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United States v. Able Time

July 7, 2011


The opinion of the court was delivered by: Consuelo B. Marshall United States District Judge


The matter before the Court, the Honorable Consuelo B. Marshall presiding, is the bench trial held on Defendant Able Time, Inc.'s ("Able Time") affirmative defenses.*fn1 Upon consideration of the testimony and evidence received, and the Court's evaluation of the demeanor and credibility of the witnesses, the Court makes the following findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52(a).

I.Findings of Fact

The following facts are not disputed.

A.The Seizure of the "Counterfeit" Watches

On April 19, 1999, Customs "detained," pursuant to the Tariff Act, a shipment of 2,794 watches, bearing the word "TOMMY", being imported by Able Time into the United States at Los Angeles International Airport. [Docket No. 159].

The word "TOMMY" is a registered trademark (U.S. Patent and Trademark Office registration no. 1998783, dated January 27, 1997), owned by Tommy Hilfiger Licensing, Inc., (now known as Tommy Hilfiger Licensing LLC), ("Tommy Hilfiger"), for use in Class-3 products such as cosmetics, cologne products, after-shave products, deodorants and soaps for personal use. Id. Tommy Hilfiger never gave Able Time permission to use its word mark on any product. Id.

Customs "examined" the watches and "compared" the "TOMMY" mark appearing on the seized watches to the word mark registered and recorded by Tommy Hilfiger Licensing, Inc. Id. In May 1999 Customs concluded that the "TOMMY" appearing on the seized watches was substantially indistinguishable or identical to Tommy Hilfiger's word mark. Id.

At the time, Tommy Hilfiger did not make watches, and "TOMMY" was not a registered trademark for use on watches. Id. Tommy Hilfiger did not apply for a trademark for use on watches until November 1999. Id.

B.The Forfeiture Action

The Government initiated a forfeiture action on November 3, 2000. The case was assigned to the Honorable Robert M. Takasugi. See related case of United States v. 2,164 Watches, et al., 00-11781 RMT (JWJx).

On December 4, 2001, Able Time filed a motion for judgment on the pleadings in the forfeiture action, arguing that Customs' unreasonable delay in arresting the res deprived the court of subject matter jurisdiction. See id. at Docket No. 38. Judge Takasugi agreed and granted the motion. See id. at Docket No. 48.

On April 28, 2004, the Ninth Circuit decided in United States v. 2,164 Watches More or Less, etc., 366 F.3d 767, 769 (9th Cir. 2004), that "dismissal without prejudice, rather than judgment on the pleadings, would have been the appropriate action to take. . . ." The Circuit remanded the case to Judge Takasugi to consider the prejudicial effect the untimely service had on Able Time, and whether the action should have instead been dismissed without prejudice on account of the untimely service. See id.

On remand on September 9, 2004, Judge Takasugi found that Able Time was prejudiced by the untimely service and dismissed the forfeiture action without prejudice. See Forfeiture Action, Docket No. 77. By the time Judge Takasugi entered the dismissal order, the five year statute of limitations had expired. Accordingly, the Government could not re-file its forfeiture action.

At no point in the forfeiture action did the Government file a motion for an issuance of a certificate of probable cause pursuant to 28 U.S.C. § 2465(a)(2). Nor did Judge Takasugi ever make any findings with respect to whether the Government had probable cause to seize the watches.

On or about January 19, 2005, the Government remitted the seizure and returned all but twelve of the seized watches. [Docket No. 159].

C.The Present Penalty Action

On April 16, 2004, the Government filed this action for penalties, pursuant to

19 U.S.C. § 1526(f), for $32,940, which was also assigned to Judge Takasugi. [Docket No. 1]. On May 28, 2004, Able Time filed a Counterclaim for a Declaratory Judgment arguing Section 1526(f) of the Tariff Act is unconstitutional because it permits Customs to collect a penalty without a preliminary finding that the goods are counterfeit. [Docket No. 7].

Judge Takasugi granted a motion for summary judgment in favor of Able Time "because Tommy Hilfiger did not make watches at the time of the seizure, the watches imported by Able Time were not counterfeit, and the penalty imposed by Customs was unlawful." [Docket No. 91].

In United States v. Able Time, Inc., 545 F.3d 824 (9th Cir. 2008), the Ninth Circuit held that a mark on merchandise may be counterfeit even if the mark owner does not manufacture that type of merchandise at the time of the seizure. Id.

First, the Circuit rejected Able Time's argument that the penalty action was moot,reasoning, see id. at 828:

This action is not moot because the civil penalty remedy is still available . . . Subsection (f) requires only that the merchandise be "seized under subsection (e)," which it was.

If the forfeiture action in this case had been dismissed with prejudice, or if Able Time were to show that the seizure was otherwise invalid, then a civil penalty would not be appropriate. But the forfeiture action here was dismissed without prejudice, and Able Time has not shown that the seizure was unlawful. ...

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