In a recent Federal Circuit ruling, ICCS USA Corp. v. United States, 2019-1561 (Fed. Cir. March 11, 2020), the Court affirmed a decision by the U.S. Court of International Trade with respect to misuse of a certification mark on goods being imported into the United States.
In this case, ICCS USA Corp. (ICCS), an importer of butane gas canisters, imported nearly 60,000 butane gas canisters into the U.S. in January 2017. The canisters were “Premium” model canisters, and they bore a certification mark owned by Underwriters Laboratories Inc. (UL). Under UL’s certification standards, each model of gas canister needs to be separately certified in order to bear the certification mark. Unfortunately for ICCS, its “Premium” model of canister had not been certified by UL at the time of the importation. ICCS argued that the “Premium” model was simply another version of model canister that had previously been certified, and that the differences between those two models were “superficial.” However, UL’s standards are clear that new models can only be certified after going through an inspection and authorization process, and the “Premium” model had not gone through the process at the time of importation.
Because use of the UL certification mark was unauthorized at the time of importation, the gas canisters were deemed to be counterfeit, and Customs issued a notice demanding that ICCS redeliver the counterfeit canisters. ICCS redelivered approximately 29,000 of the 60,000 canisters, and Customs issued an order demanding liquidated damages for the remaining canisters.
During the pendency of the action, ICCS received certification for its “Premium” model. In response, Customs stated that it would stipulate the case if UL retroactively approved use of the certification mark on the “Premium” canisters.
However, UL denied ICCS’s request to retroactively approve use of the certification mark on the “Premium” canisters, saying that to do so would be setting a bad precedent that would essentially allow companies to apply the UL certification mark to products prior to certification (in other words, it would provide an incentive to ask for forgiveness rather than permission).
UL’s denial of the requested retroactive certification of the canisters only enhances the strength of its certification mark – purchasers of the canisters can trust that canisters bearing UL’s certification mark have met a number of quality and safety standards. There were a number of other procedural issues and arguments in this case but, ultimately, the Federal Circuit affirmed the grant of summary judgment to the government, and required ICCS to comply with the demand for liquidated damages.
Owners of certification marks should take two lessons from this case – first, make certification standards very clear so that there is no room for misinterpretation or negotiation about who or what is being certified. Second, be very strict when enforcing unauthorized use of a certification mark—strict enforcement will serve only strengthen customer recognition of the quality of the goods or services certified using the mark.
This article appeared in the March 2020 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.