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HADDAD MFG. CO. v. GUCCI

January 21, 1987

HADDAD MANUFACTURING CO., INC., Plaintiff
v.
GUCCI, INC., Defendant



The opinion of the court was delivered by: LECHNER

 This case involves allegedly counterfeit Gucci luggage. It appears the United States Customs Service ("Customs") has taken steps to prevent the plaintiff, an importer, from selling or otherwise disposing of a quantity of imported luggage which was decorated, when imported, with stripes similar or identical to stripes protected by a registered Gucci trademark. Customs declared the items carried a counterfeit trademark but has apparently indicated the luggage could be released if the plaintiff obtains Gucci's written consent. Gucci, however, has withheld its consent. Plaintiff instituted this declaratory judgment action for an order releasing the luggage. Since it appears Congress has vested the Court of International Trade ("CIT") with exclusive jurisdiction over this issue, the action must be dismissed.

 Facts

 Plaintiff, Haddad Manufacturing Co., Inc. ("Haddad"), is a New York corporation with its place of business located in Linden, New Jersey. Defendant, Gucci, Inc. ("Gucci") is apparently a New York corporation with its place of business in Secaucus, New Jersey. Haddad asserts this court has jurisdiction over this matter because the action arises under the federal trademark laws. 28 U.S.C. § 1338(a).

 It appears that Gucci is the holder of certain trademarks and trade names, including a green-red-green stripe for which Gucci has obtained United States Trademark Registration No. 1,122,780. The stripe is designed for use in decorating goods including luggage. (Gucci's Brief, Ex. A.) Gucci has apparently filed a copy of this trademark registration with the Secretary of the Treasury pursuant to 19 U.S.C. § 1526(a) and 19 C.F.R. § 133.1. 19 U.S.C. § 1526 prohibits the importation of merchandise bearing a registered trademark absent written consent from the registrant.

 It appears that in late 1985 or early 1986, Haddad imported a quantity of luggage bearing stripes identical to those registered under the Gucci trademark. Customs initially cleared the luggage, but, on or about January 28, 1986, issued a "Notice of Redelivery" ordering that the merchandise be returned to Customs because of infringement on the Gucci trademark. (Complaint para. 5.) Counsel for Haddad indicated at oral argument that Customs' notification to Haddad stated that the Haddad luggage bore "counterfeit" Gucci marks. It appears the luggage has not been returned to Customs.

 The complaint alleges that in March, 1986, a Haddad representative contacted a Gucci representative, advised him the offending stripes had been removed from the luggage, and requested a Gucci representative inspect the luggage for the purpose of issuing a consent on behalf of Gucci to the release of the luggage. The complaint alleges the Gucci representative initially orally agreed to have the luggage inspected, but after several days, informed the Haddad representative Gucci would not consent to a release of the luggage. (Complaint paras. 6, 7.)

 On November 6, 1986, Haddad filed its complaint in this action. The complaint sets forth the above facts, claims Gucci wishes to have the subject luggage destroyed and seeks a declaratory judgment ordering the luggage be released. In lieu of answering the complaint, Gucci filed a motion to dismiss for lack of subject matter jurisdiction, failure to state a claim upon which relief may be granted and for failure to join Customs, an indispensable party. Briefs were submitted and the parties argued the motion on January 12, 1987.

 Discussion

 Congress has enacted extensive and specific legislation governing the importation of merchandise bearing marks that appear to be counterfeit or infringe upon registered trademarks. Specifically, the law provides that when Customs determines imported merchandise bears a "counterfeit" trademark, the merchandise "shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws. . . ." 19 U.S.C. § 1526(e). A counterfeit mark is defined as "a spurious mark which is identical with, or substantially indistinguishable from, a registered mark." 15 U.S.C. § 1127. As noted, counsel for Haddad stated at oral argument that Customs' Notice of Redelivery with respect to the luggage at issue indicated the luggage bore counterfeit Gucci stripes.

 Once Customs has seized merchandise bearing counterfeit marks and the merchandise has been forfeited for violation of the customs laws (19 U.S.C. 1526(e)), the law provides for disposal of the forfeited goods in one of four ways. After obliterating the offending trademark, Customs may dispose of the goods by delivering them to certain governmental bodies or eleemosynary institutions, by selling them at public auction or, if warranted, by destruction of the goods. 19 U.S.C. § 1526(e)(1) - (4). The law does not provide for return of the forfeited goods to the offending importer after removal of the trademarks. Moreover, nothing in the statute suggests, and counsel for Haddad has pointed to no precedent, that a trademark holder may not unreasonably withhold consent for the release of forfeited merchandise. It appears the Customs official who issued the Notice of Redelivery in this case, did so under the authority of 19 U.S.C. § 1526(e). Accordingly, it would run directly contrary to an explicit Congressional mandate for this court to issue an order releasing the subject luggage.

 The law is equally clear that a determination made by a Customs official, that imported merchandise bears a counterfeit mark and is to be redelivered to Customs, is a final and conclusive decision that may be challenged only along specified channels. As provided for in 19 U.S.C. § 1514(a):

 
Decisions of the appropriate customs officer, including the legality of all orders and findings entering into the same, as to . . . a demand for redelivery to customs custody under any provision of the customs law . . . shall be final and conclusive upon all persons . . . unless a protest is filed in accordance with this section, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the United States Court of International Trade . . . .

 However, an importer who wishes to challenge a Customs' "demand for redelivery" is not without remedies. 19 U.S.C. §§ 1514 and 1515 set forth the mechanism for protesting Customs' decisions. Most importantly for purposes of this motion, 28 U.S.C. § 1581(a) provides: "The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under [ 19 U.S.C. § 1515]." Counsel for Haddad stated at oral argument he had filed a protest to Customs' Notice of ...


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