HQ 0733888 - Country of origin marking of water heaters, that contain multiple, variously marked labels, and their sealed contain- ers, that are marked to indicate compliance with State cer- tification requirements. Ultimate purchaser; 19 CFR 134.1(d)(3); conspicuousness; degree of visibility (print size and type); typography; Words and Phrases; C.S.D. 91- 23; 19 CFR 134.41(b); 733736; container marking; 19 CFR 134.24(d)(2); C.S.D. 90-31; C.S.D. 80-119 - United States International Trade Commision Rulings

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HQ 733888

October 9, 1991

MAR-2-05 CO:R:C:V 733888 GRV

CATEGORY: MARKING

Bruce N. Shulman, Esq.
Stein Shostak Shostak & O'Hara
1620 L Street, N.W., Suite 807
Washington, D.C. 20036-5605

RE: Country of origin marking of water heaters, that contain multiple, variously marked labels, and their sealed contain- ers, that are marked to indicate compliance with State cer- tification requirements. Ultimate purchaser; 19 CFR 134.1(d)(3); conspicuousness; degree of visibility (print size and type); typography; Words and Phrases; C.S.D. 91- 23; 19 CFR 134.41(b); 733736; container marking; 19 CFR 134.24(d)(2); C.S.D. 90-31; C.S.D. 80-119

Dear Mr. Shulman:

This is in response to your letter of October 24, 1990, on behalf of Rheem Manufacturing Company, requesting a ruling concerning the country of origin marking requirements applicable to water heaters imported from Mexico in sealed containers. Photographs and samples of the country of origin marking and other labels were submitted for examination.

Information provided at a meeting at Customs Headquarters on May 8, 1991, was also considered in this ruling.

FACTS:

Your client manufactures water heaters in Mexico for export to the U.S. These water heaters have multiple labels glued onto their sides denoting the name of the manufacturer and its U.S. locations, the country of manufacture, and certain consumer information concerning safe usage, duration of warranty, and energy consumption. These labels are made of plastic and the information is printed in different print types, sizes, and colors. Based on the photographs submitted, we note that there are approximately seven labels on a given water heater.

The label containing the country of origin marking is actually two labels superimposed one on top another: a small, "adhesive strip type" label, uniformly measuring 1 1/8 inches in height by 5 inches in width, is contained within various sized larger labels, measuring 6-3 inches in height by 5 inches in width, that have a transparent window at the bottom to accommo- date the smaller label; combined, the two labels appear as one.

The smaller label contains the country of origin marking ("MADE IN MEXICO") and the seal of the American Gas Association (AGA). Both markings are printed on the right side of the label in a one square inch space. The "MADE IN MEXICO" mark is printed in black, light-face type letters measuring approximately 4-point type (1/16" letters), located directly above the seal of the AGA, which is printed in black, light-face type letters measuring approximately 6-point type (1/12" letters). In the one square inch of space where these two markings appear, the country of origin marking is printed in a straight-line format, such that it occupies only 1/16 of the space, whereas, the AGA seal in printed over a twice encircled blue star insignia, which occupies 15/16 of the space.

The larger labels identify, inter alia, the manufacturer's U.S. locations, which are printed in different--usually brighter --colors than the above referenced marks--some are printed in bold-face letters ranging in size from approximately 4-6-point type (1/16-1/12 inch letters), and located above the country of origin--and AGA seal--markings when the two labels are joined. Other, consumer-oriented information on these labels is also variously printed in print sizes and types ranging from 4-122- point type and light-bold type face, and presented in different --usually brighter--colors. In sum, the overall condition/ appearance of this composite label is that the country of origin marking is denoted in the smallest print size and lightest print type employed on the labels and located between U.S. references that are presented in the same or larger print size.

The water heaters are packaged in sealed cardboard cartons which are not marked to identify the country of origin of the merchandise. However, the cartons are marked to indicate that the merchandise complies with the certification requirements of the State of California's energy standards, and other information, e.g., the manufacturer's name, is presented on the sealed cardboard box.
Customs import specialists at the port of entry suggested that the country of origin marking on the water heater labels may not be in accordance with 19 CFR 134.46 because the "MADE IN MEXICO" marking is printed in smaller letters and different colors than the markings which denote design compliance with the American Gas Association and identify the U.S. locations of the manufacturer.

You addressed these concerns within the context of complying with the provisions of both 134.46 and 134.47, stating that because the country of origin marking appears directly below the manufacturer's U.S. locations in identical size type, these circumstances meet the "close proximity" and "comparable size" requirements of 134.46. Further, the inclusion of the American Gas Association and California certification seals is only to educate consumers to the fact that the water heaters meet the design specifications of that organization and energy standards of that state, and the marks are clearly of the type contemplated by 19 CFR 134.47, which should be accepted, provided they are in close proximity or in some other conspicuous location vis-a-vis the country of origin marking. Also, you state that 134.46 does not require that all markings appear in the same color and, since the contrast for the country of origin marking is at least as noticeable as the manufacturer's U.S. locations marking, the fact that different color inks have been used is irrelevant.

Another issue raised concerns whether the cartons have to be marked to indicate the country of origin of the water heaters. You argue that, as the water heaters are sold to either builders and contractors for installation in buildings or to individual consumers as replacement units, such that the shipping cartons are not seen, marking of the carton is not necessary. You claim that those consumers who buy or install their own water heaters would see the country of origin marking on a display model in the store.

ISSUES:

I. Is the country of origin marking on the water heaters sufficient to meet the visibility requirements of 19 U.S.C. 1304 and 19 CFR 134.41?

II. Must the sealed shipping cartons also be marked to indicate the origin of their contents, and does the presence of the state energy standard certification marking trigger the country of origin marking requirements of 19 CFR 134.46?

LAW AND ANALYSIS:

The marking statute, 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit in such a manner as to indicate to the ultimate purchaser the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The purpose of this provision is to permit the "ultimate purchaser" in the U.S. to choose between domestic and foreign- made products, or between the products of different foreign countries. See, United States v. Friedlaender & Co., C.A.D. 104, 27 CCPA (1940); National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (1986).

The "Ultimate Purchaser" Consideration

The "ultimate purchaser" is defined generally as the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d). If an article is to be sold at retail in its imported form, the purchaser is the "ultimate purchaser." 19 CFR 134.1(d)(3). The country of origin marking is in compliance with the statute only if it is such that, under normal conditions in the trade in which this merchandise moves, it would reach substantially all ultimate purchasers, not just some of them. U.S. Wolfson Bros. Corp. v. United States, C.A.D. 2442, 52 CCPA 46, 50 (1965).

In this case, the water heaters will be purchased by two distinct classes of ultimate purchasers in two different markets: by novice, retail consumers seeking replacement heaters; and, by experienced contractors-builders in construction markets for bulk installation in building projects. Based on considerations concerning the volume of merchandise purchased and the relative experience of the class of ultimate purchaser in purchasing the merchandise, we find that the marking needs of these two classes are different. Whereas a small country of origin marking might suffice to inform sophisticated, institutional classes of ulti- mate purchasers--because they frequently buy water heaters in multiple units, they are more versed in the markets of these products and usually know where to look to find the country of origin marking, a larger country of origin marking is required were casual, one-time purchasers are present, because they do not share this product/market familiarity and usually do not know where to look to find the marking. Accordingly, where the size of the country of origin marking is dependent on which class of ultimate purchasers must be able to find and read it, to effect the purpose of the marking laws, the greater needs of the less sophisticated class outweigh the lesser needs of the more sophisticated class. Accordingly, where necessary, a larger country of origin marking must be employed, as the country of origin marking must be accomplished with an eye towards informing substantially all these ultimate purchasers, not just some of them.

The Conspicuous Marking Requirement

The clear language of 1304 requires 'conspicuous' marking, and to this end 134.41(b), Customs Regulations (19 CFR 134.41(b)), further provides, in part, that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Whether words are considered "conspicuous" or not is not determined by the size of type face alone, but the location of disclosure, and manner in which it is set off from other information are also determinative. See, 8A Words and Phrases 366 (1951). Thus, "conspicuousness" is a relative, i.e., context-dependent, concept. See, C.S.D. 91-23.

Where locations other than the country of origin of the mer- chandise appear on an imported article, 134.46 imposes further marking requirements on the imported article. It provides that:

[i]n any case in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or locality in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, appear on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.

The purpose of this regulation is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the origin of the imported article. 19 CFR 134.36(b).

The country of origin marking requirements applicable to imported containers are found at Subpart C of Part 134, Customs Regulations (19 CFR Part 134, Subpart C), and distinguish between containers designed for or capable of reuse and those that are not designed for or capable of reuse (disposable containers). There is no question in this case that the sealed cartons consti- tute disposable containers, as cardboard boxes are the usual ordinary types of containers used to package water heaters and are ordinarily discarded after the contents have been consumed. 19 CFR 134.24(a). Section 134.24(d)(2) provides that:

[d]isposable containers or holders of imported merchandise, which are sold without normally being opened by the ultimate purchaser ..., shall be marked to indicate the country of origin of their contents.
The Marking of the Water Heaters

Because the water heaters are not always sold to ultimate purchasers in their containers, and may be displayed without their containers, conspicuous marking of the water heaters is required. Based on the photographs submitted and for the reasons which follow, we find that the country of origin marking is not easy to find and, therefore, not conspicuous within the meaning of 19 U.S.C. 1304 and 19 CFR 134.41(b). First, there are no less than seven labels affixed to each water heater conveying a surfeit of information. Second, each label is printed in various print sizes and types, which serves to draw the ultimate purchas- ers' attention away from the country of origin marking, which is presented in the lightest-face print type and smallest type size. Third, the location of the country of origin marking--sandwiched between references to U.S. locations--is not sufficiently set off from other information, but, on the contrary, buried between them. Fourth, because different classes of ultimate purchasers in different markets will be purchasing the water heaters, the country of origin marking should be presented in the format that is more readily visible to the less sophisticated class, which is unaccustomed to locating the mark, rather than a format designed with the sophisticated, institutional class in mind. According- ly, we suggest that the print size of the country of origin marking be enlarged to at least a 5-point type and presented in a format, e.g., bold-face, that is sufficiently prominent and distinct, i.e., so that it is easy for the ultimate purchaser to find and more fully meets the degree of visibility required by 134.41(b). See, Headquarter Ruling Letter (HRL) 733736 dated June 19, 1991 (disparity between product description and country of origin marking printing required latter marking be enlarged, so that ultimate purchaser could more easily find the marking).

Regarding the import specialists' concerns that the country of origin marking is printed in smaller letters and different colors than the markings which denote design compliance with the American Gas Association and identify the U.S. location of the manufacturer for purposes of 134.46, we find that the country of origin marking meets the requirements of this marking provision. The difference in marking colors does not constitute a material concern in this case.

Turning to address counsel's overall argument that because the "MADE IN MEXICO" country of origin marking on the water heaters satisfies the "close proximity" and "comparable size" requirements of 134.46 and 134.47 it meets the overall "con- spicuousness" marking requirements of 19 U.S.C. 1304, the purposes of these marking provisions has been shown to embrace different concerns. While we agree with counsel that the country of origin marking in this case is "in close proximity" and "comparable in size" to the location markings other than the country of origin marking, and that the marking is easy to read once it is located, the size and location of the country of origin marking is not conspicuous enough so that the ultimate purchaser can find it easily.

The Marking of the Sealed Shipping Cartons

As the water heaters will be imported in sealed, disposable containers, and it appears likely that most ultimate purchasers will buy them without normally opening the containers--a conclu- sion based on the size of the merchandise (water heaters, by their nature, are not the type of merchandise which are normally opened by retail purchasers) and bolstered by the fact that the California Energy Standards Certification is affixed to the con- tainer and not the merchandise itself, the provisions of 19 CFR 134.24(d)(2) are applicable, which mandates that such containers shall be marked to indicate the country of origin of their contents.

Concerning the application of the provisions of 19 CFR 134.46 to the required country of origin marking because of the U.S. locality reference on the California Energy Standards Cer- tification, after viewing the photographs submitted and consid- ering counsel's argument that the label is for informational purposes only--and not to otherwise mislead ultimate purchasers, it is our opinion that these marking requirements are not triggered, as no possibility of misleading or deceiving ultimate purchasers is apparent. In this regard, we follow our findings in C.S.D.s 90-31 (the words "complies with 1979 California Energy Standards" makes it unmistakable that the certification refers to the consumer information and not to any articles contained in the container) and 80-119 (the designation is placed only to alert the consumer of compliance with state standards).

HOLDING:

The country of origin marking on the water heaters does not meet the conspicuousness requirements of 19 U.S.C. 1304 and 19 CFR 134.46(b), in that the marking is not easy to find. As various print sizes and types are employed to convey a surfeit of information on multiple labels, the country of origin marking must be enlarged and presented in a format which makes it more readily apparent to the ultimate consumer. This could be accom- plished by employing a more prominent print type and locating the country of origin marking to a more visible place than currently situated. However, the marking requirements of 19 CFR 134.46, requiring "close proximity" and "comparable size," are met in the present case.

The disposable, sealed containers must be marked to indicate the country of origin of their water heater contents, as required by 19 CFR 134.24(d)(2), because water heaters constitute the type of merchandise which are often sold without normally being opened by the ultimate purchaser and ultimate purchasers will generally purchase this merchandise without seeing the country of origin marking on the article itself. The presence of the California certification seal does not trigger the marking requirements of 19 CFR 134.46, as no possibility of misleading or deceiving ultimate purchasers of the actual origin of the imported water heaters is apparent.

Sincerely,

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