United States v. Gibson-Thomsen Co.
27 C.C.P.A. 267, 1940 CCPA LEXIS 11 (1940)
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Rule of Law:
For purposes of country-of-origin marking, the 'ultimate purchaser' of an imported article that is substantially transformed in the United States into a new and different article of commerce is the U.S. manufacturer, not the retail consumer of the finished product.
Facts:
- An importer purchased wood brush blocks and toothbrush handles from Japan.
- The articles were marked with the word 'Japan' die-sunk onto the part where bristles would later be inserted.
- In the United States, the importer used these articles as materials to manufacture finished toothbrushes and hairbrushes.
- The manufacturing process involved boring holes and inserting bristles, which completely obliterated the 'Japan' marking.
- The imported handle or block constituted a minority of the final product's value, with U.S. labor and materials (bristles) comprising the majority.
Procedural Posture:
- The Collector of Customs at the port of New York refused to release a shipment of imported wood brush blocks and toothbrush handles to the importer.
- The Collector's refusal was based on the determination that the country-of-origin markings would be obliterated during the importer's manufacturing process.
- The importer filed a protest against the Collector's decision with the United States Customs Court.
- The United States Customs Court, Third Division, held for the importer, finding the marking was proper.
- The United States government, as appellant, appealed the judgment of the Customs Court to the United States Court of Customs and Patent Appeals.
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Issue:
Does the Tariff Act of 1930 require an imported component part to be marked with its country of origin in a manner that remains visible to the retail consumer after the component is manufactured into a new and different article in the United States?
Opinions:
Majority - Hatfield, Judge
No. The Tariff Act of 1930 does not require an imported component part to be marked in a manner that remains visible to the ultimate consumer of a new and different article manufactured in the United States. The court reasoned that the 'ultimate purchaser' of the imported article, as contemplated by the statute, is the manufacturer who uses the component to create a new product. When an imported article is so processed that it loses its identity and becomes an integral part of a new article with a new name, character, and use, it has been substantially transformed. The court found that Congress did not intend to require that a U.S.-manufactured product bear markings for every foreign country from which its constituent materials were sourced, as this would lead to confusion. The Treasury Department's own regulations supported this interpretation, distinguishing between articles merely 'combined' (like a bottle filled with perfume) and those used as materials in a manufacturing process.
Analysis:
This decision establishes the 'substantial transformation' doctrine as a key principle in customs law for determining the country of origin for marking purposes. It clarifies that when an imported item is not merely combined with another but is fundamentally altered into a new product, the origin of the final product is the country of manufacture, not the country of the component parts. This provides certainty for U.S. manufacturers using foreign components, ensuring they are not subject to impractical marking requirements that could mislead consumers about the origin of the final, domestically-produced good. The case sets a precedent that the 'ultimate purchaser' is the last person to receive the article in its imported form, which, in the case of manufacturing inputs, is the manufacturer.
