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In ascertaining the plain meaning of a statute, a court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole. If the statute is silent or ambiguous with respect to the specific issue addressed by the regulation, the question becomes whether the agency regulation is a permissible construction of the statute. If the agency regulation is not in conflict with the plain language of the statute, a reviewing court must give deference to the agency's interpretation of the statute.
"Gray-market" goods were foreign-manufactured goods that bore a valid United States trademark, but were imported without the consent of the United States trademark owner. Section 526 of the Tariff Act of 1930 (19 USCS 1526) prohibited the importation of any merchandise of foreign manufacture without the consent of the trademark owner if such merchandise bore a trademark "owned" by a United States citizen, or a corporation or association created or organized within the United States, and the trademark was registered by a person domiciled in the United States. However, a United States Customs Service regulation, promulgated by the Secretary of the Treasury (19 CFR 133.21), permitted the importation of certain gray-market goods where (1) both the foreign and United States trademarks were owned by the same person or business entity (19 CFR 133.21(c)(1)), or (2) the foreign and domestic trademark owners were parent and subsidiary companies or were otherwise subject to common ownership or control (19 CFR 133.21(c)(2)), or (3) the trademark was applied by an independent foreign manufacturer under authorization of the United States owner (19 CFR 133.21(c)(3)). Respondent Coalition to Preserve the Integrity of American Trademarks and two of its members filed suit against the Government seeking injunctive and declaratory relief, asserting that the regulation was inconsistent with § 526 and therefore invalid. The Federal District Court upheld the regulation, but the Court of Appeals reversed, ruling that the regulation was an unreasonable administrative interpretation of § 526. Petitioners, United States, officials and intervenors, were granted certiorari.
Was the United States Customs Service regulation an unreasonable administrative interpretation of Section 526 of the Tariff Act of 1930?
Yes, but only with respect to the authorized use exception of § 133.21(c)(3).
The court affirmed in part and reversed in part, holding that the common control exceptions of §§ 133.21(c)(1)-(2), exempting from the importation ban goods manufactured abroad by the same person who held the U.S. trademark, or by a person subject to common control with the U.S. trademark holder, were consistent with § 526 and valid. However, the court held that the authorized use exception of § 133.21(c)(3), permitting importation of gray-market goods where articles of foreign manufacture bore a trademark applied under authorization of the U.S. owner, was in conflict with the plain language of the statute and invalid. According to the court, the authorized use exception of § 133.21(c)(3) denied a domestic trademark holder statutory protection. Under no reasonable construction of the statutory language can goods made in a foreign country by an independent foreign manufacturer be removed from the purview of the statute. However, the regulation subsection was severable, since its severance and invalidation will not impair the function of the statute as a whole and there was no indication that the regulation would not have been passed but for its inclusion.