Mar-2-05 CO:R:C:V 733889 RSD
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
Commercial Rulings Division