Exclusions Seized are not Excluded from Court

I rarely mention specific judges of the Court of International Trade. I generally never want my blog posts to be personal and I certainly do not want to risk having a judge think I am taking pot shots. But, I presently feel compelled to call out Judge Timothy Stanceu. Happily, it is because he is my hero of the moment due to his decision in CBB Group, Inc. v. United States. Anyone interested in how Customs and Border Protection treats merchandise detained, excluded, and ultimately seized for alleged intellectual property violations should read this case.

The important point of background is that Customs can’t hang on to imported merchandise indefinitely without going through several procedural steps. When merchandise first arrives, Customs has five days in which to release it. After that, it is considered to be “detained.” Detention is sort of importer limbo. But, after 30 days of detention, the goods are considered to have been “excluded.” Keep in mind that “exclusion” is not a seizure. All it means is that Customs has found the merchandise to be inadmissible or has failed to admit it within 30 days. At the point of exclusion, an importer has the right to file a protest challenging the exclusion. Customs can grant or deny the protest. But, if it fails to act within 30 days (for a total of 60 days), the protest is legally considered to be denied. This is the important point: a denied protest can be challenged by filing a lawsuit in the Court of International Trade.

But, there is another possible step. Customs can seize the merchandise. When that happens, a party seeking the release of the merchandise can either go through an administrative process with Customs and Border Protection, or it can file a case in a federal district court. The CIT has no role to play in a seizure case.

In CBB Group, the importer filed a protest challenging the exclusion. On the day after the 30-day protest period elapsed, the importer filed a summons in the Court of International Trade. About 20 days later, Customs issued a notice of seizure claiming that the seizure had been effectuated on the date of the summons. On the basis of the seizure, Customs moved to dismiss the case claiming the CIT lacked jurisdiction, was not able to grant relief, and should not decide questions of copyright law. Judge Stanceu quickly dismissed each argument.

The basic point is that Congress gave importers the right to protest exclusions and the CIT the power to review denied protests. Nothing in the law limits the nature of the exclusion that can come before the CIT provided the decision on admissibility is up to Customs. While the Court does not have jurisdiction over seizures, its jurisdiction attached in this case when the importer filed a timely summons prior to the seizure. While there may be a question as to the date of the actual seizure, the Court relied on the Notice date.

The government’s argument boils down to the notion that after a court case is commenced, it can wrest an exclusion case away from the Court of International Trade by seizing the goods. The Court found nothing in the law or legislative history to support that notion. In fact, the Court found legislative history stating that Customs’ eventual decision on admissibility after judicial review has begun does not relieve the Court of its duty to grant relied. The House Report does say that Customs must notify the Court if it makes a decision on admissibility or seizes the merchandise. But, the report does not state that Customs can put that decision into effect without the Court’s permission.

All of which leads Judge Stanceu to find that the post hoc seizure did not divest the Court of jurisdiction. While he was at it, he pointed out that judges of the CIT are perfectly capable of making intellectual property rulings and have done so in prior cases. Now, it looks like he might get his chance to make such a ruling.

Comments

Matt said…
Good entry, but I think you should continue your recent practice of inserting pictures of marginally relevant images (e.g., Guardians of the Universe) to maintain the interest of your attention-challenged readers, like me. Something like Tim Stanceu's 65 Mustang.
Jul 11, 2011, 10:28:00 AM
Post a Comment

Popular posts from this blog

CAFC Decision in Double Invoicing Case

The Federal Circuit has issued a decision on the merits in United States v. Inn Foods, Inc.  There had been a previous decision on jurisdiction, which was followed by a trial at the Court of International Trade and then this appeal on the substance. The initial issue is whether Inn Foods' invoicing practice amounts to fraud.  Inn Foods had been receiving an invoice from growers in Mexico that had a relatively low sales prices on it.  Subsequent to entry, Inn Foods created a second invoice at something more similar to market value, retaining the original invoice number, and paid at that higher amount.   Superficially, this looks like a standard-issue double-invoicing scheme.  But, in the age of reconciliation, is it really more like a provisional pricing mechanism?  It might have been possible to make that argument had Inn Foods adjusted its entries accordingly.  It didn't and the loss of revenue was approximately $624,000.  Based on testimony and evidence indicating both knowl
Read more

Ninestar and UFLPA Exhaustion

Image
Exhaustion is a key doctrine in administrative law. When applicable, it requires that a party unhappy with an agency’s determination complete the administrative appeal process before turning to the courts for judicial review. Requiring exhaustion typically promotes judicial efficiency by ensuring that disputes are resolved at the agency and, if they are not, that there is a complete record of the agency process. Exhaustion also ensures that the judiciary respects the executive agencies and their expertise.  There are, on the other hand, times when the courts will find that exhaustion is not necessary or appropriate. Such is the case in  Ninestar Corporation et al. v. United States  et al., a decision of the U.S. Court of International Trade.  Ninestar is also interesting because it is one of the first cases in the CIT involving the Uyghur Forced Labor Prevention Act, known as UFLPA. In my hiatus from active blogging, I missed the rise of UFLPA as a major compliance topic. So, let's
Read more

Precious Tritium

Image
One thing I have learned as a customs lawyer who does a lot of classification work is that there are millions of odd items moving in international trade the existence of which I am completely ignorant. Such is the case of the gaseous tritium light sources used in, among other things, firearm sights. These things use tritium sealed in a glass that has been coated in phosphor. The radioactive tritium decays, releasing beta particles, which interact with the phosphor causing it to emit light. In other words, it creates light with no external power source. Pretty cool.  Tritium is, of course, a real thing. It is an isotope of hydrogen. We know this from the excellent documentary "Spider-Man." This comes up in relation to the Court of International Trade decision in Trijicon, Inc. v. United States  in which the importer challenged the tariff classification of several versions of the gaseous tritium light sources ("GTLS"). The plaintiff uses them to make gun sights. The
Read more