Monday, August 14, 2017

Chew on This

The important legal and possibly philosophical question to be answered in Mondelez Global LLC v. United States is whether the unflavored, and largely chemical, base for chewing gum is classified in HTSUS Heading 2106 as a food preparation or in Heading 3824 as a chemical preparation.

While that is an interesting question, the most interesting thing about his case may be the procedure used to get it this far. It appears that the United States made a motion for partial summary judgment to ask the Court to decide a question of law as early as possible. This makes sense when there is a possibly dispositive question of law that can be resolved without discovery or the introduction of factual evidence. The answer to that question of law might lead the parties to resolve the case by settlement or, at a minimum, the answer provides guidance on what are the important questions of fact.

Addressing the legal questions early, therefore, can be an efficient way to manage customs litigation. At least that is the theory I put forth here. Things may have gotten a little bollixed up because Mondelez opposed the motion for partial summary judgment on the question of law and then jumped in with both feet asking the court to grant full summary judgment on the whole case before the parties had engaged in discovery. That's its right, so I can't really complain, but this does not seem to have been a good test of my theory of tariff litigation.

On the merits, the first question is whether gum base is a "food preparation" of Heading 2106., as the government contends. If the Court finds that gum is a food and that the base is specially prepared for the manufacture of chewing gum, then even with just partial summary judgment on those questions, the government might well win the case because it would follow that the gum base is a food preparation.

But, Mondelez has a different thought. It contends that Heading 2106 only covers items that are themselves consumed as food and that gum base is not consumed as food. Mondelez also points out that gum base is not intended for human consumption and is not valued for its nutritional qualities.

On this question, the Court noted that the phrase in 2106 is "food preparation." That has a different meaning than the phrase "preparations for food." As written, preparations classifiable in 2106 must be food. According to the Court, "food" is a substance that is intended to be ingested or imparts flavor or nutritional value to something that is ingested. So tea leaves are presumably food preparations because they impart flavor to tea even though the leaves themselves not consumed. Something can be food without providing nutritional value, so long as it is ingested.

But, the government also argued that if it does deliver nutrition, the substance is food. At this early stage, the government has not explored whether the gum base is a means of delivering nutritional compounds, even if the base is not ingested. It turns out that gum bas includes a few components that arguably have nutritional value. Those are vegetable oil, calcium carbonate, lecithin, and triacetin.

In an effort to avoid a potentially costly scientific and expert analysis of this question, the government moved for partial summary judgment on the scope of 2106 without first investigating this question. Because of that, it asked the Court to refrain from deciding Mondelez's motion for summary judgment. The Court, not wanting to penalize the government for trying to be efficient, agreed and did not address that question.

Still on the table is whether chewing gum base is covered by Heading 3824 as a chemical preparation. Note 1(b) to Chapter 38excludes "mixtures of chemicals with foodstuffs or other substances with nutritive value, of a kind used in the preparation of human foodstuffs . . . ." Such goods, according to the note generally go in Heading 2106. The Explanatory Notes clarify that goods are not excluded from Chapter 38 by the mere presence of substances having incidental nutritive value. In other words, products of 2106 are "of a kind" used in the preparation of human food and which are valued for their nutritional content.

That means there is a necessary question of fact to be resolved: is gum base valued for its nutritional properties? That, according to the Court, is essentially the same question that must be answered to resolve the classification in Heading 2106.

This sets up a problem for the Court. Mondelez moved for summary judgment and presented evidence that gum base is not valued for its nutritional properties. The U.S. was hoping to avoid this issue and moved to resolve the legal question of whether gum base is a food preparation (making chewing gum "food"). If the Court ruled it is not food, then 2106 would have been excluded. The Court could not answer that question on the record presented. If it acted on Mondelez's motion for summary judgment, it would be doing so on a less than complete record, putting the government at a disadvantage for having tried to get the case resolved efficiently.

The Court wisely refused to do so. Instead, it ordered the government to advise whether it wants time for discovery. If no discovery is needed, Mondelez will prevail on the basis of the uncontroverted evidence.


Saturday, August 12, 2017

XYZ and Lever Protection (Part 2)

This is a discussion of the jurisdictional merits of XYZ Corporation v. United States. If you are not up on the ins and outs of parallel (or "gray market") imports, read Part 1 of this post.

Remember what is happening here: Plaintiff, going by the pseudonym XYZ Corporation, wants a preliminary injunction to prevent Customs and Border Protection from granting Lever Rule protection to Duracell batteries imported in bulk or in retail packaging.

The first question the Court has to decide is whether it even has jurisdiction to resolve this dispute. The Court of International Trade, like all federal courts, is a court of special and limited jurisdiction. It can only act if Congress gave it the authority to do so. There are two possible bases of jurisdiction in this case.

The first is 28 USC 1581(h), which states in full (with my emphasis):
The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawbacks, vessel repairs, or similar matters, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.

The second basis is 28 USC 1581(i)(4), which is the residual provision giving the Court jurisdiction over actions against the United States challenging CBP decisions relating to, among other things, the administration and enforcement of duties and quantitative restrictions on the importation of merchandise.

These two bases for jurisdiction are mutually exclusive. The Court cannot exercise jurisdiction under section 1581(i) if it has jurisdiction under 1581(h). Thus, the question comes down to whether this challenge is properly heard in the CIT as a request for declaratory judgment under 1581(h).

The first factor is clear. This is a pre-importation review. The next question is whether the granting of Lever Rule protection to Duracell is a "ruling." In this context, a "ruling" is a determination as to the manner in which CBP will treat a completed transaction. Here, CBP has made a determination to grant Lever Rule protection against merchandise bearing the Duracell trademark, meaning it has decided how it will treat those future importations. Moreover, under Customs' own regulations, a ruling is a written statement, issued by Headquarters, published in the Customs Bulletin, interpreting the customs and related laws. The decision to grant Lever Rule protection satisfies those requirements and is, therefore, a ruling. Furthermore, it is a ruling about restricted merchandise, making it appropriate subject matter for declaratory judgment.

The next of the elements required to secure (h) jurisdiction is where things usually fall apart: irreparable harm. More often than not, a customs can be resolved with a refund of duties, taxes, and fees, plus interest. That means there is almost always a way to repair the harm, making (h) inapplicable. But, there are things a money judgment can't fix such as loss of goodwill, damage to reputation, loss of future business opportunities, etc. Here, XYZ  showed that it has lost sales and suffered damage to its business reputation as a result of the grant of Lever Rule protection to Duracell. It has shown through an affidavit and testimony that customers are concerned about potential repercussions from the owners of the Duracell mark. Plaintiff also faces great uncertainty regarding whether its shipments will be released. These are significant, non-monetary harms that cannot be remedied through a refund of duties or other money judgment.

As a result of these conclusions, the Court of International Trade found that it has 1581(h) jurisdiction to hear this challenge to the extension of Lever Rule protection. That means that is does not have jurisdiction under 1581(i).

The next set of questions has to do with whether the plaintiff in this case has standing to challenge the CBP determination. "Standing" is the legal requirement that the plaintiff have a legitimate interest in the litigation. It typically means that the plaintiff must be the party that was injured. You can't sue the driver who caused an accident if you were miles away and uninjured. Here, XYZ is an importer of the affected merchandise and has complained of an injury to its business as a direct consequence of CBP's action. It has standing to sue.

The last question is whether the issue is ripe for decision. Generally, federal courts will only review final agency action. Here, CBP issued its final notice and declared that Lever Rule protection would commence. That is a final agency action. Furthermore, the issue is ready for resolution; all the relevant facts are known and the legal issue can be decided.

All of which means that this case is properly before the Court of International Trade.

The Court has denied the requested preliminary injunction against enforcement of the Lever Rule protections. That is because the relief available under (h) us limited to declaratory judgment with prospective application to future imports.

But, this case is far from over. There is still the question of whether the grant of Lever Rule protection requires public notice and comment under the Administrative Procedures Act ("APA"). If it does, the grant of Lever Rule protection in this case, and potentially all prior cases, is void. That would be a big deal. The Court has ordered the parties to confer and submit a scheduling order for the resolution of the remaining issues. In other words, the Court will likely have to decide whether the regulations implementing the Lever Rule are consistent with the requirements of the APA and possibly the due process clause.

This will be an interesting case to follow.

More to come. I am sitting on a penalty case and the important philosophical question of whether chewing gum is food. And, we might have to talk about bankruptcy law.

Friday, August 11, 2017

The XYZ Affair and a Quasi-War Over Gray Market Imports (Part I)

Every now and then a case shows up at the Court of International Trade that does not fit into the normal baskets of what tends to happen there. One such case is XYZ Corporation v. United States.

Here is some background. U.S. law says that only the trademark owner or someone authorized by the trademark owner can import products into the United States bearing the mark. That makes sense and it is how the law is usually described. But, it is also incomplete.

The law also provides that once someone buys the physical item bearing the mark, that person can do pretty much what he or she wants with it, including resell it and import it. That is the principal of trademark exhaustion. The idea is that through the authorized sale, the trademark owner has been fully compensated and has no lingering rights to control the further disposition of the product.

That creates an opportunity for entrepreneurs. If a company can find a good deal on shampoo, chocolates, or Mexican cola in some foreign market, it can import the goods into the United States and sell them here at a profit. This is the business model on which many discounters and on-line sellers operate. It is perfectly legal . . . up to a point.

The problem for parallel importers (or "gray market" importers) is that U.S. trademark law still does not allow the use of a trademark in a way that that is likely to cause confusion as to the attributes of the product. Assume you go into your local deep discount shop to buy a bar of Shield soap, because that is what you always buy and you expect it to work they way you like it to work. You see the familiar Shield label, grab a bar, and run home for a shower. Unfortunately, your shower is unsatisfying because the soap does not lather properly and maybe smells a little funny. What gives?



What happened is that you bought a perfectly cromulent bar of soap authorized by Lever Bros., the owners of the Shield trademark. It is just that the particular bar you bought at a steep discount was intended for some other country, not the U.S. It was formulated specifically for consumer preferences and conditions in that country and does not work well in the U.S. Lever Bros. never intended for it to be sold in the U.S. But, they lost control over that bar of soap when it was sold in an authorized channel abroad.

Those facts resulted in the famous Lever Bros. Co v. United States, a 1989 decision on the legality of parallel imports of authentic trademarked products. The upshot of that case is that parallel imports are generally legal. But, if the product is materially different than the product authorized for sale in the United States, then consumers may be deceived as to the nature of what they are buying. Consequently, U.S. trademark holders are permitted to seek the exclusion of imports that bear legitimate trademarks but are nonetheless materially different from the local versions. This is the Lever Rule.

Customs has implemented the Lever Rule in a kind of tricky way. First, it defines "restricted gray market goods" as "foreign-made articles bearing a genuine trademark or trade name identical with or substantially indistinguishable from one owned and recorded [with CBP] by a citizen of the United States or a corporation or association created or organized within the United States and imported without the authorization of the U.S. owner." 19 CFR 133.23(a). I say this is "tricky," because you will note that goods meeting this definition are not actually restricted; they will be prevented from entering the U.S. only in limited circumstances. The qualifiers are important.

Restricted gray market merchandise must have a trademark that was:
  1. Applied by licensee independent of the U.S. trademark owner (and, presumably, not under its control);
  2. Applied by the foreign trademark owner or under its authority, provided that the foreign trademark owner is not the U.S. trademark owner, its parent, its subsidiary, or otherwise under common control or ownership (again, note we are talking about a foreign party not under the control of the U.S. trademark owner); or
  3. Applied by the U.S. trademark owner or someone under its ownership or control but applied to goods that are materially different from the articles authorized for distribution in the U.S.
It's that last bit that we are worried about in this case.

A U.S. trademark owner can submit a request to Customs to exclude genuine but materially different restricted gray market goods. See 19 CFR 133.2(e). This is called Lever Rule Protection. But there is a caveat here. Remember that parallel imports of materially different products are restricted because consumers might be deceived (or at least confused) about what they are getting. The way to fix that is to label the product as not authorized for the U.S. market and materially different from the authorized product. No consumer confusion means the goods can be imported.

I am not 100% certain why companies seek Lever Rule Protection. One consequence is that it tells prospective importers to affix labels to the product to get them through Customs. Materially different but genuine products that are unlabeled are subject to seizure. I suspect that most importers don't know about the labeling option or don't bother to label, which makes the Lever Rule valuable. Also, seeking Lever Protection gets the trademark front and center with CBP for enforcement.

OK, all of that, leads up to the modern, as opposed to the historical, XYZ affair

In this case, Duracell asked for Lever Rule Protection for bulk and retail packaged batteries bearing genuine Duracell marks. Customs, following its regulations, published a notice of that request in the Bulletin on January 25, 2017. On March 22, 2017, CBP announced that it had granted Lever Rule Protection to Duracell but did so without permitting public comment. Customs' rationale was only that it determined the batteries to be materially different than their domestic counterparts.

This did not sit well with some company, which we must assume is a parallel importer of Duracell batteries. For purposes of this litigation, that company has a assumed the nom de guerre "XYZ Corporation." XYZ complained to Customs that restricting imports is a serious matter that affects the rights of third parties who should have an opportunity to comment before CBP takes action. XYZ also noted that the bulk batteries are not, in its estimation, materially different than Duracell's U.S. products. XYZ requested that CBP reconsider. XYZ then sued Customs seeking judicial review of the extension of Lever protection and an injunction preventing CBP from enforcing gray market restrictions on Duracell batteries. 

Shots fired.

Given that I still work for a living, I am going to call that Part I. I will finish this up soon.

Thursday, August 10, 2017

Good News (About Ford and the Blog)

Turns out that I am still alive and still consider this to be an active blog. I have been working very hard on a number of fronts and simply have not had the time to keep you all up to date. I'll be back soon.

I know I will be back soon, because this showed up on the docket at the Court of International Trade in Ford Motor Co. v. United States:

Order entered on 8/9/2017 Judgment: ORDERED that Plaintiff's motion for summary judgment is GRANTED; it is further ORDERED that Defendant's cross- motion for summary judgment is DENIED; it is further ORDERED that judgment is entered for Plaintiff; it is further ORDERED that the subject merchandise is correctly classifiable pursuant to subheading 8703.23.00 of the Harmonized Tariff Schedule of the United States ("HTSUS"); it is further ORDERED that Customs and Border Protection, United States Department of Homeland Security ("Customs"), reliquidate the entry which is the basis of this case under the aforesaid HTSUS subheading; and it is further ORDERED that Customs refund to Plaintiff any overpayment of duties together with any interest allowed by law. (related document(s) 144 ).(Demb, Rebecca) (Entered: 08/09/2017)

This is the much discussed, by me at least, case involving the tariff classification of the Ford Transit Connect.  This docket entry indicates that Ford has won at the Court of International Trade. The decision has not yet been published as the Court has requested that it be reviewed to identify any business proprietary information. A decisions should be published in the next two weeks.

Obviously, a more detailed analysis will follow.

Congratulations to Ford and its counsel.

Friday, June 02, 2017

Interest: Equitable and Otherwise

The Federal Circuit has affirmed the Court of International Trade's holding that a surety is be liable for statutory interest but not for equitable interest when the importer defaults on the payment of antidumping duties. What follows is heavy on law, short on fact, and important to sureties and also importers. The case is United States v. American Home Assurance Company.

When importers fail to pay duties, taxes, and fees to the U.S. government, the government can collect interest on the unpaid portion. If the importer defaults, the surety becomes liable up to the value of the bond, unless the surety has a defense it can assert (and [spoiler] actually asserts it). In this case, the importer defaulted on the payment of antidumping duties and Customs tried to collect the duties and interest from the surety. There was no question about the liability for the duties. The questions presented has to do with interest.

There are multiple bases for the interest. First, interest is available to the United States under 19 U.S.C. 1505(d), which states:

If duties, fees, and interest determined to be due or refunded are not paid in full within the 30-day period specified in subsection (b), any unpaid balance shall be considered delinquent and bear interest by 30-day periods, at a rate determined by the Secretary, from the date of liquidation or reliquidation until the full balance is paid. No interest shall accrue during the 30-day period in which payment is actually made.

Separate from that, 19 U.S.C. 580 provides:

Upon all bonds, on which suits are brought for the recovery of duties, interest shall be allowed, at the rate of 6 per centum a year, from the time when said bonds became due.

On top of that, there is a thing called "equitable prejudgment interest," which is not statutory and derives from the judicially perceived need to compensate the United States for the loss of the use of money owed to it from the time the obligation to pay accrued until a judgment ordering payment is entered. This is a traditional rule established by judges, not by Congress.

Starting with equitable prejudgment interest, the United States appealed the Court of International Trade's decision to deny prejudgment equitable interest. The Federal Circuit held that equitable remedies are generally unavailable when there is an adequate statutory remedy. Section 580 would appear to provide a statutory remedy at the relatively high rate of 6%, making the government whole. There is, however, a wrinkle in this case in that the recent Trade Facilitation and Trade Enforcement Act of 2015 expressly permits the government to recover both equitable prejudgment interest and statutory interest under section 580.

Nevertheless, equitable interest remains equitable in nature. The fact that Congress recognized that the Court of International Trade might award equitable interest does not mean the CIT must do so. Here, the Federal Circuit held that the CIT properly considered the equitable factors and concluded that the government was sufficient compensated by the statutory interest. Thus, the denial of additional equitable interest was proper.

Regarding the section 580 interest, the issue was not the availability of the remedy, which is clearly permitted under the statute. Rather, the surety argued that the CIT improperly permitted section 580 interest to be calculated on top of the section 1505(d) interest, putting interest on interest. The surety also argued that the relevant date for when interest should start to run is the date of denial of the protest rather than the first demand for payment.

On the first question, the Federal Circuit interpreted section 508 as clearly permitting interest on the entire bond amount, including 1505 interest. This would obligate the surety to pay interest on interest up to the amount of the bond. Regarding timing, the Court said section 508 is "clear and unambiguous" that the interest clock begins to run on the government's first formal demand.

The issue with respect to section 1505 interest was different. This is the legal question of whether the surety waived its right to content the interest by failing to challenge the denial of the protest and pay the duties and fees owed. The underlying rationale here is that decisions by Customs imposing charges or exactions on an importer are final and conclusive unless a protest of law suit contesting the liquidation is properly commenced. A surety is permitted to challenge a charge or exaction through an administrative protest. The fact that the interest is assessed after liquidation, does not change its nature as a protestable charge. Here, Customs denied the protest. At that point, is the defendant wanted to challenge the charge, it needed to file a summons in the Court of International Trade. For whatever reason, AHAC chose not to exercise that right and the decision became final and conclusive.

The latter point is very important. Where an importer or surety disagrees with Customs' efforts to collect duties, taxes, fees or interest, it must challenge the charge or exaction. Failing to protest will result in a final and conclusive assessment and will divest the importer or surety of the right to challenge it when sued in the CIT. I'm not happy with this result. It produces a waiver of defenses that many importers may not understand or appreciate. It is, however, the law.

Tuesday, May 30, 2017

On Toner Cartridges and Gray Market Imports

The United States Supreme Court has made it easier for discount retailers and "off-brand" Amazon resellers to import and sell refurbished goods, which is good news for bargain seekers.

First, a little background. Intellectual property rights like patents, trademarks, and copyrights are a deal that inventors, artists, and brand innovators make with the United States government. To promote the activity of these creative enterprises, the government grants a limited monopoly on the sale or exploitation of the work. That is why you can't make a copy of Star Wars Rogue One for 95 years, at which time it will fall into the public domain. Similarly, you can't start making your own version of the latest antibiotic because the company that put in the effort on research and development most likely owns the patent.

But, the scope of intellectual property rights is limited. With respect to patents, the law give the patent holder the "right to exclude others from  making, using, offering for sale, or selling" the invention. However, the law includes an exception that applies when the patentee sells the item. At that point, the product is the private individual property of the purchaser, who acquires all the rights of ownership, including the right to re-sell that item. This is why although you can resell your smartphone, you can't reproduce it. The same goes for music files and your trademarked running shoes. This is the rule of exhaustion.

In Impression Products, Inc. v. Lexmark Int'l, Inc., the United States Supreme Court had to decide whether Lexmark could contractually prohibit purchasers of toner cartridges from reselling them. Lexmark did this to keep the cartridges out of the hands of companies like Impression Products, that refurbish, refill, and resell the cartridges at a discount and in direct competition with Lexmark.

To discourage this activity, Lexmark set up two sales channels. In one channel, customers paid "full price" for an unrestricted toner cartridge. In the other channel, called the "Return Program," Lexmark offered a 20% discount in exchange for adding a microchip to the cartridge. The chip contained software that prevent the reuse of the cartridge. In this channel, the purchaser contractually agreed not to transfer the cartridge to anyone other than back to Lexmark. While this was a clever strategy, third parties figured out how to circumvent the chip, allowing the resellers to continue in business.

Lexmark sued Impressions for patent infringement, arguing that it did not acquire the right to use or sell the cartridge. The idea here is not unreasonable. By taking part in the Return Program, the purchaser acquired limited rights and did not acquire the right to resell the cartridge. Under normal principles of commercial law, the purchaser cannot resell more rights than it acquired. Thus, the resale should violate the patent. The Court of Appeals for the Federal Circuit agreed and held in favor of Lexmark.

The Supreme Court, via Chief Justice Roberts, took a different path. The analysis starts with a quotation from 17th Century Lord Coke who said that "in an owner restricts the resale or use of an item after selling it, that restriction 'is voide, because . . . it is against Trade and Traffique, and bargaining and contracting betweene man and man." According to the Court, this is more than an old statement of common law. Rather, it is a principle that Congress has allowed to remain in the patent laws. Without the exhaustion principle, we would not have used car dealers because patentees for individual parts might sue the dealership for repairing and reselling the car and the parts it contains. Consequently, the express reservation of rights by the patentee to the original purchaser does not give the seller a continuing interest in that item.

One additional wrinkle in this case was that some of the cartridges were first sold outside the United States. Thus, the Supreme Court had to decide whether the foreign sale exhausted the U.S. patent rights. Lexmark argued that exhaustion as a result of a foreign sale would interfere with the U.S. market and prevent it from reaping the full value of its patent monopoly. The Supreme Court was unmoved. It said, "the Patent Act does not guarantee a particular price, much less the price from selling to American consumers. Instead, the right to exclude just ensures that the patentee receives one reward--of whatever amount the patentee deems to be 'satisfactory compensation' . . . --for every item that passes outside the scope of the patent monopoly." In other words, Lexmark got paid for those sales outside the U.S. at whatever price it deemed appropriate.

This is the second in a series of Supreme Court victories for parallel importers, also known as gray market importers. The first involved copyrights in textbooks. You can read that here. On the trademark front, the law is more complicated and depends on whether the merchandise is materially different than the products sold in the United States and on whether the trademark was applied outside the United States under the control or ownership of the U.S. trademark holder. If you are interested in that, start here.

Overall, this will permit the free market in the resale of patented goods. That is, as I said, good news for discount retailers and small-scale entrepreneurs. Patentees may adjust quickly, though. The decision makes it clear that this result only applies to sales. If the good is transferred subject to a license and ownership stays with the patentee, then the licensee has no right to resell the item. Expect future toner cartridges to come with license agreements.

Tuesday, May 23, 2017

Nairobi Protocol

The Court of International Trade has taken an interesting hard look at the Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials, which is popularly known as just the Nairobi Protocol. For purposes of Sigvaris, Inc. v. United States, the important point is that the Nairobi Protocol permits duty-free entry to the United States for articles that are specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons. The merchandise at issue here is graduated compression hosiery, arm-sleeves, and gauntlets.

The merchandise is all designed to apply a certain amount of pressure the extremities to help prevent the pooling of blood or other fluids as might happen in people with certain vascular and lymph conditions. The hosiery was designed for use by people with early stage chronic venous disease. The arm sleeves and gauntlets were for people with lymphedema, which causes sever swelling in the arms and is common among women who have undergone a mastectomy.

I’m going to jump to the conclusion here. Legally, a person is said to be handicapped if they have a chronic or permanent condition that results in substantial difficulty undertaking the basic activities of life such as caring for one’s self, walking, speaking, seeing, learning or working. People with early stage chronic vascular disease can experience leg fatigue, heaviness in the legs, varicose veins, and swelling. But, 25% of sufferers experience no symptoms and those that experience symptoms do not have trouble completing basic life tasks. Thus, people with early stage chronic vascular disease are not handicapped for purposes of the law. The hosiery, therefore, is not entitled to duty-free entry under the Nairobi Protocol.
The result is different for lymphedema, which is the inability to circulate lymph fluid. It can result in pain, swelling, and ulcerations. The swelling can be so severe that it results in the inability of the patient to use the affected arm. That is, according to the Court, a handicap. As a result, the compression arm sleeves and gauntlets qualify for duty-free entry under the Nairobi protocol.
That is all well and good. It makes perfect sense and is a good analysis for anyone thinking of using the Nairobi Protocol.

Despite that, I keep returning to a single line in the decision. That line states: “The Court does not give credible weight to the Government’s assertion that a person with one arm is able to perform life’s major activities without substantial limitation.”
I don’t think I have ever written a blog post in which I have criticized a lawyer’s argument. I am hesitant to do so here. But, I really want to explore how that argument got into the briefs. I understand the factually correct assertion that people with one arm are fully capable of independent living. Two things about that fact, though, bear consideration. First, much of that independence may be facilitated by apparatus that would qualify for duty-free entry under the Nairobi Protocol. This would be true, for example, of prosthetic limbs (but not parts thereof). The existence of other Nairobi Protocol material should not undercut the ability of these products to qualify for duty-free importation.

Assuming the argument was that a person with one arm can live and work independently without any mechanical or other technological support, one should wonder what evidence for this proposition the Government provided.
Let’s be 100% clear. I am in no way, shape, or form implying that people with a physical challenge cannot live independent lives without external support. I am also not saying that there are no examples of successful and independent one-armed people. There are. All I am saying, and all the Court said, is that it is not credible to argue that a person with one arm does not have a permanent condition that causes substantial difficulty completing basic life tasks. As I type this post in the cramped quarters of American Airlines coach class, I am struck by the difficulty presented by the prospect of typing with one hand. Dragging a suitcase through an airport with only one arm would make it impossible to simultaneously use a smart phone or carry a drink in the other hand, as is the ubiquitous condition in modern airports. Riding a bike can be done with one hand, but two is far easier and safer. While I think I could drive easily with one arm, I learned just yesterday that I can barely change a tire with two perfectly good arms when one lug bolt is 80% stripped (but that is another story). I am sure that monitoring my daily activities would lead to a long list of tasks that would be far more difficult without two good arms.

My question about this stands: how did it get into the brief? Giving everyone the benefit of the doubt, was there some more subtle argument that was not well conveyed in the opinion? The opinion is thorough, so that does not seem to be the case. Was it the best argument available given the fact that lymphedema sometimes results in the inability to use an arm? If so, did the Department of Justice just go along with Customs and Border Protection’s views?
This matters because it goes to the nature of the relationship between lawyers and clients and to the public policy of the United States. Lawyers sometimes need to tell their clients that the best argument is not good enough, that the law does not support the reality the client wants. That can be a hard conversation, but hard conversations are part of the job. This is, I think, true for all lawyers but especially so for those lawyers who have the privilege of representing the United States government. While a private party, with a purely financial interest in securing a duty refund, might take a shot at a weak argument, the United States should be pursuing arguments that support the policy objectives of the United States while also preserving and protecting the revenue. It is hard to see how proffering the argument that having one good arm is not a handicap that merits the relatively minor impact on the American economy of duty-free access to the market is good public policy.

I would be very happy to be talked out this position. Is there some issue of international harmonization at stake? Is there some evidence of actual fraud? If you have insight into the reasoning, please drop a comment.