HQ 0733889 - Country of origin marking of plastic pens, conspicuous, legible, economically prohibitive, 19 CFR 134.41, 19 CFR 134.32(c), 19 U.S.C. 1304(a)(3)(c) - United States International Trade Commision Rulings

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HQ 733889
September 13, 1991

Mar-2-05 CO:R:C:V 733889 RSD

CATEGORY: MARKING

Kenneth G. Weigel, Esq.
Baker & Hostetler
Washington Square, Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036

RE: Country of origin marking of plastic pens, conspicuous, legible, economically prohibitive, 19 CFR 134.41, 19 CFR 134.32(c), 19 U.S.C. 1304(a)(3)(c)

Dear Mr. Weigel:

This is in response to your letter dated October 31, 1990, submitted on behalf of your client, Senator Pen Corporation, requesting a binding ruling on the country of origin marking requirements for imported pens. We have also received several supplemental submissions from you dated December 3, 1990, March 8, 1991, April 11, 1991, June 28, 1991, July 29, 1991, August 31, 1991, and September 10, 1991. Samples of the imported pens were also submitted for our review. Three meetings were held at Customs Headquarters with you and representatives of Senator Pen Corporation, to discuss this case. You have requested that the cost information contained in your ruling request be kept confidential. This information is in brackets and will not be included in the copies of the ruling made available to the public. Although Senator Pen originally submitted 11 sample pens for our review, after consultation with you, we have concluded that we will rule on only the country of origin marking on four of the sample pens, pen numbers 2, 3, 10, and 11, style numbers 2365, 2403, 2297, and 2093.

FACTS:

Senator Pen Corporation (Senator Pen) is a North Carolina Corporation, which is a wholly-owned subsidiary of a German Corporation, Merz & Krell. Senator Pen is seeking to import pens into the U.S. made in Germany by Merz & Krell. These pens are low cost writing instruments which are imported at prices of less than [XXXX] apiece. They are intended to be used as pens that are given away by businesses for advertising and promotional purposes. Senator Pen will be imprinting the pens with an advertising message in the U.S. The pens will be sold to businesses through a network of distributors that market and sell promotional items to businesses. The pens in question are not solely intended for the U.S. market but are also sold in other countries. Senator Pen's sales in the U.S. market only account for about [XX] of Merz & Krell's total pen production.

The pens consist of a two-piece body, a clip, and other small parts, such as the button on the top of the pen. The body and in most cases, the clip are made of plastic. The plastic pen parts are made in one-piece molds. In a one-piece mold, because the article has to be able to slide out of the mold, the surface of the sides of the article being molded must be extremely smooth to allow it to be released from the mold. In designing the pen part, any design attributes which might "lock" the molded part into the mold must be avoided. The pens are produced in large quantities in molds with multiple cavities. The molds are designed to last 20 years and cost approximately [XXXXXXXX] a mold for the body molds and [XXXXXXX] for each of the clip molds. Presently, the country of origin marking is molded into the plastic of the pens. Senator Pen states that it uses one-piece molds to make the pens because it increases the amount space available to print advertising messages and eliminates any mold lines which would interfere with an advertising message.

These pens are marked to indicate their country of origin, Germany, in very tiny letters which are cast-in-mold into the plastic body of the pen or the clip. The lettering of the country of origin marking tends to blend into the background of the pens. Pen 2 is marked on the left side of the clip in non- contrasting letters of less than 1/16th of an inch. It is also marked to indicate its country of origin around the top of the barrel in letters that are less 1/8th of an inch. Pen 3 is marked on the left side of the clip in non-contrasting letters of less than 1/16th of an inch. Pen 10 is marked in non-contrasting letters less than 1/16th of an inch on the front of the clip and the side of the clip. Pen 11 is marked in non-contrasting letters less than 1/16th of an inch high on the side of the clip and the front of the clip. Senator Pen maintains that the marking described above is sufficiently legible and conspicuous to satisfy the requirements of the marking statute. Alternatively, Senator Pen claims that the present country of origin marking on these pens is the only possible method of marking which is not economically prohibitive. Senator Pen maintains that changing the locations of the country of origin marking or making the marking bigger would prevent the pens from being released from the plastic molds.

Senator Pen has presented their cost for each of the four pens. The pens cost Senator Pen [XXXX, XXXX, XXXX, and XXXX] apiece to import into U.S., before they earn any profit, with their present method of country of origin marking. They have also presented figures on how much each pen would cost if four alternative methods of marking, printing, using a two-piece mold, die-stamping, and stickers, were used. In addition, they have also presented the market prices of their competitors who sell comparable type pens. Senator Pen's costs for marking the pens to indicate their country origin by using stickers would increase by 25-36% depending on the pen. Marking the pens by die-stamping would increase their costs by 56-82%. Using a two-piece mold to mark the country of origin on the pens would increase their costs by 16-25%, not counting the cost of the molds. Putting the country of origin marking on the pens by printing would increase the costs of the pens by 19-55% depending on the number of units produced. Senator Pen claims that the market price for a pen similar to pen 2 ranges between [XXXX- XXXX]; [XXXX-XXXX] for pen 3; [XXXX-XXXX] for pen 10 and [XXXX- XXXX] for pen 11. In most cases, use of any alternative method of marking would increase Senator Pen's cost to more than their competitor's market price.

We referred the sample pens to the Office of Laboratories and Scientific Services for their comments on the feasibly of improving the marking. Although the Office of Laboratories and Scientific Services indicated that a two-piece mold could be designed to make the country of origin marking bigger and to move it to a more conspicuous location, they did agree with Senator Pen that, because of the technical difficulties, the country of origin marking could not be improved by using a one-piece mold.

ISSUES:

Is the country of origin marking on the sample pens sufficiently legible and conspicuous to satisfy the requirements of 19 CFR 134.41(b) and 19 U.S.C. 1304?

Would it be economically prohibitive for the importer to adopt an alternative method of marking which would make the country of origin marking more conspicuous and legible?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. "The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

Senator Pen argues that the present country of origin marking on the pens is conspicuous. It contends that the ultimate purchaser would see the marking when the button on the pens is depressed. Alternatively, Senator Pen contends that it would be economically prohibitive to improve the country of origin marking on the pens.

After reviewing sample pens 2, 3, 10, and 11 we find that the country of origin marking on these article cannot be readily found from a casual examination. The country of origin marking blends into the background of the pens. The ultimate purchaser of the pens would probably have to spend a considerable amount of time and search carefully to find the country of origin marking. Moreover, the tiny print size of the country of origin marking on these pens is very difficult to read. In other words, the ultimate purchaser would be unable to find the country of origin marking easily and could not read it without strain. Accordingly, we find that the country of origin marking on these pens is not in a conspicuous location and that it is not legible. Therefore, the country of origin marking on the pens is not in accordance with 19 CFR 134.41(b).

Although the country of origin marking on these pens would normally be considered unacceptable, and if not improved, prevent these pens from being able to be imported into the U.S., Senator Pen maintains that due to the nature of the plastic molds, in that the surfaces of the molded article must be smooth in order to permit the release of the pen parts from the mold, the country of origin marking cannot be made any larger or be moved to another location on the pens. They further contend that adopting another method of marking which would make the country of origin marking more conspicuous and legible would be economically prohibitive.

Section 134.32(c), Customs Regulations, (19 CFR 134.32(c)), excepts from country of origin marking articles that cannot be marked prior to shipment to the U.S. except at an expense economically prohibitive of their importation. The question that must be in answered in this case is whether improving the country of origin marking on the pens would be economically prohibitive of their importation. Although relatively little has been written in explaining exactly what the term economically prohibitive means, several factors have been considered to help determine when marking an item would be economically prohibitive. These include situations in which the requirement to mark the article to indicate its country of origin would force the producer to incur a cost that would require the item to be marked at a price at which: (1) the item could not be sold since an individual would not buy it; (2) no profit could have been made; (3) the profit that could have been obtained would not have been sufficient to induce the importer to handle the item. See Note, Country of Origin Marking, 6 Law and Policy in Int'l Business 485, 501-502 (1974), citing Bur. Cust. Customs Information Exchange Ruling 114/51 (1951).

In this case, any change in the method of marking would represent a substantial increase in the cost of the pens. A careful examination of the cost figures presented indicates that the conversion to a two-piece mold (excluding the cost of molds themselves) constitutes the least costly of the alternatives. This option would increase Senator Pen's cost by approximately 16-25%. If stickers were used, the cost of the pens is increased by approximately 25-36%. The cost of printing would raise the cost of the pens by 19-55%, depending on the pens and the number of production units. The most costly method of marking, die-stamping, would increase Senator Pen's cost by approximately 56-82%. In addition, the least costly methods of marking (two-piece molds and stickers) have practical problems. For example, changing the molds from a one-piece mold to a two-piece mold would change the nature of the article and would limit the surface area available to print advertising messages for which these pens are primarily designed. In addition, new two-piece molds would have to be purchased at a substantial cost. Moreover with the use of stickers, there is the problem of not being able to use the stickers to mark the pens with their country until after their importation because the stickers could not be applied to the pens until after the pens were imprinted with advertising messages in the U.S. If stickers were required to be applied prior to importation they would have to be removed before printing and reapplied at a prohibitive cost. Consequently, it would be an exorbitant burden to require the importer to mark the country of origin on the pens by changing the molds or by using stickers. Requiring the importer to die- stamp or print the pens with the country of origin would raise the costs by an exorbitant amount and is not warranted. Furthermore, in most cases, the use of any alternative method of marking would make Senator Pen's costs, before any profit is earned, greater than their competitor's market price.

We find it significant that the pens in question are relatively low cost items. The basic reason why the relative costs of making the country of origin marking on the pens conspicuous and legible is so substantial is because they are inexpensive items. A few cents increase in the costs of these pens can mean a fairly large increase in their costs in percentage terms. It appears likely, in view of the market prices of their competitor's pens, that the increased costs associated with changing the marking would seriously hinder Senator Pen from successfully competing against their competitors. Requiring Senator Pen to change its marking would most likely prevent the company from a making profit sufficient to induce them to continue to handle the merchandise.

Furthermore, although the pens are not satisfactorily marked, we note that they are not totally unmarked at the time they are imported into the U.S. The pens do have a country of origin marking even if it is an inadequate marking. In some cases the pens are marked with their country of origin in two locations. We also note that these are give away pens, which means that an ultimate purchaser may not be as concerned about their country of origin as if he/she was buying them.

Based on the above considerations, we conclude that changing the method of marking the four sample pens to make it legible and conspicuous would be economically prohibitive of their importation.

HOLDING:

The country of origin marking on the submitted sample pens described above is not easy to find and read. Therefore, the country of origin marking is not in a conspicuous location and is not legible. However, the marking does not have to be changed because any other method of marking would result in increasing the cost to such an extent that it would become economically prohibitive to import the pens. This ruling is limited to four style pens discussed in this ruling; that is, sample pens 2, 3, 10, and 11, styles 2635, 2403, 2297, and 2093. Any new pens or other products must be legibly marked in a conspicuous location to indicate their country of origin in accordance with 19 U.S.C. 1304 at the time of their importation.

Sincerely,

John Durant, Director

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