GRK Canada: Wood Screws, Fly Swatters, and Butter Knives

Is it possible that I failed to report on the Court of International Trade decision in GRK Canada, Ltd. v. United States? I can't find it on my own blog, so that seems to be true. Well, the Federal Circuit has vacated and remanded that decision back to the CIT, so pretend it never happened and start here.

The issue is the proper tariff classification of various screws. Customs and Border Protection liquidated the the screws as "other wood screws" in HTSUS item 7318.12.00. GRK protested, asserting that the correct classification in in 7318.14.10 as "self-tapping screws." The Court of International Trade held that both subheadings were eo nomine, meaning that the scope of the heading depends on the description of the product by name rather than by use. Because the government's argument in the Trade Court was based on the use of the screws in wood, the Court found it to be weak and ultimately unconvincing. The Court then found that the imported products had physical characteristics of both wood screws and self-tapping screws. Because the competing subheadings were equally specific, the CIT applied GRI 3(c) and classified the screws as self-tapping, which is the last subheading in numerical order.

The Federal Circuit disagreed with the Court of International Trade in a very fundamental way. According to the majority opinion, an eo nomine designation may inherently suggest a type of use. For example, the eo nomine term "fly swatter" implies that the item is used for the swatting of flies. Under the the Federal Circuit's analysis, it would be incorrect for the Court of International to ignore this implication when classifying fly swatters and similar articles.

In fact, how could it be otherwise? What are the physical characteristics of a fly swatter that define it as such? They tend to have long handles and heads consisting of some kind of mesh or light solid surface. That might also describe a squash racket and a spatula. Other characteristics that distinguish the fly swatter might include the value and materials. But, the real distinction is that the product is designed for swatting flies, which makes the use and probably the marketing relevant.

With this in mind, the Federal Circuit held that "other wood screws" "seems naturally aligned with the indented use of screws," meaning that they are screws used to fasten wood. Further, the Explanatory Notes indicate that wood screws and self-tapping screws are similar but that self-tapping screws are intended to cut into metal and slate. The Court of International Trade recognized this when it stated that self-tapping screws as made of hardened materials. But, the Federal Circuit found this distinction to be trivial and insufficient to differentiate the products. According to the Federal Circuit, "The use of goods may be an important aspect of the distinction of certain eo nomine provisions, in particular, where, as here, the name of the provisions refers directly to the use of subject articles."

As a result, the Federal Circuit vacated the decision of the Court of International Trade and sent it back for reconsideration.

All of which would have been interesting enough. But, there's more. There is a dissenting opinion from Judge Reyna, who was a trade lawyer before he became judge. Judge Reyna says that once the Court determined that the two subheadings at issue are eo nomine provisions, it was improper to "import a principal use analysis into its construction of the eo nomine subheadings." So much for my fly swatter.

Also, Judge Reyna correctly points out that the CIT applied the legally binding General Rules of Interpretation to their logical conclusion at GRI 3(c). Rather than fault the CIT for that analysis, the Federal Circuit should recognize that resolving this kind of classification conundrum is exactly why GRI 3(c) exists.

Judge Reyna makes a strong case. He wants to focus on lexicographical evidence of the common and commercial meaning of the terms "other wood screws" and "self-tapping screws." Reviewing that evidence, he would find that the industry, and presumably the rest of English-speaking America, differentiate these screws based on the physical characteristics of the screws, which is what the CIT did. He would have affirmed the CIT.

This is a tough case. I think it turns on two important questions. The first question discussed by the Federal Circuit is whether the phrase "other wood screw" is an eo nomine designation that inherently suggests a limitation based on use. That is my fly swatter analogy. If so, does the law then require the Court of International Trade to consider use in determining the classification? That consideration raises the second question: is this really an eo nomine classification? Is "wood screw" meaningfully different than "screw for use in wood?" The latter would be a use provision and all of this goes away because we no longer have competing eo nomine provisions. I'm not suggesting that is the right answer. For example, a butter knife, has all kinds of common uses other than cutting and spreading butter. There are physical characteristics that define a butter knife including a rounded tip and relatively dull cutting surface. All I am suggesting is that this is an interesting case and is exactly the kind of issue customs lawyers love to sort out.


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