaid mark. HQ 471389 (Jan. 31, 2002), available at http://rulings.cbp.gov/detail.asp?ru=471389&qu=471389.

Trademark owners can also seek letter rulings confirming that branding used by third parties infringes their registered and recorded marks. See, HQ 459012 (May 2, 1995), available at http://rulings.cbp.gov/detail.asp?ru=459012&qu=459012. In that letter ruling, CBP ruled that LAICRA, LICRA, LIKRA and LYKRA were counterfeit and the terms LYCRI and LYCRO were confusingly similar to DuPont's LYCRA mark. Customs may also issue letter rulings based on unregistered trademark rights. See, U.S. v. Nippon Miniature Bearing Corp., 155 F.Supp.2d 702, 709 (C.I.T. 2001) (“Customs' determination in the form of letter ruling finding a violation of Section 43(a) was held to be a permissible exercise of its authority. No court order was required to deny entry of the merchandise pursuant to Section 43(b).”).

Once a ruling has been issued, a copy should be filed with the local Customs field office in connection with any relevant transactions. See, 19 C.F.R. '177.8(2).

Requirements for Ruling Requests

Ruling requests should contain “a complete statement of all relevant facts relating to the transaction,” to the extent known, including the name of the port and a summary of the proposed transaction (for trademark matters, focusing on the marks and goods at issue). The request must include at least photographs and/or drawings of the goods in question, and preferably a sample of the article itself. Any related documents that are relevant and necessary for the ruling ' like invoices, contracts, agreements, and so forth ' should be appended and described in the ruling request. The request must identify whether “the same transaction, or one identical to it” has been or is being considered by any Customs office, or the U.S. Court of International Trade, the U.S. Court of Appeals for the Federal Circuit or any court of appeal from those bodies. Finally, the request must be signed by the party making the request or the party's agent. See, 19 C.F.R. '177.2(a)-(c).

Letter ruling requests can contain a few more items. First, the requestor can and should provide a brief statement of its favored position. See, 19 C.F.R. '177.2(b)(6). Second, if the request includes any privileged or confidential information (not particularly likely for a trademark matter, but possible), that information must be identified and the reason for the confidentiality request must be justified by detailing the harm that could result from disclosure of the information. See, 19 C.F.R. '177.2(b)(7). Confidentiality designations only apply to the decisions issued by Customs; the letter request itself is discoverable under the Freedom of Information Act and will not be shielded on confidentiality grounds. So, those requesting letter rulings should be careful about including any trade secret or confidential matters in their requests, and try to construct any letter ruling requests so they do not disclose confidential information. From the perspective of an importer, merely requesting a non-infringement ruling might tip off a trademark owner about a potential infringement issue. Finally, the petitioner can request urgent consideration of the ruling request, 19 C.F.R. '177.2(d) (on a showing of a “clear need” for urgent action) or an oral hearing, 19 C.F.R. '177.4; either type of request can be granted or rejected at Customs' discretion.

The person requesting a ruling will be given 30 days to cure any non-conforming ruling requests. See, 19 C.F.R. '177.3. CBP can modify decisions that have been in effect for more than 60 days only by publishing notice of its proposed and final action. See, 19 C.F.R. '177.12(b)-(d). If field offices apply the ruling for inconsistent decisions, interested parties can petition to headquarters for reconsideration. See, 19 C.F.R. '177.13. (The petition process also provides for a short notice-and-comment period.) Letter rulings, like other types of informal interpretive documents published by agencies, are entitled to “respect” but not deference from courts, since they are not vetted through a notice-and-comment process. See, U.S. v. Mead Corp., 533 U.S. 218, 221 (2001). Because letter rulings are not true adversarial proceedings, they presumably do not have the res judicata effect of a full-fledged ITC ruling. See, e.g., Union Mfg. Co. Inc. v. Han Baek Trading Co. Ltd., 763 F.2d 42, 44-46 (2d Cir. 1985) (res judicata applies to ITC judgments on trademark claims).

Letter rulings are reviewed (if rarely) by the Court for International Trade. See: 28 U.S.C. '2640(d); Ross Cosmetics Distribution Centers Inc. v. U.S., 17 C.I.T. 814, 815 (1993). If the aggrieved party wants the Court of International Trade to grant pre-importation review, it should not dawdle too much from the date of receipt of an adverse letter ruling to the date of filing suit. See, CPC Intern. Inc. v. U.S., 19 C.I.T. 978, 988, 896 F.Supp. 1240 (C.I.T. 1995) (noting that a three-month delay was reasonable).

Standards Applied in Letter Rulings

Because the ORR is located in New York, it applies the Second Circuit's Polaroid factors to determine whether there is a likelihood of confusion between two marks. See, Polaroid Corp. v. Polaroid Electronics Corp., 287 F.2d 492 (2d Cir. 1961). The eight factors ' not all of which are relevant in every proceeding ' are:

1. The strength of the mark;
2. The degree of similarity between the two marks;
3. The proximity of the products;
4. The likelihood that the prior owner will bridge the gap;
5. Actual confusion;
6. The defendant's good faith in adopting its mark;
7. The quality of the defendant's product; and
8. The sophistication of buyers.

Because letter rulings are not adversarial proceedings, the CBP applies very loose standards of evidence. For example, in the Burberry ruling raised earlier in this article, the CBP noted (whether via judicial notice or due to facts asserted in Burberry's letter ruling request is not clear) that the Burberry plaid mark was “known, sold, and worn on an international scale.” HQ 471389, supra.