K Mart Corp. v. Cartier, Inc.

Background

An association of United States trademark owners (COPIAT) and two of its members sued after Customs adopted a regulation, 19 CFR §133.21, that allows some foreign-made goods bearing U.S. trademarks to be imported when the foreign maker is affiliated with or authorized by the U.S. trademark owner. COPIAT asked a federal district court to declare the regulation invalid and to block its enforcement. The district court kept the case and upheld the rule; the Court of Appeals affirmed the district court's jurisdiction but reversed on the merits.

Reasoning

The central question was which federal court must hear these challenges: a general federal district court or the specialized Court of International Trade. The majority explained that Congress gave the trade court exclusive jurisdiction only over true "embargoes," understood as government-imposed quantitative import bans. Section 526(a), by contrast, gives trademark owners the private power to allow or bar importation, so it is not an "embargo" under 28 U.S.C. §1581(i)(3). The Court also rejected a separate argument that protest-related jurisdiction required transfer to the trade court.

Real world impact

Because the Court allowed district courts to proceed, trademark owners, importers, and retailers will press gray-market disputes in general federal court rather than in the trade court. The Supreme Court did not decide whether the Customs exceptions (common-control and authorized-use) violate the Tariff Act or the Lanham Act; it returned the cases for reargument on those legal merits, so the final rule on gray-market imports remains undetermined.

Dissents or concurrances

Justice Scalia, joined by the Chief Justice and Justice O'Connor, dissented, arguing that §526(a) is a governmental embargo and thus within the exclusive jurisdiction of the Court of International Trade.