CIT Puts Temporary Hold on CBP Enhanced Bonding for Importer Accused of Trademark Infringement
An importer accused of trademark infringement will get a reprieve from additional customs bonds it says will put it out of business, after the Court of International Trade on April 6 issued a temporary restraining order narrowing the scope of CBP’s enhanced bonding requirements. The court told CBP to begin processing shipments from U.S. Auto Parts not implicated in the purported trademark infringement, and to restrict its demands for single transaction bonds only to allegedly counterfeit merchandise. The order expires April 20.
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The restraining order came only four days after U.S. Auto Parts filed its initial court complaint on April 2 (see 1804050022). The importer said CBP Norfolk had in March begun requiring a bond of three times entered value on all of the importer’s entries due to concerns that U.S. Auto Parts is importing aftermarket replacement auto grilles that infringe trademarks held by the car manufacturers. U.S. Auto Parts said the bond requirements are excessive, applying to all of the importer’s entries when 99 percent of its shipments were not alleged to infringe any trademarks. It also said the goods were in any case not counterfeit.
CIT held U.S. Auto Parts would be irreparably harmed by the enhanced bonding requirements. CBP’s new instructions would require a bond of about $125,000 per shipment, adding up to about $5 million per week. The importer has been unable to find a surety that would cover the bond requirement without full collateral. U.S. Auto Parts says it would be unable to import any merchandise, forcing it to cease all operations and liquidate the company.
The importer is also likely to succeed in its overall legal challenge, CIT said. “Customs’ action of imposing an enhanced, punitive bond on all of [U.S. Auto Parts’] imports, when it actually should be directed towards only 1% of imports, is an abuse of discretion that is contrary to Customs’ mandate,” the court said. “Based on the facts available at this juncture of the action, the court concludes that [U.S. Auto Parts] has shown a likelihood of success” in its arguments that CBP’s actions violate the Administrative Procedure Act.