The sale abroad of a good patented in the U.S. does not “exhaust” the patent and allow the good’s unrestricted sale in the U.S., said the Court of Appeals for the Federal Circuit in a recent decision. In the wake of a 2013 Supreme Court decision that found the “first sale” abroad removes copyright restrictions (see 13032521), the CAFC held Feb. 12 (here) that the same does not apply to patents. The Federal Circuit sided with Lexmark in finding an importer that purchased spent printer cartridges abroad before refilling them and selling them in the U.S. infringed Lexmark’s patents. “Loss of U.S. patent rights based on a foreign sale remains a matter of express or implied license,” it said. The importer, Impression Products, said it plans to appeal to the Supreme Court, according to a report by Reuters (here).
International Trade Today is providing readers with some of the top stories for Jan 4-8 in case they were missed.
The U.S. Court of Appeals for the Federal Circuit affirmed the denial of NAFTA treatment to Ford auto parts imported from Canada (here), finding CBP can apply different certificate of origin waiver requirements to reconciliations than it does to regular post-importation claims. The Jan. 6 decision was marked by a lengthy dissent from Circuit Judge Jimmie Reyna, one of the few Federal Circuit judges with a background in trade.
The government cannot seek Section 1592 customs penalties in court at a different level of culpability than alleged by CBP in a penalty notice, said the U.S. Court of Appeals for the Federal Circuit on Dec. 1 (here). Affirming a Court of International Trade decision from 2012 (see 12041647), the appeals court held a government penalty claim for negligence is barred because the pre-penalty and penalty notices CBP issued to Nitek Electronics alleged only gross negligence.
Camelbak hydration packs imported without the water-delivery components are classifiable as an insulated beverage bags, said CBP in an Aug. 19 internal advice ruling (here). The ruling, HQ H248811, makes use of classification instructions handed down by the U.S.Court of Appeals for the Federal Circuit in 2011 (see 11062315). In that case, the CAFC shot down a classification approved by CBP and the Court of International Trade of hydration packs as back packs. The CAFC has since used that ruling as precdent for considering use as a factor for "eo nomine" tariff provisions (see 14080420).
Interest accrues on customs bonds that are subject to ongoing lawsuits for recovery of antidumping and countervailing duties, ruled the U.S. Court of Appeals for the Federal Circuit on June 17. Overturning a January 2014 decision from the Court of International Trade, the court found that the law on interest for bonds subject to lawsuits applies to all “duties,” and not just customs tariffs.
The requirement that importers pay duties before bringing tariff classification cases to court is an unconstitutional hurdle that allows CBP to disregard rulings “with impunity” if the duties imposed are too much for the affected importer to bear, said Gregory Teufel, attorney for International Custom Products (ICP), in oral argument before the U.S. Court of Appeals for the Federal Circuit on May 8. The pay to play scheme is an unconstitutional bar to importers’ right to due process because it allows CBP to deprive them of a “property interest” in the form of a binding ruling without any notice or the opportunity to be heard, said Teufel.
A controversial case on the liability of compliance and corporate officers for their employer’s customs violations now goes to the Supreme Court justices’ chambers for a decision on whether to hear the appeal, after Harish Shadadpuri, owner of Trek Leather, filed a final brief on April 27 in favor of his petition for certiorari. Shadadpuri's lawyer, Al Daniel, argued that a decision from the Court of Appeals for the Federal Circuit misinterpreted the customs penalty laws and was unsupported by the facts of the case. Daniel expects a decision from the Supreme Court on whether to consider the case by the end of June.
A recent court decision holding the owner of apparel importer Trek Leather responsible for his company’s negligent omissions on entry documentation would subject import compliance managers to “massive penalties,” casting the entire importing industry into upheaval, said the American Association of Exporters and Importers in a brief submitted to the Supreme Court. The amicus brief, filed on March 16 by John Peterson of Neville Peterson on behalf of AAEI, argues that the Supreme Court should hear the case and overturn the Court of Appeals for the Federal Circuit’s ruling.
The U.S. Court of Appeals for the Federal Circuit on March 13 again upheld the validity of a law allowing countervailing duties on non-market economy countries like China and Vietnam (here). Although the 2012 law had effectively imposed CV duties retroactively on imports from 2007 through 2012, Congress did not violate the Due Process clause of the constitution because it acted with the rational purpose of protecting U.S. manufacturers from unfair trade practices, said the court.