A gray-market good is a foreign-manufactured good, bearing a
valid United States trademark, that is imported without the consent
of the United States trademark holder. The gray market arises in
three general contexts. In case 1, despite a domestic firm's having
purchased from an independent foreign firm the rights to register
and use the latter's trademark as a United States trademark and to
sell its foreign-manufactured products here, the foreign firm
imports the trademarked goods and distributes them here, or sells
them abroad to a third party who imports them here. In case 2,
after the United States trademark for goods manufactured abroad is
registered by a domestic firm that is a subsidiary of (case 2a),
the parent of (case 2b), or the same as (case 2c), the foreign
manufacturer, goods bearing a trademark that is identical to the
United States trademark are imported. In case 3, the domestic
holder of a United States trademark authorizes an independent
foreign manufacturer to use that trademark in a particular foreign
location. Again, the foreign manufacturer or a third party imports
and distributes the foreign made goods. Section 526 of the Tariff
Act of 1930 prohibits the importation of "any merchandise of
foreign manufacture" bearing a trademark "owned by" a citizen of,
or by
"a corporation . . . organized within, the United States, and
registered in the Patent and Trademark Office by a person domiciled
in the United States,"
unless written consent of the trademark owner is produced at the
time of entry. The Customs Service's implementing regulation
permits the entry of goods manufactured abroad by the "same person"
who holds the United States trademark or by a person who is
"subject to common control" with the United States trademark
holder, 19 CFR §§ 133.21(c)(1), (2), and permits importation where
the foreign manufacturer has received the United States trademark
owner's authorization to use its trademark, 19 CFR § 133.21(c)(3).
Respondent Coalition to Preserve the Integrity of
Page 486 U. S. 282
American Trademarks and two of its members filed suit against
the Government seeking injunctive and declaratory relief, asserting
that the regulation is inconsistent with § 526, and therefore
invalid. The Federal District Court upheld the regulation, but the
Court of Appeals reversed, ruling that the regulation was an
unreasonable administrative interpretation of § 526.
Held: The judgment is affirmed in part and reversed in
part.
252 U.S.App.D.C. 342, 790 F.2d 903, affirmed in part and
reversed in part.
JUSTICE KENNEDY delivered the opinion of the Court as to Parts
I, II-A, and II-C, concluding that:
1. In determining whether a challenged regulation is consistent
with the statute it implements, courts must ascertain the statute's
plain meaning by looking to the particular language at issue and
the language and design of the statute as a whole. If the statute
is clear and unambiguous, courts must give effect to Congress'
unambiguously expressed intent, and cannot pay deference to a
contrary agency interpretation. However, if the statute is silent
or ambiguous with respect to the specific issue addressed by the
regulation, a reviewing court must give deference to the agency's
interpretation if it does not conflict with the statute's plain
meaning. Pp.
486 U. S.
291-292.
2. Allowing the importation of foreign made goods where the
United States trademark owner has authorized the use of the mark,
19 CFR § 133.21(c)(3), is in conflict with the unequivocal language
of § 526, and cannot stand. The regulation denies a domestic
trademark holder statutory protection in the case 3 context. Under
no reasonable construction of the statutory language can goods made
in a foreign country by an independent foreign manufacturer be
removed from the purview of the statute. However, the regulation
subsection is severable, since its severance and invalidation will
not impair the function of the statute as a whole and there is no
indication that the regulation would not have been passed but for
its inclusion. Pp.
486 U. S.
293-294.
JUSTICE KENNEDY, joined by JUSTICE WHITE, concluded in Part II-B
that the regulation's allowance of imports from companies under
common control, 19 CFR §§ 133.21(c)(1), (2), is consistent with §
526, and is therefore valid because it is a permissible
construction designed to resolve statutory ambiguities. The
statutory phrase "owned by" is sufficiently ambiguous to permit
parallel importation in the case 2a foreign-parent,
domestic-subsidiary context, since the phrase does not reveal which
of the affiliated entities can be said to "own" the United States
trademark if the domestic subsidiary is wholly owned by its foreign
parent. Similarly, the ambiguity contained in the statutory phrase
"merchandise of
Page 486 U. S. 283
foreign manufacture" suffices to sustain the regulation as it
applies to cases 2b and 2c. It is possible to interpret the phrase
to mean goods manufactured (1) in a foreign country, (2) by a
foreign company, or (3) in a foreign country by a foreign company.
Thus, the agency is entitled to choose any reasonable definition
and to say that goods manufactured by a foreign subsidiary or
division of a domestic company are not goods "of foreign
manufacture." Pp.
486 U. S.
292-293.
JUSTICE BRENNAN, joined by JUSTICE MARSHALL and JUSTICE STEVENS,
agreeing that the common control exception is consistent with §
526, concluded that:
1. Section 526's language does not clearly cover affiliates of
foreign manufacturers. Pp.
486 U. S. 297-299.
(a) The section's protectionist language and structure bespeak a
congressional intent to extend protection only to domestic
interests, and not to affiliates of foreign manufacturers. Much of
the limiting language would be pointless if a foreign manufacturer
could insulate itself by the simple device of incorporating a shell
domestic subsidiary and transferring to it a single asset -- the
United States trademark. Pp.
486 U. S.
297-298.
(b) The undefined statutory phrase "owned by" is ambiguous when
applied in the case 2a context, because it cannot be confidently
discerned which of the entities involved owns the trademark.
Whereas the trademark must be "owned by" a domestic firm to fall
within § 526's ban, it is the foreign parent corporation -- not the
domestic subsidiary whose every decision it controls -- that better
fits the bill as the true owner of any property that the subsidiary
nominally possesses. Similarly, § 526 does not unambiguously cover
cases 2b and 2c, because it is unclear whether merchandise
manufactured abroad by a division or a subsidiary of a domestic
firm is "merchandise of foreign manufacture." If that phrase is
interpreted to mean "merchandise manufactured in a
foreign
country," § 526's ban would apply. However, if the phrase is
construed to mean "merchandise manufactured by a
foreigner," § 526's coverage is not as clear. A domestic
firm that establishes a manufacturing division abroad (case 2c)
cannot be said to be a foreigner, and it is at the very least
reasonable to view as "American" the foreign subsidiary of a
domestic firm (case 2b). Pp.
486 U. S.
298-299.
2. The common control exception is consistent with § 526's
purpose and legislative history, which confirm that, if Congress
had any intent as to the section's application to affiliates of
foreign manufacturers, it was that they ought not enjoy § 526's
protection. The major stimulus for the enactment of § 526 was the
congressionally perceived inequity of
A. Bourjois & Co. v.
Katzel, 275 F. 539, which declined to protect a case 1
trademark holder. However, the profound differences between the
equities presented in the case 1 and case 2 contexts -- which
result
Page 486 U. S. 284
from the fact that the case 1 trademark holder has a much
greater investment at stake, but much less control over parallel
importation and foreign sales to third parties, than its case 2
counterpart -- furnish perfectly rational reasons for Congress'
distinguishing between the two situations. Pp.
486 U. S.
300-309.
3. The deference owed longstanding administrative
interpretations further buttresses the conclusion that the common
control exception is consistent with § 526. While the precise
language of the importation bar has varied over the years, the
Customs Service has for 50 years adhered to the exception's basic
premise that § 526 does not require exclusion of all gray-market
goods in the context of affiliated entities. Such a longstanding
administrative practice should not be lightly overturned,
particularly where, as here, an immense domestic retail industry
has developed in reliance upon it. Pp.
486 U. S.
309-312.
KENNEDY, J., announced the judgment of the Court and delivered
an opinion of the Court with respect to Parts I and II-A, in which
REHNQUIST, C.J., and WHITE, BLACKMUN, O'CONNOR, and SCALIA, JJ.,
joined, an opinion of the Court with respect to Part II-C, in which
REHNQUIST, C.J., and BLACKMUN, O'CONNOR, and SCALIA, JJ., joined,
and an opinion with respect to Part II-B, in which WHITE, J.,
joined. BRENNAN, J., filed an opinion concurring in part and
dissenting in part, in which MARSHALL and STEVENS, JJ., joined, and
in Part IV of which WHITE, J., joined,
post, p.
486 U. S. 295.
SCALIA, J., filed an opinion concurring in part and dissenting in
part, in which REHNQUIST, C.J., and BLACKMUN and O'CONNOR, JJ.,
joined,
post, p.
486 U. S.
318.
Page 486 U. S. 285
JUSTICE KENNEDY announced the judgment of the Court and
delivered the opinion of the Court with respect to Parts I, II-A,
and II-C, and an opinion with respect to Part II-B, in which WHITE,
J., joined.
A gray-market good is a foreign-manufactured good, bearing a
valid United States trademark, that is imported without the consent
of the United States trademark holder. These cases present the
issue whether the Secretary of the Treasury's regulation permitting
the importation of certain gray-market goods, 19 CFR § 133.21
(1987), is a reasonable agency interpretation of § 526 of the
Tariff Act of 1930 (1930 Tariff Act), 46 Stat. 741,
as
amended, 19 U.S.C. § 1526.
Page 486 U. S. 286
I
A
The gray market arises in any of three general contexts. The
prototypical gray-market victim (case l) is a domestic firm that
purchases from an independent foreign firm the rights to register
and use the latter's trademark as a United States trademark and to
sell its foreign-manufactured products here. Especially where the
foreign firm has already registered the trademark in the United
States or where the product has already earned a reputation for
quality, the right to use that trademark can be very valuable. If
the foreign manufacturer could import the trademarked goods and
distribute them here, despite having sold the trademark to a
domestic firm, the domestic firm would be forced into sharp
intrabrand competition involving the very trademark it purchased.
Similar intrabrand competition could arise if the foreign
manufacturer markets its wares outside the United States, as is
often the case, and a third party who purchases them abroad could
legally import them. In either event, the parallel importation, if
permitted to proceed, would create a gray market that could
jeopardize the trademark holder's investment.
The second context (case 2) is a situation in which a domestic
firm registers the United States trademark for goods that are
manufactured abroad by an affiliated manufacturer. In its most
common variation (case 2a), a foreign firm wishes to control
distribution of its wares in this country by incorporating a
subsidiary here. The subsidiary then registers under its own name
(or the manufacturer assigns to the subsidiary's name) a United
States trademark that is identical to its parent's foreign
trademark. The parallel importation by a third party who buys the
goods abroad (or conceivably even by the affiliated foreign
manufacturer itself) creates a gray market. Two other variations on
this theme occur when an American-based firm establishes abroad a
manufacturing subsidiary corporation (case 2b) or its own
unincorporated manufacturing division (case 2c) to produce its
United States trademarked
Page 486 U. S. 287
goods, and then imports them for domestic distribution. If the
trademark holder or its foreign subsidiary sells the trademarked
goods abroad, the parallel importation of the goods competes on the
gray market with the holder's domestic sales.
In the third context (case 3), the domestic holder of a United
States trademark
authorizes an independent foreign
manufacturer to use it. Usually the holder sells to the foreign
manufacturer an exclusive right to use the trademark in a
particular foreign location, but conditions the right on the
foreign manufacturer's promise not to import its trademarked goods
into the United States. Once again, if the foreign manufacturer or
a third party imports into the United States, the
foreign-manufactured goods will compete on the gray market with the
holder's domestic goods.
B
Until 1922, the Federal Government did not regulate the
importation of gray-market goods, not even to protect the
investment of an independent purchaser of a foreign trademark, and
not even in the extreme case where the independent foreign
manufacturer breached its agreement to refrain from direct
competition with the purchaser. That year, however, Congress was
spurred to action by a Court of Appeals decision declining to
enjoin the parallel importation of goods bearing a trademark that
(as in case l) a domestic company had purchased from an independent
foreign manufacturer at a premium.
See A. Bourjois & Co. v.
Katzel, 275 F. 539 (CA2 1921),
rev'd, 260 U.
S. 689 (1923).
In an immediate response to
Katzel, Congress enacted §
526 of the Tariff Act of 1922, 42 Stat. 975. That provision, later
reenacted in identical form as § 526 of the 1930 Tariff Act, 19
U.S.C. § 1526, prohibits importing
"into the United States any merchandise of foreign manufacture
if such merchandise . . . bears a trademark owned by a citizen of,
or by a corporation or association created or organized within, the
United States, and registered
Page 486 U. S. 288
in the Patent and Trademark Office by a person domiciled in the
United States . . . unless written consent of the owner of such
trademark is produced at the time of making entry."
19 U.S.C. § 1526(a). [
Footnote
1]
The regulations implementing § 526 for the past 50 years have
not applied the prohibition to all gray-market goods. The Customs
Service regulation now in force provides generally that
"[f]oreign-made articles bearing a trademark identical with one
owned and recorded by a citizen of the United States or a
corporation or association created or organized within the United
States are subject to seizure and forfeiture as prohibited
importations."
19 CFR § 133.21(b) (1987). [
Footnote 2]
Page 486 U. S. 289
But the regulation furnishes a "common control" exception from
the ban, permitting the entry of gray-market goods manufactured
abroad by the trademark owner or its affiliate:
"(c)
Restrictions not applicable. The restrictions . .
. do not apply to imported articles when:"
"(1) Both the foreign and the U.S. trademark or trade name are
owned by the same person or business entity; [or]"
"(2) The foreign and domestic trademark or trade name owners are
parent and subsidiary companies or are otherwise subject to common
ownership or control. . . .
Page 486 U. S. 290
The Customs Service regulation further provides an
'authorized-use' exception, which permits importation of
gray-market goods where"
"(3) [t]he articles of foreign manufacture bear a recorded
trademark or trade name applied under authorization of the U.S.
owner. . . ."
19 CFR § 133.21(c) (1987).
Respondents, an association of United States trademark holders
and two of its members, brought suit in Federal District Court in
February 1984, seeking both a declaration that the Customs Service
regulation, 19 CFR §§ 133.21(c)(1)-(3) (1987), is invalid and an
injunction against its enforcement.
Coalition to Preserve the
Integrity of American Trademarks v. United
States, 598 F.
Supp. 844 (DC 1984). They asserted that the common control and
authorized-use exceptions are inconsistent with § 526 of the 1930
Tariff Act. [
Footnote 3]
Petitioners K mart and 47th Street Photo intervened as
defendants.
The District Court upheld the Customs Service regulation,
598 F.
Supp. at 853, but the Court of Appeals reversed,
Coalition
to Preserve the Integrity of American Trademarks v. United
States, 252 U.S.App.D.C. 342, 790 F.2d 903 (1986) (hereinafter
COPIAT), holding that the Customs Service regulation was
an unreasonable administrative interpretation of § 526. We granted
certiorari, 479 U.S. 1005 (1986), to resolve a conflict among the
Courts of Appeals.
Compare Vivitar Corp. v. United States,
761 F.2d 1552, 1557-1560 (CA Fed.1985),
aff'g 593 F. Supp.
420 (Ct.Int'l Trade 1984),
cert. denied, 474 U.S. 1055
(1986);
and Olympus Corp. v. United States, 792 F.2d 315,
317-319 (CA2 1986),
aff'g 627 F.Supp.
Page 486 U. S. 291
911 (EDNY 1985),
cert. pending, No. 86-757,
with
COPIAT, supra, at 346-355, 790 F.2d at 907-916. In an earlier
opinion, we affirmed the Court of Appeals' conclusion that the
District Court had jurisdiction, and set the cases for reargument
on the merits.
485 U. S. 176
(1988).
A majority of this Court now holds that the common control
exception of the Customs Service regulation, 19 CFR §§
133.21(c)(1)-(2) (1987), is consistent with § 526.
See
post at 309-310 (opinion of BRENNAN, J.). A different
majority, however, holds that the authorized use exception, 19 CFR
§ 133.21(c)(3) (1987), is inconsistent with § 526.
See
post at
486 U. S.
328-329 (opinion of SCALIA, J.). We therefore affirm the
Court of Appeals in part and reverse in part.
II
A
In determining whether a challenged regulation is valid, a
reviewing court must first determine if the regulation is
consistent with the language of the statute.
"If the statute is clear and unambiguous 'that is the end of the
matter, for the court, as well as the agency, must give effect to
the unambiguously expressed intent of Congress.' . . . The
traditional deference courts pay to agency interpretation is not to
be applied to alter the clearly expressed intent of Congress."
Board of Governors, FRS v. Dimension Financial Corp.,
474 U. S. 361,
474 U. S. 368
(1986), quoting
Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837,
467 U. S.
842-843 (1984).
See also Mills Music, Inc. v.
Snyder, 469 U. S. 153,
469 U. S. 164
(1985). In ascertaining the plain meaning of the statute, the court
must look to the particular statutory language at issue, as well as
the language and design of the statute as a whole.
Bethesda
Hospital Assn. v. Bowen, 485 U. S. 399,
485 U. S.
403-405 (1988);
Offshore Logistics, Inc. v.
Tallentire, 477 U. S. 207,
477 U. S.
220-221 (1986). If the statute is silent or ambiguous
with respect to the specific issue addressed by the regulation, the
question becomes whether the agency
Page 486 U. S. 292
regulation is a permissible construction of the statute.
See
Chevron, supra, at
467 U. S. 843;
Chemical Manufacturers Assn. v. Natural Resources Defense
Council, Inc., 470 U. S. 116,
470 U. S. 125
(1985). If the agency regulation is not in conflict with the plain
language of the statute, a reviewing court must give deference to
the agency's interpretation of the statute.
United States v.
Boyle, 469 U. S. 241,
469 U. S. 246,
n. 4 (1985).
B
Following this analysis, I conclude that subsections (c)(1) and
(c)(2) of the Customs Service regulation, 19 CFR §§ 133.21 (c)(1)
and (c)(2) (1987), are permissible constructions designed to
resolve statutory ambiguities. All Members of the Court are in
agreement that the agency may interpret the statute to bar
importation of gray-market goods in what we have denoted case 1,
and to permit the imports under case 2a.
See post at
486 U. S. 296,
486 U. S.
298-299 (opinion of BRENNAN, J.);
post at
486 U. S. 318
(opinion of SCALIA, J.). As these writings state, "owned by" is
sufficiently ambiguous, in the context of the statute, that it
applies to situations involving a foreign parent, which is case 2a.
This ambiguity arises from the inability to discern, from the
statutory language, which of the two entities involved in case 2a
can be said to "own" the United States trademark if, as in some
instances, the domestic subsidiary is wholly owned by its foreign
parent.
A further statutory ambiguity contained in the phrase
"merchandise of foreign manufacture" suffices to sustain the
regulations as they apply to cases 2b and 2c. This ambiguity
parallels that of "owned by," which sustained case 2a, because it
is possible to interpret "merchandise of foreign manufacture" to
mean (1) goods manufactured in a foreign country, (2) goods
manufactured by a foreign company, or (3) goods manufactured in a
foreign country by a foreign company. Given the imprecision in the
statute, the agency is entitled to choose any reasonable
definition, and to interpret the statute to say that goods
manufactured by a foreign subsidiary
Page 486 U. S. 293
or division of a domestic company are not goods "of foreign
manufacture." [
Footnote 4]
C
(1)
Subsection (c)(3), 19 CFR § 133.21(c)(3) (1987), of the
regulation, however, cannot stand. The ambiguous statutory phrases
that we have already discussed, "owned by" and
Page 486 U. S. 294
"merchandise of foreign manufacture," are irrelevant to the
proscription contained in subsection (3) of the regulation. This
subsection of the regulation denies a domestic trademark holder the
power to prohibit the importation of goods made by an independent
foreign manufacturer where the domestic trademark holder has
authorized the foreign manufacturer to use the trademark. Under no
reasonable construction of the statutory language can goods made in
a foreign country by an independent foreign manufacturer be removed
from the purview of the statute.
(2)
The design of the regulation is such that the subsection of the
regulation dealing with case 3, § 133.21(c)(3), is severable.
Cf. Board of Governors, FRS v. Dimension Financial Corp.,
474 U.S. at
474 U. S. 368
(invalidating a Federal Reserve Board definition of "bank" in 12
CFR § 225.2(a)(1) (1985), but leaving intact the remaining parts of
the regulation). The severance and invalidation of this subsection
will not impair the function of the statute as a whole, and there
is no indication that the regulation would not have been passed but
for its inclusion. Accordingly, subsection (c)(3) of § 133.21 must
be invalidated for its conflict with the unequivocal language of
the statute.
III
We hold that the Customs Service regulation is consistent with §
526 insofar as it exempts from the importation ban goods that are
manufactured abroad by the "same person" who holds the United
States trademark, 19 CFR § 133.21(c)(1) (1987), or by a person who
is "subject to common . . . control" with the United States
trademark holder, § 133.21(c)(2). Because the authorized use
exception of the regulation, § 133.21(c)(3), is in conflict with
the plain language of the statute, that provision cannot stand. The
judgment of the
Page 486 U. S. 295
Court of Appeals is therefore reversed insofar as it invalidated
§§ 133.21(c)(1) and (c)(2), but affirmed with respect to §
133.21(c)(3).
It is so ordered.
[
Footnote 1]
The full text of § 526(a),
as codified, 19 U.S.C. §
1526(a), is as follows:
"(a) Importation prohibited"
"Except as provided in subsection (d) of this section [an
exception added in 1978 for the importation of articles for
personal use], it shall be unlawful to import into the United
States any merchandise of foreign manufacture if such merchandise,
or the label, sign, print, package, wrapper, or receptacle, bears a
trademark owned by a citizen of, or by a corporation or association
created or organized within, the United States, and registered in
the Patent and Trademark Office by a person domiciled in the United
States, under the provisions of sections 81 to 109 of title 15, and
if a copy of the certificate of registration of such trademark is
filed with the Secretary of the Treasury, in the manner provided in
section 106 of said title 15, unless written consent of the owner
of such trademark is produced at the time of making entry."
[
Footnote 2]
The Customs Service regulation provides:
"§ 133.21. Restrictions on importations of articles bearing
recorded trademarks and trade names."
"(a)
Copying or simulating marks or names. Articles of
foreign or domestic manufacture bearing a mark or name copying or
simulating a recorded trademark or trade name shall be denied entry
and are subject to forfeiture as prohibited importations. A
'copying or simulating' mark or name is an actual counterfeit of
the recorded mark or name or is one which so resembles it as to be
likely to cause the public to associate the copying or simulating
mark with the recorded mark or name."
"(b)
Identical trademark. Foreign-made articles bearing
a trademark identical with one owned and recorded by a citizen of
the United States or a corporation or association created or
organized within the United States are subject to seizure and
forfeiture as prohibited importations."
"(c)
Restrictions not applicable. The restrictions set
forth in paragraphs (a) and (b) of this section do not apply to
imported articles when:"
"(1) Both the foreign and the U.S. trademark or trade name are
owned by the same person or business entity;"
"(2) The foreign and domestic trademark or trade name owners are
parent and subsidiary companies or are otherwise subject to common
ownership or control (see §§ 133.2(d) [defining 'common ownership
and common control'] and 133.12(d) [providing that application to
record trademark must report identity of any affiliate that uses
same trade name abroad]);"
"(3) The articles of foreign manufacture bear a recorded
trademark or trade name applied under authorization of the U.S.
owner;"
"(4) The objectionable mark is removed or obliterated prior to
importation in such a manner as to be illegible and incapable of
being reconstituted, for example by:"
"(i) Grinding off imprinted trademarks wherever they
appear;"
"(ii) Removing and disposing of plates bearing a trademark or
trade name;"
"(5) The merchandise is imported by the recordant of the
trademark or trade name or his designate;"
"(6) The recordant gives written consent to an importation of
articles otherwise subject to the restrictions set forth in
paragraphs (a) and (b) of this section, and such consent is
furnished to appropriate Customs officials; or"
"(7) The articles of foreign manufacture bear a recorded
trademark and the personal exemption is claimed and allowed under §
148.55 of this chapter."
19 CFR §§ 133.21(a), (b), (c) (1987).
[
Footnote 3]
Respondents sued the United States, the Secretary of the
Treasury, and the Commissioner of Customs. They also asserted that
the Customs Service regulation was inconsistent with § 42 of the
Lanham Trade-Mark Act, 15 U.S.C. § 1124, which prohibits the
importation of goods bearing marks that "copy or simulate" United
States trademarks. That issue is not before us.
[
Footnote 4]
I disagree with JUSTICE SCALIA's reasons for declining to
recognize this ambiguity.
See post at
486 U. S.
319-323. First, the threshold question in ascertaining
the correct interpretation of a statute is whether the language of
the statute is clear or arguably ambiguous. The purported gloss any
party gives to the statute, or any reference to legislative
history, is in the first instance irrelevant. Further, I decline to
assign any binding or authoritative effect to the particular
verbiage JUSTICE SCALIA highlights. The quoted phrases are simply
the Government's explanation of the practical effect the current
regulation has in applying the statute, and come from the statement
of the case portion of its petition for a writ of certiorari.
Additionally, I believe that agency regulations may give a
varying interpretation of the same phrase when that phrase appears
in different statutes and different statutory contexts. There may
well be variances in purpose or circumstance that have led the
agency to adopt and apply dissimilar interpretations of the phrase
"of foreign manufacture" in other regulations implementing
different statutes.
I also disagree that our disposition necessarily will engender
either enforcement problems for the Customs Service or problems we
are unaware of arising out of our commercial treaty commitments to
foreign countries. Initially, it is reasonable to think that any
such problems or objections would have arisen before now, since it
is the current interpretation of the regulations we are sustaining.
Second, I believe that the regulation speaks to the hypothetical
situation JUSTICE SCALIA poses, and that the firm with the United
States trademark could keep out "gray-market imports manufactured
abroad by the other American firms,"
post at 320, because
the regulation allows a company justifiably invoking the protection
of the statute to bar the importation of goods of foreign or
domestic manufacture. 19 CFR § 133.21(a) (1987). In this instance,
the domestic firm with the United States trademark could invoke the
protection of the statute (case l) and bar the importation of the
other domestic firm's product manufactured abroad even though our
interpretation of the phrase "of foreign manufacture" would
characterize these latter goods to be of domestic manufacture.
JUSTICE BRENNAN, with whom JUSTICE MARSHALL and JUSTICE STEVENS
join, and with whom JUSTICE WHITE joins as to Part IV, concurring
in part and dissenting in part.
Section 526 of the Tariff Act of 1930 (1930 Tariff Act), 46
Stat. 741,
as amended, 19 U.S.C. § 1526, provides
extraordinary protection to certain holders of trademarks
registered in the United States. A United States trademark holder
covered by § 526 can prohibit or condition all importation of
merchandise bearing its trademark, thereby gaining a virtual
monopoly, free from intrabrand competition, on domestic
distribution of any merchandise bearing the trademark. For half a
century the Secretary of the Treasury has consistently interpreted
§ 526 to grant this exclusionary power not to all United States
trademark holders, but only to certain ones with specifically
defined relationships to the manufacturer. Specifically, Treasury
has a longstanding practice, expressed currently in 19 CFR § 133.21
(1987) (Customs Service regulation), of not extending § 526's
extraordinary protection to the very firm that manufactured the
gray-market merchandise abroad, to affiliates of foreign
manufacturers, or to firms that authorize the use of their
trademarks abroad. Consequently, a multibillion dollar industry has
emerged around the parallel importation of foreign-manufactured
merchandise bearing United States trademarks.
In the face of this longstanding interpretation of § 526's
reach, respondent Coalition to Preserve the Integrity of American
Trademarks and its members, most of whom are United States
trademark holders or affiliates of United States trademark holders
that compete against the gray market, have waged a full-scale
battle in legislative, executive,
Page 486 U. S. 296
and administrative fora against the Customs Service regulation,
and particularly the common control exception, 19 CFR §§
133.21(c)(1) and (c)(2) (1987).
See Eisler, Gray-Market
Mayhem: It's Makers vs. Importers in Lobbying Onslaught, Legal
Times, Nov. 17, 1986, p. 1, col. 1. Largely unsuccessful in the
political branches, they have more recently brought the battle to
the courts, asserting that Treasury is (and, since 1922, has been)
statutorily required to extend to them the same exclusionary powers
as it extends to what the Court refers to as the "prototypical
gray-market victim."
Ante at
486 U. S. 286.
[
Footnote 2/1] This is such a
suit.
There is no dispute that § 526 protects the trademark holder in
the first of the three gray-market contexts identified by the Court
-- the prototypical gray-market situation in which a domestic firm
purchases from an independent foreign firm the rights to register
and use in the United States a foreign trademark (case 1).
See
ante at
486 U. S. 292.
The dispute in this litigation centers almost exclusively around
the second context, involving a foreign manufacturer that is in
some way affiliated with the United States trademark holder,
whether the trademark holder is a subsidiary of (case 2a), the
parent of (case 2b), or the same as (case 2c), the foreign
manufacturer. The Customs Service's common control exception
denudes the trademark holder of § 526's protection in each of the
foregoing cases. I concur in the Court's judgment that the common
control exception is consistent with § 526, but I reach that
conclusion through an analysis that differs from JUSTICE KENNEDY's.
See ante at
486 U. S.
292-293.
Also at issue, although the parties and
amici give it
short shrift, is the third context (case 3), in which the domestic
firm authorizes an independent foreign manufacturer to use its
Page 486 U. S. 297
trademark abroad.
See ante at
486 U. S. 287,
486 U. S.
293-294. The Customs Service's authorized use exception,
19 CFR § 133.21(c)(3) (1987), deprives the trademark holder of §
526's protection in such a situation. For reasons set forth in Part
IV of this opinion, I dissent from the Court's judgment that the
authorized use exception is inconsistent with § 526.
I
A
An assessment of the reasonableness of the Customs Service's
interpretation of § 526 of the 1930 Tariff Act begins, as always,
with an assessment of "the particular statutory language at issue,
as well as the language and design of the statute as a whole."
Ante at
486 U. S. 291
(citations omitted). Section 526 requires consent of the trademark
owner to import a United States trademarked product if (1) the
product is "of foreign manufacture"; (2) the trademark it bears is
"owned by" either a United States citizen or "a corporation . . .
created or organized within . . . the United States"; and (3) "a
person domiciled in the United States" registered the
trademark.
The most blatant hint that Congress did not intend to extend §
526's protection to affiliates of foreign manufacturers (case 2) is
the provision's protectionist, almost jingoist, flavor. Its
structure bespeaks an intent, characteristic of the times, to
protect only domestic interests. A foreign manufacturer that
imports its trademarked products into the United States cannot
invoke § 526 to prevent third parties from competing in the
domestic market by buying the trademarked goods abroad and
importing them here: The trademark is not "registered in the Patent
and Trademark Office." The same manufacturer cannot protect itself
against parallel importation merely by registering its trademark in
the United States: It is not "a person domiciled in the United
States." Nor can the manufacturer insulate itself by hiring a
United States domiciliary to register the trademark: The
Page 486 U. S. 298
owner is not "organized within . . . the United States." For the
same reason, it will not even suffice for the foreign manufacturer
to incorporate a subsidiary here to register the trademark on the
parent's behalf, if the foreign parent still owns the
trademark.
The barriers that Congress erected seem calculated to serve no
purpose other than to reserve exclusively to domestic, not foreign,
interests the extraordinary protection that § 526 provides. But
they are fragile barriers indeed if a foreign manufacturer might
bypass them by the simple device of incorporating a shell domestic
subsidiary and transferring to it a single asset -- the United
States trademark. Such a reading of § 526 seems entirely at odds
with the protectionist sentiment that inspired the provision. If a
foreign manufacturer could insulate itself so easily from the
competition of parallel imports, much of § 526's limiting language
would be pointless.
B
The language of § 526 can reasonably be read, as the Customs
Service has, to avoid such an anomaly. Section 526 defines neither
"owned by" nor "of foreign manufacture," and both phrases admit of
considerable ambiguity when applied to affiliates of foreign
manufacturers. More specifically, in each of the disputed
gray-market cases involving a domestic affiliate of a foreign
manufacturer (case 2), it cannot be confidently discerned either
which entity owns the trademark or whether the goods in question
are "of foreign manufacture."
As every Member of this Court agrees, § 526 does not
unambiguously cover the situation in which a domestic subsidiary of
a foreign manufacturer registers its parent's trademark in the
United States (case 2a), because the trademark is not clearly
"owned by" a domestic firm.
See ante at
486 U. S. 292;
post at
486 U. S. 318
(opinion of SCALIA, J.).
"The term ['owner'] is . . .
nomen generalissimum, and
its meaning is to be gathered from the connection in which it is
used, and from the subject matter to which it is applied."
Black's Law Dictionary
Page 486 U. S. 299
996 (5th ed.1979). But whether "ownership" is the "[c]ollection
of rights to use and enjoy property, including [the] right to
transmit it to others," or "[t]he complete dominion, title, or
proprietary right in a thing," or "[t]he entirety of the powers of
use and disposal allowed by law,"
id. at 997, the parent
corporation -- not the subsidiary whose every decision it controls
-- better fits the bill as the true owner of any property that the
subsidiary nominally possesses.
Cf. Copperweld Corp. v.
Independence Tube Corp., 467 U. S. 752,
467 U. S. 771
(1984) (parent and wholly owned subsidiary cannot engage in
"conspiracy" within meaning of § 1 of the Sherman Act, 15 U.S.C. §
1, because they "
always have a
unity of purpose or a
common design'") (citation omitted) (emphasis in original). Because
of this ambiguity,
"[t]he Patent and Trademark Office takes the position that
ownership of marks among parent-subsidiary corporations . . . is
largely a matter to be decided between the parties themselves."
1 J. McCarthy, Trademarks and Unfair Competition 748 (2d ed.,
1984) (footnote omitted).
The same ambiguity does not, of course, infect cases 2b and 2c.
A domestic parent plainly owns the trademark registered in its
name, whether or not it also owns a manufacturing subsidiary (case
2b) or division (case 2c) abroad. Nevertheless, § 526 does not
unambiguously cover cases 2b and 2c, because it is unclear whether
merchandise manufactured abroad by a division or a subsidiary of a
domestic firm is "merchandise of foreign manufacture." That phrase
could readily be interpreted to mean either "merchandise
manufactured in a
foreign country" or "merchandise
manufactured by a
foreigner." Under the former definition,
the merchandise manufactured abroad in cases 2b and 2c would fall
within § 526's ban. Under the latter definition, however, the
coverage is not as clear. Surely a domestic firm that establishes a
manufacturing facility abroad (case 2c) is not in any sense a
foreigner, and it is at the very least reasonable to view as
"American" the foreign subsidiary of a domestic firm.
Page 486 U. S. 300
II
Even if the language of § 526 clearly covered all affiliates of
foreign manufacturers,
"[i]t is a 'familiar rule, that a thing may be within the letter
of the statute and yet not within the statute, because not within
its spirit, nor within the intention of its makers.' [
Footnote 2/2]"
It is therefore appropriate to turn to our other "traditional
tools of statutory construction" for clues of congressional intent.
INS v. Cardoza-Fonseca, 480 U. S. 421,
480 U. S. 446
(1987). The purpose and legislative history of § 526 confirm that,
if Congress had any intent as to the application of § 526 to
affiliates of foreign manufacturers, it was that they ought not
enjoy § 526's protection. There is, admittedly, evidence suggesting
that some legislators might have understood § 526 otherwise. That
evidence, however, is slim, ambiguous, and interspersed among more
-- and more convincing -- evidence that Congress had a contrary
intent.
A
Section 526 can be fully understood only in the context of the
controversial judicial opinion that spawned it. In
A. Bourjois
& Co. v. Katzel, 275 F. 539 (CA2 1921),
rev'd,
260 U. S. 689
(1923), a French producer of "Java" face powder sold to an
independent United States company at a considerable premium all its
United States business, along with its goodwill and full rights in
its United States trademarks. The United States company, Bourjois
& Co., registered the newly acquired trademarks under its own
name and continued to import the powder from the French producer,
selling it to domestic consumers under the French trademark and its
own name. All the while, the United States company went to great
expense to develop an identity independent from
Page 486 U. S. 301
that of the French producer of its product. But much of the
expense went to waste, for a competitor began to buy Java directly
from the French producer abroad and market it here under the French
trademark in competition with Bourjois. In sum, Bourjois was a
"prototypical gray-market victim" -- a United States trademark
holder that purchased its trademark rights, at arm's length and at
substantial cost, from an unaffiliated foreign producer.
Ante at
486 U. S.
286.
Despite the apparent unfairness of the competition, the Court of
Appeals for the Second Circuit declined to enjoin the encroachment
on the trademark holder's newly purchased market. The court could
find no trademark violation so long as the competitor's French
labels accurately identified the product's manufacturer. It adhered
to the then-prevailing "universality" theory of trademark law, a
view that it had espoused for several years.
See, e.g., Fred
Gretsch Mfg. Co. v. Schoening, 238 F. 780, 782 (1916). Under
that view, trademarks do not confer on the owner property interests
or monopoly power over intrabrand competition. Rather, they merely
protect the public from deception by indicating "the origin of the
goods they mark."
Katzel, supra, at 543.
While Bourjois, the prototypical (case l) gray-market victim,
evoked little sympathy from the Court of Appeals, it would have
been a far less sympathetic plaintiff had it not bargained and paid
so dearly for the Java trademark and distribution rights. And the
gray-market encroachment on the Java market would have been
considerably less troubling had Bourjois had control over the
foreign manufacturer's import conduct or over its sales abroad to
third parties who might import; it would essentially have been
seeking to protect itself from its own competition.
A comparison of Bourjois to the parties seeking § 526's
protection in this litigation aptly illustrates the profound
difference between the equities presented by the prototypical
gray-market victim and those implicated in case 2. First,
Page 486 U. S. 302
the United States trademark holder that, like Bourjois, has
purchased trademark rights at arm's length from an independent
manufacturer stands to lose the full benefit of its bargain because
of gray-market interference. In contrast, a United States trademark
holder that acquires identical rights from an affiliate (case 2a)
or creates identical rights itself and permits them to be used
abroad by an affiliate (cases 2b and 2c) does not have the same
sort of investment at stake.
Second, without § 526, the independent trademark purchaser has
no direct control over the importation of competing goods, much
less over the manufacturer's sale to third parties abroad. In
contrast, if the gray market harms a United States trademark holder
in case 2a, 2b, or 2c, that firm and its foreign affiliate (whether
a parent, subsidiary, or division) can respond with a panoply of
options that are unavailable to the independent purchaser of a
foreign trademark. They could, for example, jointly decide in their
mutual best interests that the manufacturer (1) should not import
directly to any domestic purchaser other than its affiliate; (2)
should, if legal, impose a restriction against resale (or against
resale in the United States) as a condition on its sales abroad to
potential parallel importers; or (3) should curtail sales abroad
entirely.
These differences furnish perfectly rational reasons that
Congress might have intended to distinguish between a domestic firm
that purchases trademark rights from an independent foreign firm
and one that either acquires identical rights from an affiliated
foreign firm or develops identical rights and permits a
manufacturing subsidiary or division to use them abroad.
B
There is no dispute that the perceived inequity in case 1, as
exemplified by
Katzel, was the "major stimulus" for the
enactment of § 526.
Coalition to Preserve the Integrity of
American Trademarks v. United States, 252 U.S.App.D.C. 342,
348, 790 F.2d 903, 909 (1986) (hereafter
COPIAT);
see
also
Page 486 U. S. 303
Sturges v. Clark D. Pease, Inc., 48 F.2d 1035, 1037
(CA2 1931) (A. Hand, J.);
Coty, Inc. v. Le Blume Import
Co., 292 F. 264, 268-269 (SDNY 1923) (L. Hand, J.). United
States trademark holders, many of which had purchased foreign
trademarks from unrelated foreign corporations, demanded an
immediate legislative response to
Katzel. Congress
responded with § 526 of the 1922 Tariff Act, without even waiting
for this Court to reverse the Second Circuit (which it ultimately
did three months later). The hastily drafted provision was
introduced as a "midnight amendmen[t]" on the floor of the Senate,
62 Cong.Rec. 11602 (1922) (remarks of Sen. Moses), and allotted a
miserly 10 minutes of debate, in the context of a debate on a
comprehensive revision of tariff (not trademark) law. The specific
wording of the response was by no means carefully considered, which
provides all the more reason to avoid a hypertechnical
interpretation that would "make trouble rather than allay it."
Fort Smith & Western R. Co. v. Mills, 253 U.
S. 206,
253 U. S. 208
(1920);
see United States v. Bass, 404 U.
S. 336,
404 U. S. 344
(1971).
The language that was originally introduced prohibited in
essence the importation, without the trademark owner's consent,
of
"any merchandise if such merchandise . . . bears a trademark
registered in the Patent Office by a person domiciled in the United
States."
62 Cong.Rec. 11602 (1922). As initially drafted, § 526 lacked
two of its three current limitations.
See supra, at
486 U. S. 297.
First, it did not limit the import prohibition to goods that were
"of foreign manufacture"; that limitation was added later by floor
amendment when an opponent pointed out that the provision, as
written, would preclude, for example, a United States citizen from
importing a domestically manufactured product that had been
exported to, and then purchased by him in, Canada. Second, the bill
lacked the requirement that the trademark be "owned by a citizen
of, or by a corporation or association created or organized within,
the United States"; that limitation appeared for the first time,
without explanation, in the Conference
Page 486 U. S. 304
Report. H.R.Conf.Rep. No. 1223, 67th Cong., 2d Sess. (1922).
See infra at
486 U. S.
306-307.
The sparse legislative history confirms that Congress' sole goal
was to overrule
Katzel. Section 526's sponsors and
proponents categorically rejected any suggestion that its effect
might be broader than necessary to overrule
Katzel on its
facts. They emphasized repeatedly that § 526 would serve at the
very most to protect domestic companies who (like Bourjois)
purchased trademark rights from unrelated foreign manufacturers.
[
Footnote 2/3] In fact, the first
Senator to object to § 526 was troubled by the impropriety of
enacting a provision designed to do no more than reverse
Katzel while it was still pending before this Court, 62
Cong.Rec. 11603 (1922) ("[T]he
whole subject matter
involved in [§ 526] . . . has been heard in the circuit court of
appeals [in
Katzel] and is now on its way to the Supreme
Court of the United States for final determination") (remarks of
Sen. Moses), a characterization with which no one took issue.
If anything, the most outspoken supporters of § 526
characterized it as even more limited than
Katzel, for
they seemed to have been operating under the mistaken impression
that the French producer in
Katzel was itself importing
Java in competition with Bourjois and in violation of its
agreement. Thus, several proponents, like Senator Sutherland,
repeatedly described the "only aim" of § 526 as the "prevent[ion]
[of] a palpable fraud," 62 Cong.Rec. 11603 (1922), or the
protection of domestic firms that purchase trademarks from foreign
manufacturers, which then
"deliberately violate the property rights of those to whom they
have sold these trademarks by
Page 486 U. S. 305
shipping over to this country goods under those identical
trademarks."
Ibid. [
Footnote
2/4]
The Court of Appeals read an exchange between Senators Lenroot
and McCumber to suggest that § 526 could have been understood to go
further than necessary merely to overrule
Katzel on its
facts. [
Footnote 2/5] The exchange
began with Senator
Page 486 U. S. 306
Lenroot's inquiry whether § 526 would protect from parallel
imports a foreign manufacturer whose "American
agents . .
. register a trademark . . . here in the United States,"
id. at 11605 (emphasis added), to which Senator McCumber
gave the following opaque response:
"[I]f there has been no transfer of trademark, that presents an
entirely different question. But suppose the trademark is owned
exclusively by an American firm or corporation. The mere fact of a
foreigner having a trademark and registering that trademark in the
United States, and selling the goods in the United States through
an
agency, of course, would not be affected by this
provision."
Ibid. (emphasis added). Dissatisfied with the response,
Senator Lenroot rephrased the question: whether the foreign owner
of "an international trademark . . .
registered by an
American, with American
domicile" could preclude parallel
importation of the product "without the written consent of the
[foreign firm], or their
agent domiciled here in America."
Ibid. (emphasis added). Time ran out before Senator
McCumber could answer.
I disagree with both the inference that the Court of Appeals
drew from Senator Lenroot's question and its reading of the answer.
In the first place, the question, in either formulation, does not
suggest that
"Senator Lenroot . . . was concerned that foreign corporations
could obtain the statutory monopoly simply by
incorporating an American subsidiary."
COPIAT, 252 U.S.App.D.C. at 350, 790 F.2d at 911
(emphasis added). It refers only to the possibility of a foreign
company "hav[ing] an agent" (not necessarily "incorporating a
subsidiary") in the United States to "register" (not necessarily to
"own") the foreign trademark. The question
Page 486 U. S. 307
seems to have been directed to the inadvertent omission,
subsequently remedied by the Conference Committee, of the
requirement that the trademark be "owned by a citizen of, or by a
corporation . . . created . . . within the United States."
Secondly, even if I could accept the conclusion that Senator
Lenroot initially read § 526 as permitting a foreign firm to invoke
§ 526 merely through the artifice of creating a subsidiary, Senator
McCumber's response laid to rest any such fear. He reiterated what
had been said repeatedly: Section 526 would apply only to a
situation in which there has been a "transfer" -- presumably at
arm's length -- of the trademark; and only where the trademark "is
owned exclusively by an American" -- presumably an exclusively
American -- firm. Thus, even if both Senators meant "subsidiary"
when they used the word "agent," Senator McCumber's answer squarely
negated any suggestion that § 526 would apply; such a situation,
"of course, would not be affected by this provision."
C
The sliver of legislative history on which the Court of Appeals
relied most heavily in support of its reading of § 526 was the
following statement in the Conference Report:
"A recent decision of the circuit court of appeals holds that
existing law does not prevent the importation of merchandise
bearing the same trademark as merchandise of the United States, if
the imported merchandise is genuine and if there is no fraud upon
the public. [Section 526] makes such importation unlawful without
the consent of the owner of the American trademark, in order to
protect the American manufacturer or producer. . . ."
H.R.Conf.Rep. No. 1223, 67th Cong., 2d Sess., at 158. The Court
of Appeals read the statement that § 526 "makes
such
importation unlawful" as meaning that § 526 would prevent the
importation of
any merchandise bearing a United
Page 486 U. S. 308
States trademark, so long as the imported merchandise is genuine
and there is no fraud on the public, even though the holder of the
United States trademark is affiliated with the manufacturer. That
is, concededly, a plausible reading of that brief passage.
But
cf. Atwood, Import Restrictions on Trademarked Merchandise --
The Role of the United States Bureau of Customs, 59 Trademark Rep.
301, 304 (1969) (describing Conference Report as "evidence of the
misunderstanding of the facts of the
Katzel case"). More
plausible though, is that the first sentence quoted above merely
described the well established legal theory that compelled the
result in
Katzel, and the second sentence, declaring the
unlawfulness of "such importation" referred to the type of
importation at issue in
Katzel --
i.e., parallel
importation of goods bearing a United States trademark purchased by
an
independent domestic company from a foreign
manufacturer. Only if the second sentence were so limited would §
526 "protect the American manufacturer or producer," as the
Conference Report itself says it does, for (as this case aptly
demonstrates) the alternative would constitute Government-enforced
insulation of the United States markets of foreign
corporations.
As the Court of Appeals had to concede,
COPIAT, supra,
at 349, 790 F.2d at 910, its own reading imputed to Congress an
intent to effect a sweeping transformation of the then-prevailing
trademark doctrine. Congress, the argument goes, intended to reject
squarely the Second Circuit's "universality theory" that a
trademark was a device to protect the public against fraud by
properly identifying the product's manufacturer, not a device to
protect the trademark owner against competing sales of its own
goods.
See supra, at
486 U. S. 301.
When Congress intends to effect so radical a departure from
prevailing legal doctrine, it ordinarily acknowledges as much, and
does so in more than a single cryptic comment in a conference
report. Moreover, Congress typically would not sneak such a
sweeping doctrinal change into a
Page 486 U. S. 309
massive legislative overhaul on an unrelated topic (here tariff
revision). And it usually would (though did not here) refer the
matter to the committee with expertise in the area.
See 62
Cong.Rec. 11602 (1922) (remarks of Sen. Moses). Since Congress did
not so much as hint that it was engaged in such an ambitious task,
the more plausible reading of the cryptic Conference Report is that
Congress intended merely to remedy a specific inequity that the
prevailing doctrine produced, not to abolish the entire doctrine
that produced it. [
Footnote
2/6]
In sum, the legislative history and purpose of § 526 confirm,
and JUSTICE SCALIA does not dispute, that if Congress had any
particular intent with respect to the application of § 526 to
trademark owners affiliated with foreign manufacturers, it was to
exclude them from its shield. At the very least, that
interpretation -- which forms the basis of the Customs Service
regulation -- is reasonable.
See Cardoza-Fonseca, 480 U.S.
at
480 U. S.
445-449.
III
The conclusion that the common control exception is consistent
with § 526 is further buttressed by the deference owed to an agency
interpretation that represents a longstanding agency position.
See Zenith Radio Corp. v. United
States,
Page 486 U. S. 310
437 U. S. 443,
437 U. S. 450
(1978);
NLRB v. Bell Aerospace Co., 416 U.
S. 267,
416 U. S. 275
(1974). While the precise language of the importation bar has
varied over the years, Treasury has for 50 years adhered to the
basic premise of the common control exception -- that § 526 does
not require exclusion of all gray-market goods.
Until 1936, Treasury's regulations merely tracked the language
of § 526,
see Cust.Reg.1923, art. 476; Cust.Reg.1931,
arts. 517(a), 518, but respondents point to no evidence that the
Customs Service had any practice of excluding goods bearing
trademarks registered by affiliates of foreign corporations. That
year, Treasury explicitly adopted for the first time a
"same-company" exception, which barred foreign manufactured goods
bearing United States trademarks except if the foreign and domestic
trademarks "are owned by the same person, partnership, association,
or corporation."
See T.D. 48537, 70 Treas.Dec. 336-337
(1936) (amending art. 518(b)). Contrary to the assertion of the
Court of Appeals,
COPIAT, 252 U.S.App.D.C. at 353, and n.
14, 790 F.2d at 914, and n. 14, Treasury's preamble specifically
invoked its authority under §§ 526 and 624 of the 1930 Tariff Act
(as well as § 27 of the Trade-Mark Act of 1905) in introducing the
same-company exception. Treasury adhered to an identical
same-company formulation of the exception upon reissuing the
regulation in 1937,
see Cust.Reg.1937, arts. 536(a), 537;
in 1943,
see 19 CFR § 11.14(b) (1943); and in 1947,
see 19 CFR § 11.14(b) (1947), each time citing
specifically § 526 as partial authority for the interpretation. For
17 years thereafter, the regulation remained unchanged, and the
Customs Service permitted parallel importation so long as the
manufacturer and the United States trademark holder were
affiliated, including situations where the holder was the
manufacturer's subsidiary.
See In re Georg Jensen Inc.,
T.D. 52711, 86 Treas.Dec. 92 (1951); Derenberg, The Impact of the
Antitrust Laws on Trade-Marks in Foreign Commerce, 27 N.Y.U.L.Rev.
414, 429 (1952).
Page 486 U. S. 311
In 1953, Treasury revised its regulations "[t]o eliminate
obsolete material [and] correct discrepancies," T.D. 53399, 88
Treas.Dec. 376, that arose as international corporate relationships
grew in complexity. It adhered to the same-company exception but
enlarged it to encompass the situation in which the foreign
manufacturer is a "related company as defined in section 45 of the
[Lanham Trade-Mark] Act, [15 U.S.C. § 1127 (1982 ed. and Supp.
IV)]," one that "legitimately controls, or is controlled by" the
domestic trademark owner "in respect to the nature and quality of
the goods in connection with which the mark is used." T.D. 53399,
88 Treas.Dec. at 384. Although the new regulations, for the first
time, omitted reference to § 526, contemporaneous commentators
uniformly recognized that the omission was inadvertent.
See,
e.g., Derenberg, The Seventh Year of Administration of the
Lanham Trade-Mark Act of 1946, 44 Trade-Mark Rep. 991, 996-1000
(1954); Note, Trade-Mark Infringement: The Power of an American
Trade-Mark Owner to Prevent the Importation of the Authentic
Product Manufactured by a Foreign Company, 64 Yale L.J. 557,
559-562, 566-568 (1955). It would have been nonsensical in the
extreme for Treasury to announce that goods excludable in any event
under § 526 are not barred by the Lanham Trade-Mark Act.
That exception remained in place until 1959, when (for reasons
not relevant here) Treasury deleted the related-company formulation
of the exception and returned to the same-company formulation.
Significantly, however, Treasury and the Customs Service continued
to apply the provision as if the related-company language had still
been there, permitting importation of gray-market goods where "the
foreign producer is the parent or subsidiary of the American
[trademark] owner or the firms are under a common control." T.D.
69-12(2), 3 Cust.Bull. 17 (1969);
see also Letter from
Deputy Customs Commissioner Flinn to Felix Levitan (Mar. 15, 1963),
App. 63 (articulating Customs Service's "position
Page 486 U. S. 312
for many years" that § 526 is inapplicable where "merchandise
[is] manufactured or sold by the foreign parent or subsidiary
corporation of an American trademark owner").
In 1972, Treasury promulgated the current Customs Service
regulation, with its common control exception once more codifying
the practice that the Customs Service has adhered to for 50 years.
In sum, the agency has (to quote the Customs Service's long-time
attorney)
"always denied complete exclusionary protection to an American
trademark registrant when it knew the importer to be a subsidiary
or parent of the foreign user of the trademark."
Atwood, 59 Trademark Rep. at 305-307. We do not lightly overturn
administrative practices as longstanding as the ones challenged in
this action. This is particularly true where, as here, an immense
domestic retail industry has developed in reliance on that
consistent interpretation.
Zenith Radio Corp. v. United
States, 437 U.S. at
437 U. S.
457.
IV
I turn now to my small area of disagreement with the Court's
judgment -- the Court's conclusion that the authorized use
exception embodied in 19 CFR § 133.21(c)(3) (1987) is inconsistent
with the plain language of § 526. In my view, § 526 does not
unambiguously protect from gray-market competition a United States
trademark owner who authorizes the use of its trademark abroad by
an independent manufacturer (case 3).
Unlike the variations of corporate affiliation in case 2,
see supra at
486 U. S. 299,
the ambiguity in § 526, admittedly, is not immediately apparent in
case 3. In that situation, the casual reader of the statute might
suppose that the domestic firm still "own[s]" its trademark. Any
such supposition as to the meaning of "owned by," however, bespeaks
stolid anachronism, not solid analysis. It follows only from an
understanding of trademark law that established itself long after
the 1922 enactment and 1930 reenactment of § 526.
Cf. Potomac
Electric Power Co. v. Director, OWCP, 449 U.
S. 268,
449 U. S.
280
Page 486 U. S. 313
(1980) (in interpreting a "statute enacted over 50 years ago,
the view that once
dominate[d] the field' is more enlightening
than a recent state law trend that has not motivated subsequent
Congresses to amend the federal statute") (footnote
omitted).
When § 526 was before Congress, the prevailing law held that a
trademark's sole purpose was to identify for consumers the
product's physical source or origin.
See, e.g., Macmahan
Pharmacal Co. v. Denver Chem. Mfg. Co., 113 F. 468, 475 (CA8
1901).
"Under this early 'source theory' of protection, trademark
licensing was viewed as philosophically impossible, since licensing
meant that the mark was being used by persons not associated with
the real manufacturing 'source' in a strict, physical sense of the
word."
1 McCarthy, Trademarks and Unfair Competition, at 826;
see
Macmahan Pharmacal Co., supra, at 475 ("An assignment or
license without [a] transfer [of the business] is totally
inconsistent with the theory upon which the value of a trademark
depends"); H. Nims, The Law of Unfair Competition and Trade-Marks
46 (1917) (identifying
Macmahan as "the usual rule").
Thus, any attempt by a trademark holder to authorize a third party
to use its trademark worked an abandonment of the trademark,
resulting in a relinquishment of ownership.
See, e.g., Everett
O. Fisk & Co. v. Fisk Teachers' Agency, Inc., 3 F.2d 7, 9
(CA8 1924).
Nor was it at all obvious then that a trademark owner could
authorize the use of its trademark in one geographic area by
selling it along with business and goodwill, while retaining
ownership of the trademark in another geographic area. There were,
as JUSTICE SCALIA points out, isolated suggestions that a foreign
firm could validly assign to another the exclusive right to
distribute the assignor's goods here under the foreign trademark.
See post at
486 U. S. 326.
The cases, however, were rife with suggestions to the contrary.
[
Footnote 2/7] And
Page 486 U. S. 314
we have found no contemporaneous case even suggesting that a
domestic firm could retain ownership of a trademark after
attempting to assign to another the right to use the trademark on
goods that the other manufactured abroad.
Cf. Scandinavia
Belting Co. v. Asbestos & Rubber Works of America, Inc.,
257 F. 937, 956 (CA2 1919) (raising similar issue whether assignee
of right to use trademark in the United States might use trademark
on products not produced by the foreign manufacturer, but
concluding "[t]hat question is not here and is not decided"). As
one commentator writing as late as 1932 observed:
"[T]here is much confusion in the books in regard to the
transferability of trademarks and tradenames. The law on the matter
is neither clearly stated nor always uniformly applied."
Grismore, The Assignment of Trade Marks and Trade Names, 30
Mich.L.Rev. 490, 491 (1932). [
Footnote
2/8]
Not until the 1930's did a trend develop approving of trademark
licensing -- so long as the licensor controlled the quality of the
licensee's products -- on the theory that a trademark might also
serve the function of identifying product quality for consumers. 1
McCarthy, Trademarks and Unfair Competition, at 827-829;
see Grismore, 30 Mich.L.Rev. at 499.
Page 486 U. S. 315
And not until the passage of the Lanham Trade-Mark Act in 1946
did that trend become the rule.
See, e.g., Dawn Donut Co. v.
Hart's Food Stores, Inc., 267 F.2d 358, 366-367 (CA2 1959).
Similarly, it was not until well after § 526's enactment that it
became clear that a trademark owner could assign rights in a
particular territory along with goodwill, while retaining ownership
in another distinct territory.
See, e.g., California Wine &
Liquor Corp. v. William Zakon & Sons, Inc., 297 Mass. 373,
378, 8 N.E.2d 812, 814 (1937).
Manifestly, the legislators who chose the term "owned by" viewed
trademark ownership differently than we view it today. Any
prescient legislator who could have contemplated that a trademark
owner might license the use of its trademark would almost certainly
have concluded that such a transaction would divest the licensor
not only of the benefit of § 526's importation prohibition, but of
all trademark protection; and anyone who gave thought to the
possibility that a trademark holder might assign rights to use its
trademark, along with business and goodwill, to an unrelated
manufacturer in another territory had good reason to expect the
same result. At the very least, it seems to me plain that Congress
did not address case 3 any more clearly than it addressed case 2a,
2b, or 2c. To hold otherwise is to wrench statutory words out of
their legislative and historical context and treat legislation as
no more than a "collection of English words" rather than "a working
instrument of government. . . ."
United States v.
Dotterweich, 320 U. S. 277,
320 U. S. 280
(1943).
JUSTICE SCALIA's assertion that the foregoing analysis of case 3
is not based on the "resolution of textual 'ambiguity,"'
post at
486 U. S. 323,
depends on the proposition that an ancient statute is not ambiguous
-- and judges can never inform their interpretation with reference
to legislative purpose -- merely because the scope of its language
has, by some fortuitous development, expanded to embrace situations
that its drafters never anticipated. The proposition is
unexceptionable where the post-enactment development does not
implicate the
Page 486 U. S. 316
purpose of the statute. Thus, to use JUSTICE SCALIA's
illustration, no one would doubt that "[a] 19th-century statute
criminalizing the theft of goods" applies unambiguously to "theft
of microwave ovens,"
post at
486 U. S. 323,
for the post-enactment development (the invention of new "goods")
in no way implicates the statute's purpose (to deter "theft of
goods"). The proposition is fallacious, however, when the
post-enactment development does implicate the statute's purpose.
For example, had the same 19th-century legislature passed a statute
requiring a utility commission to "inspect all ovens installed in a
home for propensity to spew flames," the statute would not
unambiguously apply to microwave or electric ovens. Although it
would not be absurd to read the statute to cover such developments,
a court might decline to do so, depending upon the extent to which
the statute's purpose would be furthered by inspection of ovens
that spew fewer flames than do conventional ovens. So too, the
drastic doctrinal change in the nature of trademark ownership that
occurred after § 526's enactment directly implicates the statute's
purpose -- to protect United States trademark owners from
intrabrand competition arising from the manufacture abroad of
trademarked goods by firms having certain relationships with the
owner.
Since I believe that the application of § 526 to case 3 is
ambiguous, the sole remaining question is whether Treasury's
decision to exclude case 3 from § 526's prohibition is entitled to
deference. The same considerations that lead me to uphold
Treasury's treatment of the case 2 variations compel the same
conclusion here. In the first place, the equities in case 3, as in
case 2, differ significantly from the equities that motivated
Congress to protect the prototypical gray-market victim (case l)
that purchases its trademark rights at arm's length from an
independent manufacturer. While the prototypical gray-market victim
stands to lose the full benefit of its bargain because of
gray-market interference, the United States trademark holder that
develops identical rights and
Page 486 U. S. 317
authorizes a third party to use them abroad does not have the
same sort of investment at stake. Similarly, while a trademark
purchaser has no direct control over the importation of competing
goods or over the manufacturer's sale abroad to third parties, the
holder of a United States trademark in case 3 can avoid competition
simply by declining to license its use abroad or even (if
contractually permitted) revoking an already-issued license. Thus,
it would have been perfectly rational for Congress to treat case 3
like case 2, excluding both from the § 526's prohibition.
The legislative history that I have already discussed at length
confirms Congress' intent to do exactly that, and merely to
overrule
Katzel. There is no more indication that Congress
intended to permit a United States trademark holder to prohibit
importation of trademarked goods manufactured abroad under its
authorization than that Congress intended to permit a United States
trademark holder to exclude goods produced by its affiliates or
divisions abroad.
Finally, Treasury has, at least since 1951, declined to protect
trademark holders who authorize the use of their trademarks abroad.
Almost as soon as the Lanham Trade-Mark Act codified the quality
theory, enabling trademark holders to license the use of their
trademarks without thereby relinquishing ownership,
see
supra, at
486 U. S. 311,
the Customs Service took the position that § 526's protection would
be unavailable to domestic firms that authorized independent
foreign firms to use their trademarks.
See Letter from
Customs Commissioner Dow to Sen. Douglas (Mar. 23, 1951), App. 52,
53 ("[A] foreign subsidiary
or licensee of the United
States trademark is considered to stand in the same shoes as such
trademark owner") (emphasis added).
See also T.D.
69-12(2), 3 Cust.Bull. at 17. Particularly in light of that
longstanding agency interpretation, I would uphold the authorized
use exception as reasonable.
Page 486 U. S. 318
[
Footnote 2/1]
See, e.g., Olympus Corp. v. United States, 792 F.2d 315
(CA2 1986),
aff'g 627 F.
Supp. 911 (EDNY 1985),
cert. pending, No. 86-757;
Vivitar Corp. v. United States, 761 F.2d 1552 (CA
Fed.1985),
aff'g 593 F. Supp. 420 (Ct.Int'l Trade 1984),
cert. denied, 474 U.S. 1055 (1986);
Lever Brothers Co.
v. United States, 652 F.
Supp. 403 (DC 1987).
[
Footnote 2/2]
Steelworkers v. Weber, 443 U.
S. 193,
443 U. S. 201
(1979) (quoting
Holy Trinity Church v. United States,
143 U. S. 457,
143 U. S. 459
(1892)).
See also INS v. Cardoza-Fonseca, 480 U.
S. 421,
480 U. S. 432,
n. 12 (1987) (citing cases);
Kelly v. Robinson,
479 U. S. 36,
479 U. S. 43-44
(1986);
Offshore Logistics, Inc. v. Tallentire,
477 U. S. 207,
477 U. S.
220-221 (1986).
[
Footnote 2/3]
See 62 Cong.Rec. 11604 (1922) (bill's cosponsor, Sen.
McCumber, complains that, after
Katzel, "the American
purchasers of these [trademark] rights are entirely
unprotected") (emphasis added);
ibid. (purpose "is to give
the opportunity to protect the American
purchaser")
(emphasis added) (remarks of Sen. McCumber),
ibid. (Sen.
Simmons describes case of domestic purchasers of Bayer Aspirin
trademark from German company, whose investment § 526 would protect
by precluding importation of the aspirin by third party under same
trademark).
[
Footnote 2/4]
See also id. at 11604 (describing § 526 as "a
prohibition against the violation of . . . contract"; "In a
thousand ways, we have guarded against fraud, and this [is] one
among the thousand") (remarks of Sen. McCumber).
It is conceivable, as the Court of Appeals suggested, that the
quoted statements were merely "efforts by proponents of a bill to
understate its significance,"
COPIAT, 252 U.S.App.D.C.
342, 350, 790 F.2d 903, 911 (1986). But without firmer evidence
tending to impugn a legislator's integrity, the presumption that
legislators mean what they say would seem more appropriate than the
opposite presumption that the Court of Appeals applied. At any
rate, if a sponsor of legislation needs to understate the
significance of a provision in order to secure its passage, it is
reasonable to assume that other legislators relied on the sponsor's
statements in casting their votes.
[
Footnote 2/5]
The Court of Appeals also made much of a question posed by
Senator Lenroot, which prompted an amendment of § 526 on the Senate
floor. Senator Lenroot objected that, under § 526 as originally
drafted, a United States citizen who purchased an American product
while in Canada could not carry the product across the United
States border. In recognition of the absurdity of that result,
Senator McCumber offered, and the Senate adopted, an amendment
limiting the prohibition to goods "of foreign manufacture." 62
Cong.Rec. 11603-11604 (1922). The Court of Appeals thought it
significant that Senator McCumber felt compelled to amend the
provision, rather than
"simply noting (as the Customs Service would under its
regulations) that the owners of the American and Canadian
trademarks were the same company, or that the American trademark
owner had authorized the use of the trademark."
COPIAT, supra, at 350, 790 F.2d at 911. Senator
McCumber's response is not as telling as the Court of Appeals
suggests. In the first place, it is not at all clear that there was
a Canadian trademark in Senator Lenroot's illustration. Second,
even if such an assumption were implicit, a legislator's choice of
one solution does not prove that he considered others nonviable.
Third, the hypothetical demonstrated one respect in which the
hastily drafted provision was not narrowly tailored to
Katzel's facts. Senator McCumber's prompt floor amendment
is just as consistent with a motive to tailor the provision more to
Katzel's specific facts as it is with a suggestion that §
526 was never intended to be so limited in the first place. Indeed,
the Senators' concern that domestic companies not be shielded from
importation of their own goods suggests a desire not to extend §
526's protection to domestic companies from the parallel imports
disputed in this litigation over which they have control.
[
Footnote 2/6]
If the congressional debates surrounding the initial enactment
of § 526 were less than clear, the reenactment of § 526 in the 1930
Tariff Act was utterly confused. One proposal, which Congress
ultimately rejected, was to substitute for § 526 a new and
substantially different provision.
See 71 Cong.Rec.
3871-3876, 3889-3906 (1929). The only two Senators who discussed §
526's current meaning mischaracterized it as a provision designed
to protect United States trademark owners from infringement of
their trademarks, rather than from the competition of valid
trademarks.
See id. at 3837 (remarks of Sen. Reed);
id. at 3872 (remarks of Sen. George). The debates
certainly do not evince the level of understanding that one might
expect of a Legislature that only eight years earlier is said to
have effected through that provision a sweeping doctrinal revision.
Significantly, in discussing the reenactment of § 526, no one
suggested that it was no longer limited to the facts of
Katzel, as the Congress that originally enacted it
intended.
[
Footnote 2/7]
See, e.g., Independent Baking Powder Co. v. Boorman,
175 F. 448, 154 (CC NJ 1910) ("[T]he assignor cannot, after the
assignment, continue the same identical business and at the same
places as before, under unassigned trademarks, and at the same time
authorize his assignee to conduct the same business elsewhere under
an assigned trademark");
Eiseman v. Schiffer, 157 F. 473
(CC SDNY 1907) (trademark owner may not assign trademark and then
continue to engage in same business under different trademark).
[
Footnote 2/8]
JUSTICE SCALIA cites
United Drug Co. v. Theodore Rectanus
Co., 248 U. S. 90,
248 U. S.
100-101 (1918), and
Hanover Star Milling Co. v.
Metcalf, 240 U. S. 403,
240 U. S. 415
(1916), in support of his contention that the law, by 1920, clearly
permitted a trademark owner to retain ownership and use a trademark
in one territory after assigning the identical trademark along with
goodwill in another.
Post at
486 U. S. 326.
Those cases held only that a firm can develop a trademark that is
identical to a trademark already in use in a geographically
distinct and remote area if the firm is unaware of the identity.
Thus, those cases bore on the territorial extent of trademark
protection, not on the transferability of a trademark by territory
once developed.
JUSTICE SCALIA, with whom THE CHIEF JUSTICE, JUSTICE BLACKMUN,
and JUSTICE O'CONNOR join, concurring in part and dissenting in
part.
I agree with the Court's analytic approach to this matter, and
with its conclusion that subsection (c)(3) of the regulation, 19
CFR § 133.21(c)(3) (1987), is not a permissible construction of §
526(a) of the Tariff Act of 1930, 19 U.S.C. § 1526(a). I therefore
join Parts I, II-A and, II-C, of the Court's opinion. In my view,
however, subsections (c)(1) and (c)(2) of the regulation are also
in conflict with the clear language of § 526(a). I therefore
decline to join parts II-B and III of JUSTICE KENNEDY's opinion and
dissent from that part of the judgment upholding subsections (c)(1)
and (c)(2).
I
The Court observes that the statutory phrase "owned by" is
ambiguous when applied to domestic subsidiaries of foreign
corporations (case 2a). With this much, I agree. It may be
reasonable for some purposes to say that a trademark nominally
owned by a domestic subsidiary is "owned by" its foreign parent
corporation. This lawsuit would be different if the Customs Service
regulation at issue here did no more than resolve this arguable
ambiguity, by providing that a domestic subsidiary of a foreign
parent could not claim the protection of § 526(a). In fact,
however, that has never been asserted to be the theory of the
regulation, and is assuredly not its only, or even its principal,
effect. The authority to clarify an ambiguity in a statute is not
the authority to alter even its unambiguous applications, and §
526(a) unambiguously encompasses most of the situations that the
regulation purports to exclude.
Thus, the regulation excludes from § 526(a)'s import prohibition
products bearing a domestic trademark that have been manufactured
abroad by the trademark owner (case 2c), or by the trademark
owner's subsidiary (case 2b). But the statutory requirement that
the trademark be "owned by" a
Page 486 U. S. 319
United States citizen or corporation is unambiguous with respect
to these two cases. A parent corporation may or may not be said to
"own" the assets owned by its subsidiary, but no matter how that
ambiguity is resolved it is impossible to conclude that a trademark
owned by a United States corporation and applied abroad either by
the corporation or its foreign subsidiary is "owned by" anyone
other than a United States corporation.
Five Members of the Court (hereinafter referred to as "the
majority") assert, however, that the regulation's treatment of
situations 2b and 2c is attributable to the resolution of yet
another ambiguity in § 526(a).
See ante at
486 U. S.
292-293 (opinion of KENNEDY, J.);
ante at 299
(opinion of BRENNAN, J.). The statute excludes only merchandise "of
foreign manufacture," which the majority says might mean
"manufactured by a foreigner" rather than "manufactured in a
foreign country." I think not. Words, like syllables, acquire
meaning not in isolation, but within their context. While looking
up the separate word "foreign" in a dictionary might produce the
reading the majority suggests, that approach would also interpret
the phrase "I have a foreign object in my eye" as referring,
perhaps, to something from Italy. The phrase "of foreign
manufacture" is a common usage, well understood to mean
"manufactured abroad." Hence, when statutes and regulations intend
to describe the universe of manufactured goods, they do not refer
to goods "of foreign or citizen manufacture," but to goods "of
foreign or domestic manufacture."
See, e.g., 19 CFR §
133.21(a) (1987). I know of no instance in which anyone, anywhere,
has used the phrase with the meaning the majority suggests -- and
the majority provides no example.
In the particular context of the present statute, however, the
majority's suggested interpretation is not merely unusual, but
inconceivable, since it would have the effect of eliminating §
526(a)'s protection for some trademark holders in case 1 -- which
contains what the Court describes as the "prototypical"
Page 486 U. S. 320
gray-market victims. Not uncommonly, a foreign trademark owner
licenses an American firm to use its trademark in the United States
and also licenses one or more other American firms to use the
trademark in other countries. In this situation, the firm with the
United States license could not keep out gray-market imports
manufactured abroad by the other American firms, since, under the
majority's interpretation, the goods would not be "of foreign
manufacture." Thus, to save the regulation, the majority proposes
an interpretation that undermines even the core of the statute.
[
Footnote 3/1]
The majority does not insist that this queer reading is the best
interpretation of "of foreign manufacture," but only that the
Customs Service has adopted this construction of the statute as the
basis for its regulation. That will come as a surprise to the
Customs Service. The Government's petition for writ of certiorari
in this very case states that § 526(a) deals not with goods
manufactured by foreigners, but rather with "goods manufactured
abroad," "genuine foreign-made goods," "[g]enuine goods
manufactured abroad," "goods produced abroad." Pet. for Cert. in
No. 86-625, p. 3. As far as I can discern, that accords with the
absolutely uniform Customs Service interpretation. For example, the
Customs
Page 486 U. S. 321
Service cites (Brief for Federal Petitioners 38, n. 46) the 1951
correspondence from the Commissioner of Customs to Senator Douglas
describing § 526(a):
"As interpreted by the [Customs] Bureau, section 526 prohibits
the importation of genuine articles
of foreign origin
bearing a genuine trademark. . . . For example: if the foreign
owner of a trademark applied to
articles manufactured in a
foreign country assigns the United States rights [to a United
States citizen],
no articles of foreign origin bearing
such mark . . . may be imported."
App. 53 (emphasis added). Perhaps most telling of all is the
Commissioner's description, in this letter, of the common-ownership
exception:
"However, if the United States trademark owner and the owner of
the foreign rights to the same mark are one and the same person,
articles produced and sold abroad by the foreign owner may
be imported by anyone. . . ."
Ibid. (emphasis added). The Commissioner's reference to
articles produced and sold abroad was not original, but paraphrased
the language of the earliest regulation articulating the
common-ownership exception to § 526(a) ("merchandise manufactured
or sold in a foreign country") which was reiterated in regulations
promulgated in 1937, 1943, 1947, and 1969.
See
Cust.Reg.1931, art. 518(b),
as amended, T.D. 48537, 70
Treas.Dec. 336-337 (1936); Cust.Reg.1937, art. 537(b);
Cust.Reg.1943, 19 CFR § 11.14(b) (1943); Cust.Reg.1947, 19 CFR §
11.14(b) (1947); 19 CFR § 11;14(b) (1969). It is a strange sort of
deference to agency interpretation which adopts a view of the
statute that the agency clearly rejects.
If it were, as JUSTICE KENNEDY believes, "the current
interpretation of the regulations we are sustaining,"
ante
at
486 U. S. 293,
n. 4, one would expect there to be in place some mechanism that
enables the Customs Service to identify goods that are not only
manufactured abroad but also (as the majority's
Page 486 U. S. 322
interpretation requires) manufactured by foreigners. Acquiring
this knowledge cannot be easy, since the importer of merchandise
will often not know the manufacturer's identity, much less its
corporate pedigree. International corporate ownership, not a matter
of public record, is often a closely guarded secret. Yet although
there is in place a regulation requiring the country of origin
(
i.e., whether "manufactured abroad") to be plainly
indicated on all imports,
see 19 CFR §§ 134.0-134.55
(1987), there is none requiring the nationality of the manufacturer
to be stated. After today's decision, of course, the Customs
Service, if it would not rather amend its regulations, will
presumably have to devise means to enforce what we say it has been
enforcing.
Which suggests one of the most important reasons we defer to an
agency's construction of a statute: its expert knowledge of the
interpretation's practical consequences. Since the Government has
never advocated the interpretation proposed by the majority
(although this case has been argued twice), and since we did not so
much as ask for additional briefing after conceiving of the novel
interpretation, we cannot be sure what other difficulties it will
create. It might, for example, conflict with mutually accepted
understandings of our commercial treaty commitments to foreign
countries, such as the provision in our Treaty of Friendship,
Commerce and Navigation with the Federal Republic of Germany,
October 29, 1954, that
"[n]ationals and companies of either Party shall be accorded
national treatment and most-favored-nation treatment by the other
Party with respect to all matters relating to importation and
exportation."
[1956] TIAS 3593, 7 UST 1839, art. XIV, � 4. I doubt, in any
case, that our trade partners will look favorably upon a regulation
which, as now interpreted, treats goods manufactured by American
companies on their soil more favorably than goods manufactured
there by their own nationals.
I find it extraordinary for this Court, on the theory of
deferring to an agency's judgment, to burden that agency with
Page 486 U. S. 323
an interpretation that it not only has never suggested, but that
is contrary to ordinary usage, to the purposes of the statute, and
to the interpretation the agency appears to have applied
consistently for half a century.
II
Section 526(a) also unambiguously embraces a third situation
that the regulation excludes -- namely, the situation (case 3) in
which a domestic trademark owner and registrant authorizes a
foreign firm to use its United States trademark abroad. There, the
United States trademark is unambiguously "owned by" a United States
firm, and registered by a firm "domiciled in the United States,"
and the goods sought to be imported are "of foreign manufacture."
According to JUSTICE BRENNAN, however, thus reading the words to
mean what they say "bespeaks stolid anachronism, not solid
analysis," because
"[a]ny prescient legislator who could have contemplated that a
trademark owner might license the use of its trademark would almost
certainly have concluded that such a transaction would divest the
licensor not only of the benefit of § 526's importation
prohibition, but of
all trademark protection."
Ante at
486 U. S. 312,
486 U. S.
315.
There may be an anachronism here, but if so, it is the statute
itself -- which Congress has chosen not to update -- and not the
faithful reading of it to cover what it covers. JUSTICE BRENNAN
characterizes his view as the resolution of textual "ambiguity,"
but it has nothing to do with that. A 19th-century statute
criminalizing the theft of goods is not ambiguous in its
application to the theft of microwave ovens simply because the
legislators enacting it "were unlikely to have contemplated" those
appliances; and a 1922 (or 1930) statute covering a "corporation .
. . organized within, the United States" unambiguously includes a
United States corporation that has licensed its trademark abroad,
whether or not a United States corporation with that characteristic
existed
Page 486 U. S. 324
at the time. [
Footnote 3/2]
JUSTICE BRENNAN is asserting that we have the power -- indeed, the
obligation, lest we commit "stolid anachronism" -- to decline to
apply a statute to a situation that its language concededly covers,
not on the ground that the enacting Congress actually intended but
failed to express such an exception, nor even on the ground that
failure to infer such an exception produces an absurd result, but
on the ground that,
if the enacting Congress had foreseen
modern circumstances, it
would have adopted such an
exception, since otherwise the effect of the law would extend
beyond its originally contemplated purpose. I confess never to
have
Page 486 U. S. 325
heard of such a theory of statutory construction. The principle
of our democratic system is not that each legislature enacts a
purpose, independent of the language in a statute, which the courts
must then perpetuate, assuring that it is fully achieved but never
overshot by expanding or ignoring the statutory language as
changing circumstances require. To the contrary, it seems to me the
prerogative of each currently elected Congress to allow those laws
which change has rendered nugatory to die an unobserved death if it
no longer thinks their purposes worthwhile, and to allow those laws
whose effects have been expanded by change to remain alive if it
favors the new effects. In the last analysis, it is JUSTICE
BRENNAN's approach that "bespeaks stolid anachronism," because in
theory it requires judges to rewrite the United States Code to
accord with the unenacted purposes of Congresses long since called
home. (The reality, I fear, may be even worse than the theory. In
practice, the rewriting is less likely to accord with the
legislative purposes of yesteryear than the judicial predelictions
of today.)
But it is not really necessary to conduct the discourse at such
a philosophical level in order to reject what JUSTICE BRENNAN
proposes. For even those who would support the power of a court to
disregard the plain application of a statute when changed
circumstances cause its effects to exceed the original legislative
purpose would concede, I must believe, that such power should be
exercised only when (1) it is clear that the alleged changed
circumstances were unknown to, and unenvisioned by, the enacting
legislature, and (2) it is clear that they cause the challenged
application of the statute to exceed its original purpose. Here
both of those conditions, far from being clearly satisfied, are
almost certainly not met.
JUSTICE BRENNAN asserts that legislators in 1922 or 1930 were
unlikely to have contemplated that a trademark owner could assign
his trademark unless he simultaneously conveyed the goodwill and
business associated with the mark.
Page 486 U. S. 326
Ante at
486 U. S.
313-314. But the prohibition on assigning a trademark
apart from its associated goodwill has not been eliminated.
See 15 U.S.C. § 1060. And no more in 1922 than today did
it preclude assignment of the trademark and goodwill on a
region-by-region basis. By 1920, it was firmly established that
unrelated businesses could own and use an identical trademark so
long as the uses were confined to different and distinct regions.
See United Drug Co. v. Theodore Rectanus Co., 248 U. S.
90,
248 U. S.
100-101 (1918);
Hanover Star Milling Co. v.
Metcalf, 240 U. S. 403,
240 U. S. 415
(1916). As a consequence, a trademark holder doing business in two
distinct territories was free to assign the business, goodwill, and
rights to the trademark in one of the regions.
See, e.g.,
Scandinavia Belting Co. v. Asbestos & Rubber Works of America,
Inc., 257 F. 937, 953-956 (CA2 1919);
Battle Creek Toasted
Corn Flake Co. v. Kellogg Toasted Corn Flake Co., 54
Ont.L.Rep. 537, 546, 550 (1923);
see also Apollinaris Co. v.
Scherer, 27 F. 18, 19-20 (CC SDNY 1886) (dicta);
cf.
Saxlehner v. Eisner & Mendelson Co., 179 U. S.
19 (1900) (a trademark owner does not abandon his
trademark if he continues to use it domestically while granting
another party the exclusive right to sell the product in certain
foreign countries). [
Footnote 3/3]
Similarly, a firm that used its trademark in one
Page 486 U. S. 327
business, say manufacturing cola syrup, could transfer rights to
use the trademark in another business, such as bottling
cola-flavored soda.
See Coca-Cola Bottling Co. v. Coca-Cola
Co., 269 F. 796, 806-808 (DC Del.1920). It was also well
established that different parties using an identical trademark in
different regions, or for different purposes, could enter into a
consent agreement authorizing each party to continue the
nonconflicting uses.
See Waukesha Hygeia Mineral Springs Co. v.
Hygeia Sparkling Distilled Water Co., 63 F. 438, 441 (CA7
1894). JUSTICE BRENNAN correctly notes that trademark law now
recognizes, as it had only begun to recognize in 1930, that a
trademark may be licensed for use by different firms in the same or
overlapping regions,
ante at
486 U. S.
314-315. That change in the law, however, plays almost
no part in the application of § 526(a). Since international
trademark licensing is interregional, a statute that applies only
to imported goods is hardly affected by a change in trademark law
concerning intraregional licensing. Finally, there is direct proof
that Congress appreciated the possibility of territorial assignment
of trademarks. JUSTICE BRENNAN acknowledges that the 1922 Congress
was well aware of, and indeed was motivated by, the case of
A.
Bourjois & Co. v. Katzel, 275 F. 539 (CA2 1921), which
presented a textbook example of an assignment of the right to use a
trademark in a distinct market. Although Congress understood that a
United States trademark owner could authorize the use of its mark
abroad, Congress nonetheless chose not to create an exception to §
526(a) for that situation.
Nor does it seem to me that the second condition for
disregarding the words of the statute is met: that the original
legislative purpose is not served by its text. I cannot agree
that
"the equities in case 3 . . . differ significantly from the
Page 486 U. S. 328
equities that motivated Congress to protect the prototypical
gray-market victim (case 1),"
the United States assignee of a foreign trademark.
Ante
at
486 U. S. 316.
The United States assignee's innocent vulnerability to gray-market
imports is no greater than that of the United States trademark
owner who assigns the right to use his trademark abroad -- and whom
JUSTICE BRENNAN would deprive of § 526(a)'s protection. I cannot
understand why the latter victim "does not have the same sort of
investment at stake,"
ante at
486 U. S. 317.
If anything, his investment may be even greater, consisting of the
entire goodwill associated with his trademark in this country. Nor
do I understand why he has more "direct control" over the harm,
ibid. The means of control available to the United States
assignor are precisely those available to the United States
assignee: he can either decline to participate in the assignment
from the beginning or contractually preclude the other party to the
assignment from parallel importation. The latter is as unlikely to
be effective in the one case as in the other, since the bulk of the
gray market is attributable to third parties that are unaffiliated
with either the manufacturer or the trademark holder. That same
phenomenon renders inexplicable JUSTICE BRENNAN's perception that
all affiliated trademark holders are less in need of, or less
deserving of, § 526(a) protection against the products of their
foreign affiliates. It is not the affiliates who are doing the
damage, but third parties.
In sum, while congressional attention to the problem addressed
by § 526(a) may have been prompted by the gray-marketeering
represented by
A. Bourjois & Co. v. Katzel, supra, the
language of the statute goes well beyond that narrow case to cover
the same inequity in other contexts. Even if Congress could not
have envisioned those other contexts I would find no reasonable
basis to disregard what the statute plainly says; but to make the
case complete, it surely must have envisioned them.
Page 486 U. S. 329
"
* * * *"
I of course agree that, to the extent § 526(a) is ambiguous, we
need only determine whether the Customs Service's interpretation of
the statute is reasonable,
See Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837,
467 U. S.
842-843 (1984). But we owe no deference to a
construction that is contrary to the interpretation of the agency.
I would therefore hold invalid, in addition to subsection (c)(3) of
the regulation, subsections (c)(1) and (c)(2).
[
Footnote 3/1]
JUSTICE KENNEDY suggests that "the regulation speaks to [this]
hypothetical situation," since it
"allows a company justifiably invoking the protection of the
statute to bar the importation of goods of foreign or domestic
manufacture. 19 CFR § 133.21(a) (1987)."
Ante at
486 U. S. 293,
n. 4. This suggestion is puzzling. If, as the majority believes (or
as it believes the Customs Service believes), the statute does not
exclude the goods in this situation, it is hard to understand how
the
regulation could do so. The reality, in any case, is
that subsection (a) of § 133.21 has nothing to do with § 526(a),
but rather implements § 42 of the Lanham Trade-Mark Act, 15 U.S.C.
§ 1124, which prohibits importation of goods of foreign or domestic
manufacture bearing not genuine trademarks identical to a United
States trademark, but trademarks that "copy or simulate" a recorded
trademark. It is subsection (b) of § 133.21 that implements §
526(a), and which, consistent with that statute, only prohibits
importation of "[f]oreign-made [but not domestic-made] articles
bearing a trademark identical with one owned" by a United States
trademark holder.
[
Footnote 3/2]
JUSTICE BRENNAN responds with the example of an old statute
requiring agency inspection of "all ovens" for their propensity to
spew flames. This statute is asserted to be ambiguous with respect
to modern microwave or electric ovens because its purpose would not
be served.
Ante at
486 U. S.
315-316. With respect to microwave ovens, there may
indeed be an ambiguity -- not because the purpose would not be
served but because the term "oven" connotes "a heated enclosure,"
Webster's Third New International Dictionary 1605 (1981), and may
or may not embrace microwave ovens. With respect to electric ovens,
there seems to me no ambiguity at all. Perhaps the statute should
not be interpreted to cover electric ovens, but if so it would not
be because of ambiguity, but because (1) electric ovens are
incapable of spewing flames, (2) it is therefore absurd to inspect
electric ovens for that propensity, and (3) it is a venerable
principle that a law will not be interpreted to produce absurd
results.
"The common sense of man approves the judgment mentioned by
Puffendorf, that the Bolognian law which enacted 'that whoever drew
blood in the streets should be punished with the utmost severity'
did not extend to the surgeon who opened the vein of a person that
fell down in the street in a fit. The same common sense accepts the
ruling, cited by Plowden, that the statute of 1st Edward II, which
enacts that a prisoner who breaks prison shall be guilty of felony,
does not extend to a prisoner who breaks out when the prison is on
fire -- 'for he is not to be hanged because he would not stay to be
burnt.'"
United States v.
Kirby, 7 Wall. 482,
74 U. S. 487 (1869)
(citations omitted). Nothing in JUSTICE BRENNAN's example suggests
that we can simply disregard a phrase, such as "corporation . . .
organized within . . . the United States," whose unambiguous
application produces a result that is not at all absurd, but merely
(in JUSTICE BRENNAN's estimation) beyond the contemplation of the
enacting Congress.
[
Footnote 3/3]
JUSTICE BRENNAN's only attempt to provide caselaw support for
the proposition that regional trademark licensing was impermissible
consists of a reference to dicta in
Independent Baking Powder
Co. v. Boorman, 175 F. 448 (CC NJ 1910), and
Eiseman v.
Schiffer, 157 F. 473 (CC SDNY 1907),
see ante at
486 U. S.
313-314, n. 7. The latter case contains nothing more
than statements of the principle that a trademark cannot be
assigned separately from the business to which it pertains -- which
says nothing about whether business and trademark can be conveyed
on a regional basis. The former case does contain the seemingly
pertinent remark, quoted by JUSTICE BRENNAN, that
"the assignor cannot, after the assignment, continue the same
identical business and at the same places as before, under
unassigned trademarks, and at the same time authorize his assignee
to conduct the same business
elsewhere under an assigned
trademark."
175 F., at 454 (emphasis added). On the facts of the case,
however, "elsewhere" was elsewhere in the same market in which the
licensor continued to do business. The basis of the holding and of
the dictum was, once again, that a trademark is not assignable
separately from the business to which it pertains. There is no
reason to believe that the court, even in dictum, was addressing
the question of regional licensing.