MAR-2-05 CO:R:C:V 735125 RSD
Mr. Peter E. Schwartz, President
Apogee Golf, Inc.
10 Commerce Park North-Unit 9
Bedford, New Hampshire 03110
RE: Country of origin marking of imported golf club heads with a
trademark or trade name containing the words "American" which
will be assembled with the shafts to make the finish golf clubs
in the U.S.; substantial transformation; trade name; ultimate
purchaser; 19 CFR 134.47; 19 CFR 134.46; 19 CFR 134.36(b); HQ
734327; HQ 734785; HQ 734249
Dear Mr. Schwartz:
This is in response to your letter dated April 16, 1993,
concerning the country of origin marking requirements for
imported golf club heads that will be assembled in the United
States with a domestic shaft and grip to make a finished golf
club. The Boston District of Customs advised you to seek a
ruling in this matter. You have submitted two sample golf club
heads. In addition, you faxed a copy of a trademark registration
that was filed with the U.S. Patent and Trademark Office.
FACTS:
Apogee Golf, Inc., located in Bedford, New Hampshire, makes
and sells golf clubs. It is importing golf club heads from China
and Taiwan. The golf club heads will be assembled with U.S. made
shafts and grips in the U.S. to make finished golf clubs. One of
the sample golf club heads, known as the "Black Thunder" has the
phrase "BY AMERICAN GOLF DESIGN" etched into the bottom of the
club head. An adhesive label marked with the phrase "MADE IN
TAIWAN REPUBLIC OF CHINA" has been placed over the American golf
design logo. The second club head has the phrase "AMERICAN GOLF
DESIGN" etched on the bottom. It also has the word "AMERICAN"
next to a red sideways triangle etched on the top of the club.
An adhesive label with the marking "MADE IN CHINA" covers the
word American.
Presently, each head imported into the United States is
placed in its own individual plastic bag which is marked with the
country of origin of the head on the bag. You ask whether the
club heads need to be individually marked with their country of
origin, and if so whether your present method of marking the club
heads is acceptable. You also want to know if the country of
origin marking has to be permanently etched into the heads or if
using stickers to mark the country of origin of the heads would
be acceptable. You report that the "Black Thunder" heads
represent less than 50 percent of the cost of making the finished
golf clubs. The other heads represent less than 24 or 28 percent
of the cost of the finished golf clubs. The word "AMERICAN" with
the sideways triangle is a trademark registered with the U.S.
Patent and Trademark Office, and is the property of your company.
You also sent us a corporate resolution which states that
American Golf Design Inc. assigned the right and title to the
trademarks "AMERICAN GOLF DESIGN" and "American" to your company,
Apogee Golf, Inc.
ISSUES:
Are the imported golf club heads substantially transformed
when they are assembled with the U.S. made shafts and grips in
the U.S. to make the finished golf clubs?
Does the presence of the word American when used as part of
a trademark or a trade name on the clubs exclude them from being
excepted from the country of origin marking requirements under 19
U.S.C. 1304?
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.
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304.
1. Substantial Transformation
As provided at 19 CFR 134.1(b), the country of origin of an
article is the country in which it was manufactured, produced, or
grown. Further work or material added in another country must
effect a substantial transformation in order to render such other
country the country of origin. A substantial transformation is
said to occur when, after processing, an article emerges having a
new name, character, or use. A manufacturer in the U.S. who
converts or combines the imported article into a different
article will be considered the ultimate purchaser of the imported
article within the meaning of 19 U.S.C. 1304, and the article is
excepted from country of origin marking. The outermost container
of the imported article must be marked in accordance with the
requirements of 19 U.S.C. 1304 and Part 134, Customs Regulations.
See 19 CFR 134.35.
Here, the issue is whether the assembly of golf clubs from
imported club heads effects a substantial transformation of the
imported heads, such that your company is the ultimate purchaser
of the heads and the imported heads may be excepted from country
of origin marking. Customs previously has addressed this very
question and answered in the affirmative. In ORR 824-70 (August
24, 1970), we ruled that a manufacturer who purchased imported
golf club heads, whether finished or unfinished, and assembled
them with shafts and grips of U.S. origin into finished golf
clubs, was the ultimate purchaser of the imported heads.
Provided Customs officials are satisfied that the imported heads
will be used by an original equipment manufacturer, they may be
excepted from individual country of origin marking. To the same
effect were HQ 728213 (July 3, 1985) and HQ 734136 (June 17,
1991). In each case either the head or the shaft was of U.S.
origin. A different conclusion was reached in HQ 734256 (July 1,
1992), where both of the major components of the club, i.e., the
head and the shaft, were of foreign origin.
Consistent with these rulings, we find that in this case,
the addition of a major U.S. component - the shaft- in the U.S.
to produce the completed "AMERICAN GOLF DESIGN" golf club effects
a substantial transformation of the imported head. Therefore,
your company is the ultimate purchaser of the golf club heads,
and pursuant to 19 CFR 134.35 only the outermost containers of
the imported heads must be marked to indicate their country of
origin. The finished golf club is not required to be marked to
indicate the origin of the head. Marking of the outermost
containers in which the heads are imported and in which they
reach your company would suffice to indicate the country of
origin of the heads to the ultimate purchaser as provided at 19
CFR 134.32(d).
2. Application of section 134.36(b), Customs Regulations.
Under previous Customs policy, the presence of the
trademark, AMERICAN with the sideways triangle, or the trade name
"AMERICAN GOLF DESIGN" would have required that each head be
marked in such a manner that the marking will survive processing
and be visible to the purchaser of the article after it has been
processed in the U.S. As provided under section 134.36(b),
Customs Regulations (19 CFR 134.36(b), exceptions from marking
"shall not apply to any article or retail container bearing any
words, letters, names, or symbols described in sections 134.46 or
134.47 which imply that an article was made or produced in a
country other than the actual country of origin." The logo
"American Golf Design" which appears on the imported heads is
within the class of words or letters so specified. Thus, the
golf club heads would not have been eligible for the exceptions
provided at 19 CFR 134.35 and 19 CFR 134.32(d).
Recently, however, Customs changed this policy so as to
permit the ultimate purchaser to utilize his trademark on an
imported article without triggering 19 CFR 134.36(b). In HQ
734327 (February 17, 1993), this office ruled that the trademark
"Ray Ban USA" was not misleading to the ultimate purchaser of the
imported frames upon which the mark appeared, as the ultimate
purchaser (the importer) then substantially transformed the
frames by inserting non-prescription lenses into them. We noted
that in cases in which the ultimate purchaser is arranging the
importation of articles with a trademark affixed, which he owns,
there is no risk that the ultimate purchaser will be misled as to
the actual country of origin of the imported article. If
markings which appear on the substantially transformed articles
are misleading to subsequent purchasers of these articles, there
may exist other legal remedies beyond the scope of Section 304 of
the Tariff Act. Thus, 19 CFR 134.36(b) did not apply to require
that the imported frames be individually marked. Accord HQ
734785 (March 17, 1993) (imported fire hydrant castings not
misleadingly marked with "Beaumont, Texas" when substantially
transformed after importation; 19 CFR 134.36(b) not triggered);
HQ 734249 (June 28, 1993), ("Pro USA" logo stamped on imported
golf club heads does not trigger requirements of 19 CFR 134.36(b)
provided the U.S. processing substantially transforms the heads.)
In this case the imported heads include trademarks owned by
your company (the word "American" with a red sideways triangle
and the "American Golf Design"). The corporate resolution
indicates that your company has acquired the ownership of these
trademarks. So long as the ultimate purchaser of the imported
heads, your company, is advised of the country of origin of the
imported head (e.g., receives the head in a properly marked
container), the requirements of 19 CFR 134.36(b) are not
triggered and there is no need to individually mark the head with
its country of origin.
To be eligible for this exemption from the requirement of
individual marking set forth in 19 CFR 134.36(b), the importer
must satisfy Customs officials that in all instances the imported
golf club heads will be substantially transformed by your company
in the U.S.
HOLDING:
The above described golf club heads are substantially
transformed in the U.S. such that they are excepted from country
of origin marking pursuant to 19 CFR 134.35. Marking of the
outermost containers in which they reach the ultimate purchaser
is sufficient.
The "AMERICAN" with a sideways triangle trademark, or the
"AMERICAN GOLF DESIGN" trademark when used in the manner
described above, is not misleading to the ultimate purchaser,
Apogee Golf, and does not trigger the provisions of 19 CFR
134.36(b). Customs officials must be satisfied that the imported
golf club heads will be used by the importer/ultimate purchaser
exclusively in the manufacture of golf clubs as described above
(i.e. combined with U.S. made shafts) and that they will imported
in properly marked containers.
Sincerely,
John Durant, Director,
Commercial Rulings Division