NY N017920 - COUNTRY OF ORIGIN MARKING OF REQUIREMENTS APPLICABLE TO THE BROCADE 5300 (SW5300 CODENAMED “THOR”) FABRIC SWITCH FOR STORAGE AREA NETWORKS (SAN); SUBSTANTIAL TRANSFORMATION - United States International Trade Commision Rulings

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NY N017920

October 31, 2007

MAR-2 OT:RR:E:NC:N1:109

CATEGORY: MARKING

Mr. Stuart P. Seidel
Partner, Baker & McKenzie LLP
815 Connecticut Avenue NW
Washington, DC 2006

RE: COUNTRY OF ORIGIN MARKING OF REQUIREMENTS APPLICABLE TO THE BROCADE 5300 (SW5300 CODENAMED “THOR”) FABRIC SWITCH FOR STORAGE AREA NETWORKS (SAN); SUBSTANTIAL TRANSFORMATION

Dear Mr. Seidel:

This is in response to your letter dated October 1, 2007, on behalf of Brocade Communications Systems, Inc., concerning the country of origin of your clients Brocade’s 5300 (SW5300 codenamed “Thor”) fabric switch for Storage Area Networks (SAN). Your letter states that the SW5300 will be partially manufactured in China and assembled to completion in the United States. A marked sample was not submitted with your letter for review.

The Brocade’s 5300 fabric switch for Storage Area Networks (SAN) is designed to provide an open and secure environment for rapidly growing mission-critical electronic storage applications. It offers flexibility in architecture with 48-port, 64-port, or 80-port conductivity, with 1, 2, 4, or 8 gigabits/second line speed (full duplex) per port through auto-sensing of existing SAN environment configurations. The SW5300 is shipped to customers with a minimum of 48 ports enabled. The additional 16 or 32 ports are activated through a software licensing upgrade. Through utilization of Brocade’s Inter-Switch Link (ISL) trunking, up to 64 Gbit/sec is possible.

The SW5300 system consists of a printed circuit board assembly (PCBA), chassis, top cover, redundant power supplies and fans, the Brocade Fabric Operating System (FOS®), and a suite of advanced software options. The software is designed to boost transmission rates, provide additional security, increase reliability, and optimize fabric traffic management. The FOS® allows full backwards and forwards compatibility with other Brocade SAN switches. The units work with environments running Windows, Linux, UNIX, Solaris, and AIX. The SW5300 will be partially manufactured in China and assembled to completion in the United States. The assembly process in the United States will encompass software and customer specified firmware installation, programming, and system testing with the FOS® firmware and software. The PCBA requires the FOS®, a complex and proprietary software operating system, to function. It is downloaded to flash memory integrated circuits on the PCBA. The FOS® operating system controls all system functions, the data ports, interoperability, speed, and upgradeability. The FOS® is accompanied by firmware, which defines customer-selected options and functionality. The PCBA will not function without this software and firmware which is developed, loaded, integrated and tested in the United States.

The Brocade’s SW5300 fabric switch for Storage Area Networks (SAN) will be partially manufactured in China, with final assembly, integration, test, software and firmware uploads performed in the United States. The operations performed in China and the assembly process performed in the United States, as stated in your letter, are outlined below:

Operations performed in China:

1 – A bare printed circuit board is populated with various electronic components to form a printed circuit assembly (PCBA). Diagnostic software is downloaded on the PCBA. The basic diagnostic software enables functional testing of the PCBA and chassis hardware. The basis diagnostic software allows limited diagnostic test information to travel to and from the ports on the PCBA to the automated test equipment (ATE) interface where the unit is functionally tested.

2 – The PCBA undergoes a series of standard battery tests to ensure its functionality and the proper operation of its components, connections, and circuitry. Examples of such tests are the In-Circuit-Test (ICT) and the Environmental-Stress-Screen (ESS).

3 – Two power supplies with integral fans (made in either China or Thailand) and an A/C filter assembly (made in either Canada or Mexico) are assembled into the chassis.

4 – The PCBA is installed into a chassis base.

5 – A Console Port connector (RJ45) is installed and the interconnection cables are assembled to the chassis bottom.

6 – A dummy cover is installed for testing and shipping.

7 – Serial numbers from the PCBA and power supply are collected and appended to the unit serial number in a data tracking system.

8 – Upon completion of the foregoing procedures, a “system test” is performed using automated ATE scripts and diagnostics software and “run-in test” is performed, including an automated system test at elevated temperatures, and an ongoing reliability test.

Operations performed in the United States:

1 - The US-origin Brocade Fabric Operating System (FOS®) software, which was developed in the United States at a significant cost to Brocade, is downloaded into a 1 GB compact flash memory integrated circuit on the PCBA.

2 – Mechanical configuration is carried-out as per individual customer requirements.

3 - A “hi-pot” test is performed per safety agency standards and requirements.

4 – Customer specified firmware and software configurations are loaded and the final systems tests are performed.

5 – Dust caps are put on the connectors, ports, and an Ethernet plug is installed on the RJ45 connector.

6 – Final quality assurance tests are performed and final system configuration is recorded including all assembly and serial numbers.

7 – A minimum of 16 small form-factor pluggable transceivers (SFPs) are individually tested and installed into the unit in order to provide interfaces between the SW5300 and external networks.

8 – After completion of all assembly steps, software and firmware downloads, functional and environmental testing, final system testing, and quality assurance inspection, a unique programming operation takes place. This programming operation generates a permanent change in the PCBA memory, which cannot be undone by third parties during the normal course of operation. As a result of this programming operation, only Brocade approved or developed reprogramming operations may be performed upon the completed system during the normal course of operation, such as updating the installed software/firmware base to a different revision of the proprietary system or entering customer purchased licensing keys, which enable the activation of additional hardware and software features that are already present and preloaded into the system.

9 – The completed PCBA (SW5300) is packaged and prepared for domestic and international shipment.

The units, as exported from China, lack the functional “intelligence” characteristic that are present in a completed SW5300 because only the basic hardware subassemblies of the completed SW5300 are manufactured and tested in China. Such “intelligence” characteristics found in the completed SW5300 are imparted by the US-origin software, firmware, and subsequent integration and testing that occurs with the United States. The processing that occurs within the United States provides the end product with its functionality, storage connectivity management potential, SAN fabric performance monitoring capability (for example, the ability to control multiple switches from a central point), network security and access control, and other features that enable the SW5300 to function as a fully configured network switch.

In the United States, the imported hardware subassembly of the SW5300 is substantially transformed into a fully configured network switch. During the assembly process that takes place in the United States, the hardware subassembly becomes a product with a new name, character, and use, specifically the completed Brocade’s SW5300 fabric switch for Storage Area Networks (SAN).

The marking statute, Section 304, 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 in the U.S. the English name of the country of origin of the article.

Part 134, Customs Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 C.F.R. 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. Section 134.1(d) defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 C.F.R. 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed, and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See 19 C.F.R. 134.35.

In this case, the imported Brocade SW5300 fabric switch for Storage Area Networks (SAN) is substantially transformed as a result of the U.S. processing, and therefore the country of origin of this new product is the United States. Pursuant to 19 C.F.R. 134.35 (a), the imported article itself would be exempt from marking upon importation into the United States. Only the outermost container in which the hardware is imported must be marked to indicate China as the country of origin.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. Part 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Linda M. Hackett at 646-733-3015.

Sincerely,

Robert B. Swierupski
Director,

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