HQ 0734165 - Country of origin marking requirements for LEGO and DUPLO sets with pieces made in three different countries, toys, sets, containers; 19 CFR 134.32(d) - United States International Trade Commision Rulings

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HQ 734165
December 2, 1991

MAR-2-05 CO:R:C:V 734165 RSD

CATEGORY: MARKING

M. Barry Levy, Esq.
Sharretts, Paley, Carter and Blauvelt
Sixty-seven Broad Street
New York, N.Y. 10004

RE: Country of origin marking requirements for LEGO and DUPLO sets with pieces made in three different countries, toys, sets, containers; 19 CFR 134.32(d)

Dear Mr. Levy:

This is in response to your letter dated June 28, 1991, requesting a ruling on the country of origin marking requirements for LEGO sets and DUPLO sets with pieces made in three different countries. We have received your supplemental letter dated August 2, 1991. We have also received a copy of sketches for a proposed box containing the LEGOS.

FACTS:

Your client, LEGO Systems, Inc. (LEGO), sells toy sets consisting primarily of small, uniformly sized and shaped plastic building bricks which are produced in a variety of colors and are sold under the names of LEGO or DUPLO. In addition to the plastic bricks, each toy set contains one or more of the following types of pieces: (1) decorative components (e.g., trees, flags, etc.); (2) functioning components (e.g., wheels, hinges, etc.); and (3) figures representing people to provide a human dimension. Some sets also have accessories to facilitate the use of the toy, such as a brick separator and a brick sweeper to assist the child in putting the toy set away. Each set contains an average of 170 pieces, with the largest set having 340 pieces, and smallest containing as many as 29 pieces.

The LEGO pieces are made in one of three countries Denmark, Switzerland, or the U.S. The Danish facilities are set up to produce pieces only for those sets which are sold under the LEGO name. The Swiss facilities primarily manufacture pieces for sets sold under the DUPLO name, but also serve as a secondary supplier for the LEGO pieces when necessary. The U.S. facilities primarily serve as an additional supplier for the most commonly produced pieces of both the LEGO and DUPLO sets. They are also used as a secondary source for the less common LEGO and DUPLO pieces when required. Every piece produced in the U.S. is also manufactured in at least one of the other two countries, and a number of them are manufactured in all three.

To respond to fluctuations in the demand for its individual toy sets, LEGO is constantly shipping molds for the different pieces of the toy sets from country to country to alter production as needed. Thus, at different times a given LEGO piece may be made in any one of the three countries, any two of the countries, or in all three countries. A DUPLO piece may at different times, be made only in Switzerland, only in the U.S. or in both Switzerland and the U.S. However, though they may be manufactured in two or three different countries, the bricks and other shapes are identical in every respect, as all of the plastic injection molds are made to the exact same specifications by the same mold maker without regard to where they will be used, and all plastic pellets are purchased from the same sources.

Foreign-made bricks and shapes are shipped in bulk to the U.S., where they are commingled in containers with their identical counterparts regardless of their country of production. LEGO produces its toy sets by combining the required pieces in sealed plastic bags and packaging them in retail containers. Prior to retail packaging, the pieces made in the three countries are commingled together in large bins. A sorting machine using a random selection process chooses which pieces to put into the retail packages. This random selection process will choose pieces from all of the involved countries. It is highly improbable that a LEGO set will not contain some pieces from all three countries.

You also indicate that it would be extremely difficult if not impossible, to produce a legible marking for the tiny LEGO building bricks, which constitute the bulk of the sets. You also state that it would be cost prohibitive for LEGO to change its more than 4,000 molds in order to incorporate a country of origin marking on each piece and would be inequitable based on a previous ruling applicable to LEGO's products.

LEGO seeks to satisfy the country of origin marking law by having the retail packages printed with the phrase "Made in Denmark, Switzerland, and USA." In the case of the DUPLO sets, the retail packages will be marked "Made in Switzerland and USA." In some instance, the packaging will be imported filled with LEGO products. In other instances it will imported empty to be filled by LEGO in the U.S.

ISSUE:

Does the proposed marking "Made in Denmark, Switzerland, and USA" on the retail packages of the LEGO sets and "Made in Switzerland and USA" on the retail packages of the DUPLO sets satisfy the country of origin marking law? 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. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain.

An article is excepted from marking under 19 U.S.C. 1304 (a)(3)(D) and 19 CFR 134.32(d), if the marking of a container of such article will reasonably indicate the origin of such article. Accordingly, if the LEGO bricks are imported and sold in marked containers and the ultimate purchaser can tell the country of origin of the LEGO and DUPLO sets by viewing the country of origin marking on the container, the individual pieces would be excepted from marking under this provision.

In HQ 707219, July 1, 1977, plastic toy building brick sets produced by LEGO were being imported into the U.S. Commingled Danish and Swiss bricks, shapes, and other pieces were imported into the U.S. in their retail containers. Customs indicated that inasmuch as, in this instance, the plastic bricks and other shapes will reach the ultimate purchaser in the retail container, marking the retail container with the country of origin will satisfy the requirements of section 304. Customs also determined that a country of origin marking on the retail box "Contents made in Denmark and Switzerland" would be acceptable.

In a second situation covered by HQ 707219, some of the commingled Danish and Swiss pieces were to be imported in bulk for packaging in the U.S. Customs ruled that the marking on the repacked retail container "Made in Denmark and Switzerland" would also be acceptable provided that LEGO can make satisfactory arrangements with the district director of Customs at the port of entry to ensure that it will repackage the bricks and shapes in containers marked to indicate the country of origin in accordance with section 304.

The only distinction between HQ 707219 and the present case, is that some of the plastic pieces will be made in the U.S. and LEGO is seeking to include this fact on the country of origin marking information on its retail boxes. You indicate that each box of the LEGOS kits will contain pieces from the three countries listed on the box. This is because the pieces are made in the three countries and commingled together in storage bins. A random sorting machine will select the pieces to put in each retail box. The probability that the sorting machine will not select pieces for a toy set from all three countries is exceptionally remote. Under these circumstances, we find that the marking on the container will properly inform the ultimate purchaser of the countries of origin of the LEGO sets. The alternative is to require that each piece be individually marked. In view of the fact, that each set consists, on average of approximately 170 pieces, we feel that such an approach in this case would be exceptionally burdensome and unnecessary. This is especially in view of the fact that the retail boxes cannot be opened until after the purchase, the ultimate purchaser will not see the individual LEGO or DUPLO pieces until after the sets are purchased. Moreover, since the pieces for the LEGO sets are fungible, the ultimate purchaser is not likely to be interested in the country of origin of each individual piece. Accordingly, the proposed country of origin markings on the retail boxes, "Contents made in Denmark, Switzerland, and USA." in the case of the LEGO sets and "Made in Switzerland and USA" for the DUPLO sets are acceptable and individual pieces do not have to be marked.

With respect to the merchandise which will be packaged into retail packages after importation in accordance with 19 CFR 134.34, appropriate arrangements should be made with the district director of Customs at the port of entry to ensure that the marking requirements are satisfied.

The circumstances in this case are distinguishable from those in HQ 732679, May 1990, which concerned the country of origin marking of toy sets with components made in Mexico and the U.S. In that case, the components were already marked with their country of origin. Customs ruled that the marking "Contents from USA and Mexico," was not specific enough, since it did not identify which articles were of foreign origin as required by 19 U.S.C. 1304. Instead, we suggested that the marking "Contents from USA and Mexico. See Marking on Each Article Inside." be used. The facts of HQ 732679 and this case are distinguishable in that the individual pieces were already being marked with their country of origin, and no request was made for an exception to marking the individual pieces. Moreover, the individual pieces in the toy set were more unique than the pieces in LEGO sets and the LEGO pieces are small and would be difficult to mark.

HOLDING:

The individual pieces of the LEGO or the DUPLO sets are excepted from country origin marking under 19 U.S.C.1304(a)(3)(D) and 19 CFR 134.32(d) if the retail boxes are properly marked. The proposed country of origin markings on the retail box of LEGO or DUPLO sets are acceptable so long as each set will contain pieces from all three countries listed on the box and the appropriate arrangements are made with the district director as set forth above.

Sincerely,

John Durant, Director

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