Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog

Learn the Basics of Customs and International Trade Policy and Procedure

Archive for November, 2014

Remanufactured or Refurbished Cell Phone Importing – What Should You Know?

There is a big market for used cell phones around the world.  Accordingly, we come into contact with many entrepreneurs who are involved in the secondary cell phone market.  As a result, we have handled many cases involving refurbished or remanufactured cell phones.

Your typical fact pattern involves a U.S. company that would export broken cell phones to a refurbishing center in a foreign country. Depending on the nature of repair, the cell phones would undergo a thorough repairing process before they are considered to be back in good working order.  Subsequently, the cell phones are shipped back to the United States.

Prior to delivery to the importer, these now remanufactured or refurbished cell phones must clear through customs.  U.S. Customs and Border Protection (“CBP” or “Customs”) is the responsible federal agency for determining the admissibility of such products. When it comes to investigation and delays for remanufactured or refurbished cell phones we have seen that questions involving intellectual property rights are most notably at issue.  Specifically, Section 526(e) of the Tariff Act of 1930, as amended, provides that merchandise bearing a counterfeit mark within the meaning of Section 1127 of Title 15, that is imported in violation of Section 1124 of Title 15, shall be seized and, absent the consent of the trademark owner, forfeited for violations of the Customs laws. 19 U.S.C. Section 1526(e).

The first prong of section 526(e) requires that the imported merchandise bear a counterfeit mark as defined by section 45 of the Act of July 5, 1946 (the “Lanham Act,” codified as amended at 15 U.S.C. Section 1127.  Section 45 of the Lanham Act defines the term counterfeit as “a spurious mark that is identical with or substantially indistinguishable from, a registered mark.” 15 U.S.C. Section 1127.

The second prong requires that the merchandise, in addition to bearing a counterfeit mark, shall have been imported in violation of section 42 of the Lanham Act, which provides:

Except as provided in subsection 1526 (d) of Title 19 . . . no article of imported merchandise . . . which shall copy or simulate a trademark registered in accordance with the provisions of this chapter . . .  shall be admitted to entry at any customhouse of the United States . . . .

15 U.S.C. Section 1124.  A “copying or simulating” trademark or trade name is one which may so resemble a recorded mark or name as to be likely to cause the public to associate the copying or simulating mark or name with the recorded mark or name. 19 C.F.R. Section 133.22(a).

Questions arise as to whether there is a violation of a trademark when one is selling remanufactured or refurbished goods under the original manufacturer’s U.S. trademark.  As a general matter, it is not a violation to sell such goods without deceiving consumers provided that one attempts so far as possible to restore the original condition of the goods and full disclosure is made about the true nature of the goods i.e. that they are remanufactured or refurbished goods.  Nitro Leisure Products, L.L.C. v. Achushnet Co., 341 F.3d 1356, 1361 (Fed. Cir. 2003).  Accordingly, there is information one can provide to CBP to prove that your goods do not violate any trademark laws.  This depends on the nature of remanufacturing or refurbishing done to the product, how it was imported, and the documents one has regarding their purchase.

If you find yourself in a position where your remanufactured or refurbished goods are detained or seized by CBP contact an attorney who is familiar with Customs and International Trade laws and regulations as well as the secondary cell phone market business.

For more information about an importing remanufactured or refurbished cell phone products or for assistance with any of the issues noted above, contact Abady Law Firm, P.C., at 800.549.5099, to speak with a international trade attorney today!

Smoke Shop Importing Into the U.S. – What Should You Know?

U.S. Customs and Border Protection (CBP or Customs) is the federal agency in charge of determining the admissibility of items sold in smoke shops across the country.  Presently, we have been asked by importers across the United States for information regarding how to determine whether ones product will meet scrutiny by CBP.  Moreover, whether Customs would permit entry of these products into the United States.

For such products like water pipes, grinders, blunt wraps/wrappers, and vaporizers CBP will consider whether the specific product you are attempting to import constitutes “drug paraphernalia.”

The relevant statute, 21 U.S.C. Section 863 provides,

(a) In general It is unlawful for any person—

(1) to sell or offer for sale drug paraphernalia;

(2) to use the mails or any other facility of interstate commerce to transport drug paraphernalia; or

(3) to import or export drug paraphernalia.

Pursuant to 21 U.S.C. Section 863(d), the term “drug paraphernalia” is defined as:

[A]ny equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under this subchapter. It includes items primarily intended or designed for use in ingesting, inhaling, or otherwise introducing marijuana, cocaine, hashish, hashish oil, PCP, methamphetamine, or amphetamines into the human body, such as—

(1) metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured metal bowls;

(2) water pipes;

(3) carburetion tubes and devices;

(4) smoking and carburetion masks;

(5) roach clips: meaning objects used to hold burning material, such as a marihuana cigarette, that has become too small or too short to be held in the hand;

(6) miniature spoons with level capacities of one-tenth cubic centimeter or less;

(7) chamber pipes;

(8) carburetor pipes;

(9) electric pipes;

(10) air-driven pipes;

(11) chillums;

(12) bongs;

(13) ice pipes or chillers;

(14) wired cigarette papers; or

(15) cocaine freebase kits. (Emphasis added).

How do you determine whether an item is considered drug paraphernalia?

21 U.S.C. Section 863(e) provides that:

[I]n addition to all other logically relevant factors, the following may be considered:

(1) instructions, oral or written, provided with the item concerning its use;

(2) descriptive materials accompanying the item which explain or depict its use;

(3) national and local advertising concerning its use;

(4) the manner in which the item is displayed for sale;

(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;

(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;

(7) the existence and scope of legitimate uses of the item in the community; and

(8) expert testimony concerning its use.

Lastly, 21 U.S.C. Section 863(f) lists exemptions:

(1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items; or

(2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory. (Emphasis added).

The U.S. Supreme Court examined the meaning of “drug paraphernalia” pursuant to 21 U.S.C. Section 863 in the matter of Posters ‘N’ Things v. United States, 511 U.S. 513 (1994), and considered the phrases (1) “primarily intended for use” and (2) “designed for use” in such case.

The Court concluded that “primarily intended for use” is to be understood objectively and refers generally to an item’s likely use. Posters ‘N’ Things, 511 U.S. 513, 521 (1994). Moreover, the Court noted that this “is a relatively particularized definition, reaching beyond the category of items that are likely to be used with drugs by virtue of their objective features.” Id. at 521 n.11.

The court stated that “items ‘primarily intended’ for use with drugs constitute drug paraphernalia, indicating that it is the likely use of customers generally, not any particular customer, that can render a multiple-use item drug paraphernalia.” Id. at 521 n.11. Therefore, items having possible multiple uses may constitute drug paraphernalia for purposes of 21 U.S.C. Section 863 if the likely use by customers of the seller of the items is for use with illegal drugs.

Customs will make the determination on a case-by-case basis about whether your product falls within the context of drug paraphernalia.  Accordingly, one should take into account the relevant factors that CBP considers when publishing its rulings on such products.  Further, one should speak with an attorney who focuses on Customs law to ensure that the best arguments are presented to CBP for clearance of their smoke shop products into the United States.

For more information about an importing smoke shop and vape products or for assistance with any of the issues noted above, contact Abady Law Firm, P.C., at 800.549.5099, to speak with a customs law attorney.