Holding that the Bureau of Customs and Border Protection's seizure of counterfeit goods under 19 U.S.C. § 1526(e) does not constitute an embargo, the U.S. Court of Appeals for the Federal Circuit vacated the decision of the Court of International Trade (CIT) and remanded with instruction to dismiss for lack of jurisdiction. Sakar Int'l, Inc. v. United States, Case No. 06-00025 (Fed. Cir., Feb. 19, 2008) (Schall, J.).
In 2002, Sakar International, Inc. attempted to import travel chargers and mini-keyboards for PDAs bearing "UL" trademark registered to Underwriters Laboratories and "Flying Window" trademark of the Microsoft Corporation. The U.S. customs officials determined that the goods were counterfeit under U.S. law, seized them and notified Sakar that the goods would be forfeited and disposed of unless, within 30 days, the trademark owners consented in writing to the importation of the goods. Consent was not received and the bureau destroyed the goods. Subsequently, the Bureau of Customs fined Sakar $381,500 for the attempted import; the amount was later reduced to $67,775.
Sakar filed suit in the CIT challenging the fine. The CIT found that it had jurisdiction over the matter, but dismissed Sakar's complaint due to the lack of "final agency action."
On appeal, the government argued that CIT erred in ruling that it had jurisdiction. The Federal Circuit noted that under 19 U.S.C. § 1581(i)(3) and (4), the CIT has exclusive jurisdiction over administration and enforcement of "embargoes and other quantitative restrictions on the importation of merchandise." Therefore, the critical question was whether the Bureau of Customs' seizure of merchandise under § 1526(e) constituted an embargo.
The Federal Circuit next noted that in K Mart v. Cartier, the Supreme Court concluded that the prohibition against importation of counterfeit goods imposed by 19 U.S.C. § 1526(a) was not an embargo because the trademark owner, not the government, had the sole authority to decide whether products bearing its trademark could be imported. The Federal Circuit rejected Sakar's attempt to distinguish K Mart. Examining Bureau of Customs' regulations, the Federal Circuit found that merchandize seized under § 1526(e) is forfeited, "unless the trademark owner, within 30 days of notification, provides written consent to importation." Thus, the Federal Circuit concluded, it is the trademark owner that ultimately controls the disposition of the merchandise under § 1526(e). The government's seizure of imported merchandise alone does not constitute an embargo when seized goods may be subsequently released for importation upon the trademark owner's consent.
Accordingly, the Federal Circuit vacated the CIT's decision and remanded the case with instructions for the CIT to dismiss Sakar's complaint for lack of jurisdiction.
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