Customs Ruling HQ H315840 - Ruling Request; U.S. International Trade Commission; General Exclusion Order; Investigation No. 337-TA-976; Certain Woven Textile Fabrics and Products Containing Same.

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HQ H315840
Feb 08, 2021

Type : 19 U.S.C. § 1337; Unfair Competition • HTSUS :
Related: H121519; H233041; H302369

OT:RR:BSTC:EOE H315840 JW

VIA EMAIL: [email protected]

Mr. Adam M. Smith
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306

RE: Ruling Request; U.S. International Trade Commission; General Exclusion Order; Investigation No. 337-TA-976; Certain Woven Textile Fabrics and Products Containing Same.

Dear Mr. Smith:

Pursuant to 19 C.F.R. Part 177, the Exclusion Order Enforcement Branch (“EOE Branch”), Regulations and Rulings, U.S. Customs and Border Protection (“CBP”) issues this ruling letter. This ruling letter is the result of a request for an administrative ruling from CBP, dated December 18, 2020, and submitted on behalf of Niche Sourcing, Inc. (“Niche”). CBP’s position is Niche has not met its burden to show that the “Chief Value Cotton (CVC) bed linens” that it purchases from [[ ]] and seeks to enter for consumption into the United States are not subject to the general exclusion order (“976 GEO”) issued by the U.S. International Trade Commission (“ITC” or “Commission”) in investigation no. 337-TA-976 (the “976 investigation”). We further found no determination by the Commission, as of the date of this ruling letter, either in the 976 investigation, or in any subsequent ancillary proceeding, that “Chief Value Cotton (CVC) bed linens” purchased from [[ ]] do not violate the 976 GEO. Accordingly, there is no present basis for CBP to use its discretion to permit certification by Niche as set forth in the standard certification provision provided in paragraph 3 of the 976 GEO. See e.g., Certain Composite Aerogel Insulation Materials & Methods for Manufacturing the Same, Inv. No. 337-TA-1003, Comm’n Op. at 62, (Feb. 22, 2018) (USITC Pub. 4932, August 2019) (“The standard certification provision does not allow an importer to simply certify that it is not violating the exclusion order. . . . As the Commission has previously stated, [CBP] only accepts a certification that the goods have been previously determined by [CBP] or the Commission not to violate the exclusion order.”). Niche was asked to clearly identify confidential information with [[red brackets]] in their submissions to the CBP. See, e.g., EOE Branch Email to Niche dated January 8, 2021. However, as of the date of this ruling letter, other than a general statement in Niche’s ruling request stating, “EXEMPT FROM DISCLOSURE UNDER 5 U.S.C. § 552(B)(4)”, along with a footnote stating “[t]his correspondence, including any attachments contains trade secrets and/or confidential commercial information exempt from disclosure under 5 U.S.C. § 552(b)(4)”; Niche has neither clearly identified the alleged “trade secrets and/or confidential commercial information,” nor attempted to overcome the presumption of disclosure with a request for confidential treatment that is narrowly tailored and supported by evidence establishing the aspects noted below, and in section III.B. infra. Thus, at present, nothing is bracketed in red [[ ]] in this ruling letter.

If there is information in this ruling letter, or Niche’s letter to CBP dated December 18, 2020 requesting an administrative ruling pursuant to 19 C.F.R. Part 177, which included Exhibits 1 to 9, not currently bracketed in red [[ ]] that Niche believes constitutes confidential information, and should be redacted from the published ruling, then Niche is asked to contact CBP within ten (10) working days of the date of this ruling letter clearly identifying such confidential information with [[red brackets]]. See, e.g., 19 C.F.R. § 177.8(a)(3).

Please note that disclosure of information related to administrative rulings under 19 C.F.R. Part 177 is governed by, for example, 6 C.F.R. Part 5, 31 C.F.R. Part 1, 19 C.F.R. Part 103, and 19 C.F.R. § 177.8(a)(3). See, e.g., 19 C.F.R. § 177.10(a). In addition, CBP is guided by the laws relating to confidentiality and disclosure, such as the Freedom of Information Act (“FOIA”), as amended (5 U.S.C. § 552), the Trade Secrets Act (“TSA”) (18 U.S.C. § 1905), and the Privacy Act of 1974, as amended (5 U.S.C. § 552a). A request for confidential treatment of information submitted in connection with a ruling requested under 19 C.F.R. Part 177 faces a strong presumption in favor of disclosure. See, e.g., 19 C.F.R. § 177.8(a)(3). The person seeking this treatment must overcome that presumption with a request that is narrowly tailored and supported by evidence establishing at least that: (1) it is information that is customarily kept private or closely; and (2) either (a) the government provided an express or implied assurance of confidentiality when the information was shared with the government; or (b) there were no express or implied indications at the time the information was submitted that the government would publicly disclose the information. See, e.g., OIP Guidance: Step-by-Step Guide for Determining if Commercial or Financial Information Obtained from a Person is Confidential Under Exemption 4 of the FOIA (posted 10/3/2019).

BACKGROUND

ITC Investigation No. 337-TA-976

Procedural History at the ITC

The Commission instituted investigation no. 337-TA-976 (the “underlying investigation” or the “976 investigation”) on December 18, 2015, based on a supplemented and twice amended complaint filed by AAVN, Inc. of Richardson, Texas (“AAVN”). 80 Fed. Reg. 79094 (Dec. 18, 2015); See Certain Woven Textile Fabrics and Products Containing Same, Investigation No. 337-TA-976, EDIS Doc. No. 605892, Commission Opinion (March 20, 2017) (“Comm’n Op.”) at 1. The complaint alleged violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain woven textile fabrics and products containing the same, by reason of infringement of claims 1–7 of U.S. Patent No. 9,131,790 (“the ’790 patent”) and/or by reason of false advertising. Id. The notice of investigation named fifteen respondents including [[ ]] 80 Fed. Reg. 79094 (Dec. 18, 2015); Comm’n Op. at 1. Fourteen of those respondents entered into a settlement agreement or consent order. Id. The last remaining respondent was Pradip Overseas Ltd. of Ahmedabad, India (“Pradip”). Id.

AAVN accused Pradip of false advertising, specifically alleging that Pradip misrepresented the thread count of sheets manufactured in India, imported into the United States, and sold in United States department stores. Id. Pradip was not accused of infringing the ’790 patent. Id.

On September 2, 2016, AAVN moved for leave to file a motion for summary determination of violation out of time. Comm’n Op. at 2. In the motion, AAVN noted that as a result of the settlements and consent orders, Pradip was the last remaining respondent. Id. The summary determination motion that was appended argued, inter alia, that Pradip had violated section 337 by falsely advertising the thread count of its imported sheets, and that the false advertising was deceptive, material, and injurious to AAVN. Id. AAVN requested that the administrative law judge (“ALJ”) recommend the issuance of a general exclusion order and also sought a 100 percent bond during the Presidential review period. Id.

On September 15, 2016, the Commission investigative attorney (“IA”) responded in support of the motion for leave and the accompanying summary determination motion. Id. Pradip did not respond. Id.

On November 10, 2016, the ALJ granted the motion for summary determination and issued the initial determination and recommended determination on remedy (“ID/RD”) (Order No. 21). Id. The ALJ found that AAVN had shown a violation of section 337 by reason of false advertising under section 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). Id. (citing Order No. 21 at 7-9, 13-15). The ALJ found that Pradip’s packaging of its sheets with a falsely stated thread count was a false and misleading description of the sheets, that the misdescription was deceptive, that it is material to consumers in determining the sheets’ quality, that the advertised goods traveled in interstate commerce, and that there is a likelihood of injury to AAVN (i.e., injury under the Lanham Act). Id. at 2–3 (citations omitted). Further, the ALJ found substantial injury to AAVN under section 337(a)(1)(A) “as a result of the false claims of Pradip and its competitors regarding the actual thread count of its products and their ability to sell their products to retailers at lower prices.” Id. at 3 (citing Order No. 21 at 15) (internal quotations omitted). The ALJ also found that the importation requirement of section 337 had been satisfied, that Pradip had submitted to the Commission’s jurisdiction (i.e., in personam jurisdiction), and that the Commission had in rem jurisdiction over the imported articles. Id. (citations omitted).

The ALJ recommended the issuance of a general exclusion order finding that “the evidence shows a widespread pattern of violation of Section 337,” and “the evidence shows that it is difficult to identify the source and manufacturers of the falsely advertised products.” Id. (citing Order No. 21 at 16-18) (internal quotations omitted). The ALJ also recommended the bond be set at 100 percent of the entered value of the falsely advertised products. Id.

No petitions for review of the ID were filed, and on December 20, 2016, the Commission determined not to review the ID. Id. (citing 81 Fed. Reg. 95195 (Dec. 27, 2016)). The Commission requested written submissions on remedy, the public interest, and bonding. Id. (citations omitted). On January 6, 2017, AAVN and the IA filed submissions on these issues. Comm’n Op. at 2. On January 13, 2017, the IA filed a reply to AAVN’s submission. Id. No other submissions were received. Id.

The Commission found that the statutory requirements for relief under 19 U.S.C. § 1337(d)(2) were met and that the public interest factors enumerated in 19 U.S.C. § 1337(d)(1) did not preclude issuance of the statutory relief. Commission Notice of Issuance of General Exclusion Order Dated March 20, 2017.

The Commission determined that the appropriate remedy in the investigation was a general exclusion order prohibiting the entry of certain woven textile fabrics and products containing same that are falsely advertised through a misrepresentation of thread count. Id.; see also General Exclusion Order Issued in ITC Inv. No. 337-TA-976 (March 20, 2017) (“976 GEO”). The Commission also determined that the bond during the period of Presidential review to be in the amount of 100 percent of the entered value of the imported articles that are subject to the general exclusion order. Id.

Seizure and Forfeiture Order

On [[ ]] pursuant to 19 U.S.C. § 1337(i), the Commission issued a seizure and forfeiture order against [[ ]] or any affiliated companies, parents, subsidiaries, or other related business entities, or any of their successors or assigns. See Seizure and Forfeiture Order for [[ ]].

This seizure and forfeiture order has been posted on the Commission’s Electronic Document Information System, and accessible to the general public, since [[ ]].

False Advertising of Thread Count

Overview

Higher thread count sheets are generally perceived by consumers to be higher quality than lower thread count sheets. See Statement of Undisputed Facts in Support of AAVN’s Motion for Summary Determination (Inv. No. 337-TA-976) (“SUF”) at ¶ 7. To make high thread count products, manufacturers have to use smaller and finer yarns. Id. However, it is difficult to incorporate synthetic fibers – like polyester – into high thread count woven textile fabrics as they become increasingly brittle when made smaller and finer, and can break when fed into the loom apparatus used in making high thread count cotton-polyester blended fabric product. Id.

To circumvent the problem of brittleness and breakage for synthetic yarns, some manufacturers twisted individual synthetic fibers together during manufacturing. Id. at ¶ 8; see also ALJ ID (Order No. 21 at 12, fn.4). This twisting increased tensile strength and helped stop synthetic fibers – like polyester – from breaking in looms, but it sacrificed comfort. Id. The twisted combination of fibers was then used as a plied yarn in the weaving process. Id.

The products created using these plied yarns result in lower thread count products. Id. However, to appeal to consumers, some manufacturers falsely advertised their products with an inflated thread count achieved by counting the components of the plied yarns as multiple individual yarns instead of as one yarn. Id. at ¶¶ 13, 19. The Federal Trade Commission (“FTC”) concluded that the practice of counting individual plied components (or plies) within plied yarns to be a deceptive act or practice under Section 5 of the FTC Act, 15 U.S.C. § 45 and “would likely mislead consumers about the quality of the product being purchased.” Id. at ¶¶ 19, 20; see also ALJ ID (Order No. 21) at 12; see also Certain Woven Textile Fabrics and Products Containing Same, Investigation No. 337-TA-976, EDIS Doc. No. 568883, Attachment ID 1043770, Exhibit 6 of Second Amended Complaint (Nov. 12, 2015).

The ITC’s Finding of False Advertising in the 976 Investigation

In the 976 investigation, complainant AAVN based its false advertising claim on its assertion that respondent Pradip’s falsely advertised the thread counts of its woven textile fabric products in violation of the Lanham Act. ALJ ID (Order No. 21) at 12. To support its false advertising claim, AAVN cited the “ASTM Standard 3775 (‘Standard Test Method for Warp (End) and Filling (Pick) count of Woven Fabrics’)” (“ASTM Standard 3775” or “ASTM D3775”). Id. Pradip appeared “to agree that the ASTM D3775 standard was the appropriate test procedure for measuring thread count of woven textile fabric products.” Id. AAVN argued that Pradip’s accused products were advertised through a misleadingly inflated thread count as confirmed by independent testing (using ASTM Standard 3775) of Pradip’s Westwood 800 Thread Count Sheets and Astor Place 650 Thread Count Sheets. Id.

In accordance with the testing results AAVN provided, the ALJ found that the statements Pradip made with respect to the thread counts of Pradip’s accused products were literally false. ALJ ID (Order No. 21) at 13. The ALJ stated that the independent testing under the ASTM Standard 3775 showed that the actual thread counts were 407 for the Astor Place 650 Thread Count Sheets (advertised as 650 thread count sheets) and 253 for the Westwood 800 Thread Count Sheets (advertised as 800 thread count sheets). Id. The ALJ further noted that Pradip failed to present any evidence that would contradict the veracity of the testing reports provided by AAVN. Id.

Along the same lines, the ALJ also found that there was actual deception. Id. at 13–14. The ALJ noted that while Pradip claimed that its Westwood 800 Thread Count Sheets and its Astor Place 650 Thread Count Sheets were the advertised thread counts, the actual thread counts were 253 and 407, respectively. Id.

Accordingly, finding that the other elements of a false advertising claim were met as well, the ALJ concluded that AAVN demonstrated that Pradip’s false advertising of its woven textile fabric products through the misrepresentation of thread counts was an act of unfair competition in violation of section 337. Id. at 13–15.

ASTM Standard 3775

“ASTM International is an international standards organization that develops and publishes voluntary consensus technical standards for a wide range of materials, products, systems, and services.” ALJ ID (Order No. 21) at 12, fn. 3 (citations omitted) (quotations omitted). ASTM’s definition of “thread count” is:

in woven textiles as used in sheets and bedding, the sum of the number of warp yarns (ends) and filling yarns (picks) per unit distance as counted while the fabric is held under zero tension and is free of folds and wrinkles, individual warp and filling yarns are counted as single units regardless of whether comprised of single or plied components.

See ASTM D7023 06 (Reapproved 2018) Standard Terminology Relating to Home Furnishings. “ASTM Standard 3775” is titled “Standard Test Method for Warp (End) and Filling (Pick) Count of Woven Fabrics.” ALJ ID (Order No. 21) at 12; see also ASTM Designation: D3775-12; ASTM Designation: D3775-17 (“ASTM D3775-17 e1”). “Under the ASTM Standard 3775, in order to calculate thread count, one must count ‘plied components’ (such as twisted fibers) as ‘single units.’” ALJ ID (Order No. 21) at 12 (citation omitted). ASTM Standard 3775 further states that “[w]hen two yarns are laid-in together and parallel, count each yarn separately, as a single unit, regardless of whether it is comprised of single or plied components.” ASTM Designation: D3775-12 at ¶ 9.1.2; ASTM D3775-17 e1 at ¶ 9.1.3.

ASTM’s definition of “yarn” is:

a generic term for a continuous strand of textile fibers, filaments, or material in a form suitable for knitting, weaving, or otherwise intertwining to form a textile fabric.

ASTM Designation: D123-03 Standard Terminology Relating to Textiles.

19 C.F.R. Part 177 Ruling Request

On December 18, 2020, Niche submitted a letter to CBP requesting an administrative ruling pursuant to 19 C.F.R. Part 177, which included Exhibits 1 to 9 (collectively, “Ruling Request). The Ruling Request states Niche is “an importer of high quality Chief Value Cotton (CVC) bed linens” which are “purchase[d] . . . from [[ ]] . . .” (hereinafter, the “articles at issue”). Ruling Request at 1. The Ruling Request further states that Niche is “request[ing] a ruling from [CBP] regarding the sufficiency of the enclosed sample documentation to meet the importer’s burden with respect to paragraph 3 of the [976 GEO].” Id.

No oral discussion pursuant to 19 C.F.R. § 177.4 was requested by Niche in the Ruling Request. Nevertheless, as a courtesy, the EOE Branch had a phone call with Niche on December 30, 2020 regarding the Ruling Request.

In addition, in an email to Niche, the EOE Branch noted that “to the greatest extent possible, the EOE Branch conducts 19 C.F.R. Part 177 ruling requests related to exclusion orders issued by the Commission on an inter partes basis involving the parties with a direct and demonstrable interest in challenging the question presented in the Ruling Request.” See EOE Branch Email to Niche Dated January 8, 2021. In response, Niche asserted that AAVN did not have a demonstrable interest in the question presented by the ruling request and requested to go through this process, and work through the “technical issues and compliance questions” without the participation of AAVN. See Niche Email to EOE Branch dated January 11, 2021.

ISSUE

Whether the “sample documentation” provided in Niche’s Ruling Request is sufficient “to meet the importer’s burden with respect to paragraph 3 of the March 20, 2017 General Exclusion Order issued in the Matter of Certain Woven Textile Fabrics and Products Containing Same, Investigation No. 337-TA-976.” See Ruling Request at 1.

LEGAL STANDARDS

Section 337 Exclusion Order Administration

Section 337 of the Tariff Act of 1930 authorizes the Commission to exclude articles from entry into the United States when it has found “[u]nfair methods of competition [or] unfair acts in the importation of [those] articles.” 19 U.S.C. § 1337(a)(1)(A). When the Commission determines there is a violation of section 337, it generally issues one of two types of exclusion orders: (1) a limited exclusion order or (2) a general exclusion order. See Fuji Photo Film Co., Ltd. v. U.S. Int’l Trade Comm’n, 474 F.3d 1281, 1286 (Fed. Cir. 2007).

Both types of orders direct CBP to bar infringing products from entering the country. See Yingbin-Nature (Guangdong) Wood Indus. Co. v. U.S. Int’l Trade Comm’n, 535 F.3d 1322, 1330 (Fed Cir. 2008). “A limited exclusion order is ‘limited’ in that it only applies to the specific parties before the Commission in the investigation. In contrast, a general exclusion order bars the importation of infringing products by everyone, regardless of whether they were respondents in the Commission's investigation.” Id. A general exclusion order is appropriate only if two exceptional circumstances apply. See Kyocera Wireless Corp. v. U.S. Int’l Trade Comm’n, 545 F.3d 1340, 1356. A general exclusion order may only be issued if (1) “necessary to prevent circumvention of a limited exclusion order,” or (2) “there is a pattern of violation of this section and it is difficult to identify the source of infringing products.” 19 U.S.C. § 1337(d)(2); see Kyocera, 545 F.3d at 1356 (“If a complainant wishes to obtain an exclusion order operative against articles of non-respondents, it must seek a GEO [general exclusion order] by satisfying the heightened burdens of §§ 1337(d)(2)(A) and (B).”).

In addition to the action taken above, the Commission may issue an order under 19 U.S.C. § 1337(i) directing CBP to seize and forfeit articles attempting entry in violation of an exclusion order if their owner, importer, or consignee previously had articles denied entry on the basis of that exclusion order and received notice that seizure and forfeiture would result from any future attempt to enter articles subject to the same. An exclusion order under § 1337(d)—either limited or general—and a seizure and forfeiture order under § 1337(i) apply at the border only and are operative against articles presented for customs examination or articles conditionally released from customs custody but still subject to a timely demand for redelivery. See 19 U.S.C. § 1337(d)(1) (“The Commission shall notify the Secretary of the Treasury of its action under this subsection directing such exclusion from entry, and upon receipt of such notice, the Secretary shall, through the proper officers, refuse such entry.”); id. at (i)(3) (“Upon the attempted entry of articles subject to an order issued under this subsection, the Secretary of the Treasury shall immediately notify all ports of entry of the attempted importation and shall identify the persons notified under paragraph (1)(C).”) (emphasis added).

Significantly, unlike district court injunctions, the Commission can issue a general exclusion order that broadly prohibits entry of articles that violate Section 337 of the Tariff Act of 1930 without regard to whether the persons importing such articles were parties to, or were related to parties to, the investigation that led to issuance of the general exclusion order. See Vastfame Camera, Ltd. v. U.S. Int’l Trade Comm’n, 386 F.3d 1108, 1114 (Fed. Cir. 2004). The Commission also has recognized that even limited exclusion orders have broader applicability beyond just the parties found to infringe during an investigation. See Certain GPS Devices and Products Containing Same, Inv. No. 337-TA-602, Comm’n Op. at 17, n. 6, Doc ID 317981 (Jan. 2009) (“We do not view the Court’s opinion in Kyocera as affecting the issuance of LEOs [limited exclusion orders] that exclude infringing products made by respondents found to be violating Section 337, but imported by another entity. The exclusionary language in this regard that is traditionally included in LEOs is consistent with 19 U.S.C. § 1337(a)(1)(B)–(D) and 19 U.S.C. § 1337(d)(1).”).

Moreover, “[t]he Commission has consistently issued exclusion orders coextensive with the violation of section 337 found to exist.” See Certain Erasable Programmable Read Only Memories, Inv. No. 337-TA-276, Enforcement Proceeding, Comm’n Op. at 11, Doc ID 43536 (Aug. 1991) (emphasis added). “[W]hile individual models may be evaluated to determine importation and [violation], the Commission's jurisdiction extends to all models of [violative] products that are imported at the time of the Commission's determination and to all such products that will be imported during the life of the remedial orders.” See Certain Optical Disk Controller Chips and Chipsets, Inv. No. 337-TA-506, Comm’n Op. at 56–57, USITC Pub. 3935, Doc ID 287263 (July 2007).

Lastly, despite the well-established principle that “the burden of proving infringement generally rests upon the patentee [or plaintiff],” Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843; 187 L. Ed. 2d 703; 2014 U.S. LEXIS 788 (2014), the Commission has held that Medtronic is not controlling precedent and does not overturn its longstanding practice of placing the burden of proof on the party who, in light of the issued exclusion order, is seeking to have an article entered for consumption. See Certain Sleep-Disordered Breathing Treatment Systems and Components Thereof, Inv. No. 337-TA-879, Advisory Opinion at 6–11. In particular, the Commission has noted that “[t]he Federal Circuit has upheld a Commission remedy which effectively shifted the burden of proof on infringement issues to require a company seeking to import goods to prove that its product does not infringe, despite the fact that, in general, the burden of proof is on the patentee to prove, by a preponderance of the evidence, that a given article does infringe. . . .” Certain Integrated Circuit Telecommunication Chips, Inv. No. 337-TA-337, Comm’n Op. at 21, n.14, USITC Pub. 2670, Doc ID 217024 (Aug. 1993), (emphasis in original) (citing Sealed Air Corp. v. U.S. Int’l Trade Comm’n, 645 F.2d 976, 988–89 (C.C.P.A. 1981)).

This approach is supported by Federal Circuit precedent. See Hyundai Elecs. Indus. Co. v. U.S. Int'l Trade Comm'n, 899 F.2d 1204, 1210 (Fed. Cir. 1990) (“Indeed, we have recognized, and Hyundai does not dispute, that in an appropriate case the Commission can impose a general exclusion order that binds parties and non-parties alike and effectively shifts to would-be importers of potentially infringing articles, as a condition of entry, the burden of establishing noninfringement. The rationale underlying the issuance of general exclusion orders—placing the risk of unfairness associated with a prophylactic order upon potential importers rather than American manufacturers that, vis-a-vis at least some foreign manufacturers and importers, have demonstrated their entitlement to protection from unfair trade practices—applies here [in regard to a limited exclusion order] with increased force.”) (emphasis added) (internal citation omitted).

Treatment of Confidential Information Submitted under 19 C.F.R. Part 177

Niche was asked to clearly identify confidential information with [[red brackets]] in their submissions to the CBP. See, e.g., EOE Branch Email to Niche dated January 8, 2021. However, as of the date of this ruling letter, other than a general statement in Niche’s ruling request stating, “EXEMPT FROM DISCLOSURE UNDER 5 U.S.C. § 552(B)(4)”, along with a footnote stating “[t]his correspondence, including any attachments contains trade secrets and/or confidential commercial information exempt from disclosure under 5 U.S.C. § 552(b)(4)”; Niche has neither clearly identified the alleged “trade secrets and/or confidential commercial information,” nor attempted to overcome the presumption of disclosure with a request for confidential treatment that is narrowly tailored and supported by evidence establishing the aspects noted below.

Disclosure of information related to administrative rulings under 19 C.F.R. Part 177 is governed by 6 C.F.R. pt. 5; 31 C.F.R. pt. 1; 19 C.F.R. pt. 103; and 19 C.F.R. § 177.8(a)(3). See e.g., 19 C.F.R. § 177.10(a). In addition, the determination as to whether to include or redact information within a published ruling is guided by various federal laws that involve confidentiality and disclosure, including the Freedom of Information Act (“FOIA”) (5 U.S.C. § 552), the Trade Secrets Act (18 U.S.C. § 1905), and the Privacy Act of 1974 (5 U.S.C. § 552a). See, e.g., CBP HQ Ruling H121519 at 1 (Feb. 8, 2011). Congress enacted FOIA to overhaul the public disclosure section of the Administrative Procedure Act that gradually became more “a withholding statute than a disclosure statute.” Milner v. Dep't of the Navy, 562 U.S. 562, 565 (quoting EPA v. Mink, 410 U.S. 73, 79 (1973)). Hence, there is a strong presumption in favor of disclosure, consistent with the purpose and plain language of the Act. U.S. Dep't of State v. Ray, 502 U.S. 164, 173 (1991). FOIA mandates agency disclosure of requested records unless they fall within one of nine exemptions. Milner, 562 U.S. at 565. These exemptions are “explicitly made exclusive,” Mink, 410 U.S. at 79, and must be “narrowly construed,” FBI v. Abramson, 456 U.S. 615, 630 (1982). Nevertheless, “Congress did not design the Freedom of Information Act exemptions to be mandatory bars to disclosure.” Chrysler Corp. v. Brown, 441 U.S. 281, 293 (1979); see also, GTE Sylvania v. Consumers Union of United States, 445 U.S. 375, 378, n. 2 (1980) (“The theory of the so-called ‘reverse Freedom of Information Act’ suit, that the exemptions to the Act were mandatory bars to disclosure and that therefore submitters of information could sue an agency under the Act in order to enjoin release of material, was squarely rejected in Chrysler Corp.”).

Like FOIA, an objective of administrative rulings under 19 C.F.R. Part 177 is disclosure, providing notice to interested parties of the agency’s decision-making process and position. See id. at 290 n.10. The relevant Customs regulations mirror the general presumption in favor of disclosure and place the burden on the party requesting confidentiality to demonstrate that such information qualifies. See generally FCC v. Schreiber, 381 U.S. 279 (1965). Moreover, the Customs regulations that place the burden on the ruling requester to establish, that the information at issue constitutes confidential business information is consistent with the burden that the government must satisfy in an action challenging an agency position not to disclose information pursuant to a FOIA exemption.. See 5 U.S.C. § 552(a)(4)(B); see also United States Department of Justice v. Landano, 508 U.S. 165, 171 (1993).    Exemption 4 of FOIA, provides that FOIA does not apply to matters that are “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552 (b)(4). Under 19 C.F.R. § 177.8(a)(3), there is a general presumption that “[n]o part of the ruling letter, including names, addresses, or information relating to the business transactions of private parties, shall be deemed to constitute privileged or confidential commercial or financial information or trade secrets exempt from disclosure pursuant to the Freedom of Information Act, as amended (5 U.S.C. § 552), unless, as provided in §?177.2(b)(7), the information claimed to be exempt from disclosure is clearly identified and the reasons for the exemption are set forth.” Thus, 19 C.F.R. § 177.2(b)(7) articulates the test for determining whether certain information is confidential in 19 C.F.R Part 177 administrative rulings.

The language of 19 C.F.R. § 177.2(b)(7) provides that, “[i]nformation which is claimed to constitute trade secrets or privileged or confidential commercial or financial information regarding the business transactions of private parties the disclosure of which would cause substantial harm to the competitive position of the person making the request (or of another interested party), must be identified clearly and the reasons such information should not be disclosed, including, where applicable, the reasons the disclosure of the information would prejudice the competitive position of the person making the request (or of another interested party) must be set forth.”  The “substantial harm to a competitive position” standard adopted in 19 C.F.R. § 177.2(b)(7) is identical to the standard for FOIA Exemption 4 established by the U.S. Court of Appeals for the District of Columbia Circuit. See Nat’l Parks & Conservation Ass’n. v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974) (construing information as “confidential” under FOIA Exemption 4 if disclosure would “cause substantial harm to the competitive position of the person from whom the information was obtained.”).

The Supreme Court’s recent decision in Argus Leader, however, overturned National Parks and the test upon which 19 C.F.R. § 177.2(b)(7) is based. Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019). In this decision, the Court addressed when information provided to a federal agency qualifies as “confidential” under Exemption 4 by analyzing the term’s “ordinary, contemporary, common meaning . . . when Congress enacted FOIA in 1966.” Id. at 2362. The Court found that “[t]he term ‘confidential’ means then, as it does now, ‘private’ or ‘secret.’” Id. at 2363. And, “[n]otably lacking from dictionary definitions, early case law, or any other usual source that might shed light on the statute’s ordinary meaning is any mention of the ‘substantial competitive harm’ requirement” articulated in National Parks. Id. at 2363–65.  The Court found “[c]ontemporary dictionaries suggest two conditions that might be required for information communicated to another to be considered confidential”: (1) the information is “customarily kept private, or at least closely held, by the person imparting it;” and (2) the “party receiving [the information] provides some assurance that it will remain secret.” Id. at 2363. For information to be deemed confidential under Exemption 4, the Court held that the first condition must be met, but with respect to the second condition, “there’s no need to resolve that question in this case . . . .” Id. Thus, “[a]t least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4.” Id. at 2366. In light of the above, a request for confidential treatment of information submitted in connection with a ruling requested under 19 C.F.R. Part 177 faces a strong presumption in favor of disclosure. See, e.g., 19 C.F.R. § 177.8(a)(3). The party seeking this treatment must overcome that presumption with a request that is narrowly tailored and supported by evidence establishing at least that: (1) it is information that is customarily kept private or closely; and (2) either (a) the government provided an express or implied assurance of confidentiality when the information was shared with the government; or (b) there were no express or implied indications at the time the information was submitted that the government would publicly disclose the information. See, e.g., OIP Guidance: Step-by-Step Guide for Determining if Commercial or Financial Information Obtained from a Person is Confidential Under Exemption 4 of the FOIA (posted 10/3/2019).

Based on the framework above, Niche has failed to meet the criteria discussed above. Thus, nothing at present, is bracketed in red [[ ]] in this ruling letter. Unless Niche contacts CBP within ten (10) working days of the date of this ruling letter clearly identifying such confidential information with [[red brackets]] no information will be redacted from the published ruling. See, e.g., 19 U.S.C. § 1625(a); 19 C.F.R. § 177.8(a)(3).

False Advertising Under the Lanham Act

Under the Lanham Act, it is unlawful to use in commerce, in connection with any goods or services, any false or misleading description of fact, or false or misleading representation of fact, which “in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods [or] services.” 15 U.S.C. § 1125(a)(l)(B).

To prevail on a claim of false advertising under the Lanham Act, a plaintiff must prove that:

1.) The defendant made false or misleading statements about his own or another person's product; 2.) There is actual deception or at least a tendency to deceive a substantial portion of the intended audience; 3.) The deception is material in that it is likely to influence purchasing decisions; 4.) The advertised good traveled in interstate commerce; and 5.) There is a likelihood of injury to the [complainant] in terms of declining sales, loss of good will, etc.

Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, 774 F.3d 192, 198 (3rd Cir. 2014); see also Certain Light-Emitting Diode Products and Components Thereof (“LED Products”), Inv. No. 337-TA-947, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bonding ("ID"), pp. 430–432 (July 29, 2016) (describing the five elements) and Certain Cigarettes and Packaging Thereof (“Cigarettes”), Inv. No. 337-TA-424, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bonding ("ID"), pp. 43–44 (June 22, 2000) (unreviewed).

In order to show element 1 (a false statement), the complainant must prove that the advertisement is “either (1) literally false, or (2) literally true or ambiguous but likely to mislead or deceive consumers.” Groupe SEB, 774 F.3d at 198 (citing Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3rd Cir. 2002)); see also Clorox Co. Puerto Rico v. Proctor & Gamble Commercial Co., 228 F.3d 24, 33 (1st Cir. 2000) (“A plaintiff can succeed on a false advertising claim by proving either that an advertisement is false on its face or that the advertisement is literally true or ambiguous but likely to mislead and confuse consumers.”) (citations omitted). In determining whether the advertisement is “literally false,” the court must first decide whether the message is unambiguous and, second, whether the unambiguous message is false. Groupe SEB, 774 F.3d at 198 (citations omitted). The “literally false message” can be either (1) explicit or (2) “conveyed by necessary implication when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated.” Id. at 198 (citing Novartis, 290 F.3d at 586–87). “Unless the claim is unambiguous, it cannot be literally false.” Id.

Whether the statement is “literally false” is a question of fact. Clorox Co., 228 F .3d at 34 (citing Mead Johnson & Co. v. Abbott Labs., 209 F.3d 1032, 1034 (7th Cir. 2000).) First, the factfinder must determine the claim conveyed by the advertisement and, second, it must then evaluate whether the claim is false. Id. If the statement is literally false, then the ALJ “may grant relief without considering evidence of consumer reaction.” Clorox Co.,228 F.3d at 33. If the statement is not literally false, then the complainant must show that the statement “conveys a misleading message to the viewing public” and must show “how consumers actually reacted to the challenged advertisement rather than merely demonstrating how they could have reacted.” Id.

A complainant who alleges a violation of section 337 pursuant to 19 U.S.C. § 1337(a)(l)(A)(i), unfair methods of competition and unfair acts, based on false advertising must also show substantial injury or the threat of substantial injury to "an industry in the United States." To determine whether a complainant's domestic industry has been substantially injured, the Commission considers “a broad range of indicia” including “the volume of imports and their degree of penetration, lost sales, underselling by respondents, reductions in complainants’ profits or employment levels, and declining production, profitability and sales.” LED Products, ID, p. 481 (quoting Certain Electric Power Tools, Battery Cartridges & Battery Chargers (“Electric Power Tools”), Inv. No. 337-TA-284, Initial Determination (“ID”), p. 246 (June 2, 1989) (unreviewed).

IV. ANALYSIS

The issuance of an exclusion order by the Commission effectively shifts the burden of proof to the company seeking to import goods, as a condition of entry, to prove that the articles it seeks to import are not subject to the exclusion order. See, e.g., Hyundai Elecs. Indus. Co. v. U.S. Int'l Trade Comm’n, 899 F.2d 1204, 1210 (Fed. Cir. 1990); Certain Integrated Circuit Telecommunication Chips, Inv. No. 337-TA-337, Comm’n Op. at 21, n.14, USITC Pub. 2670, Doc ID 217024 (Aug. 1993), (emphasis in original) (citing Sealed Air Corp. v. U.S. Int’l Trade Comm’n, 645 F.2d 976, 988–89 (C.C.P.A. 1981)). Accordingly, the burden of proof is on Niche to show that the articles at issue are not subject to the 976 GEO.

The 976 GEO directs CBP to exclude certain woven textile fabrics and products containing same; specifically paragraph 1 states:

Woven textile fabrics and products containing same that are falsely advertised through the misrepresentation of thread counts are excluded from entry for consumption in the United States, entry for consumption from a foreign trade zone, or withdrawal from a warehouse for consumption, except as provided by law.

See ¶ 1 of 976 GEO.

The 976 GEO became final in May of 2017. See, e.g., 19 U.S.C. § 1337(j)(4). Accordingly, paragraph 2 of the 976 GEO does not apply to the articles at issue. We further note that there was no indication (and Niche does not state otherwise) that the articles at issue will be “imported by or for the use of the United States, or imported for and to be used for, the United States with the authorization or consent of the Government.” Accordingly, paragraph 4 of the 976 GEO also does not apply to the articles at issue. Further, there is no exception in the 976 GEO for articles imported by Niche, or articles manufactured by [[ ]]. See 976 GEO (or generally any entities). Hence, the 976 GEO, outside of the exception provided in paragraph 4 related to importation for or use for the United States (which, as noted, is not applicable here), applies to the importation of violative articles by everyone. See, e.g., Yingbin-Nature (Guangdong) Wood Indus. Co., 535 F.3d at 1330 (emphasis added).

Hence, in looking at whether Niche has met its burden of proof to prove that the articles at issue are not subject to the exclusion order, the focus will be on paragraph 1 of the 976 GEO; specifically, whether Niche has met its burden of proof to prove that the articles at issue do not falsely advertise through the misrepresentation of thread count. As discussed below, we find that Niche has not met its burden of proof. Thus, as there is no determination by the Commission or CBP that articles at issue do not violate the 976 GEO, use of paragraph 3 of the 976 GEO to certify is not permitted.

[[ ]]

As a preliminary matter, we will address the representations in Niche’s Ruling Request that “[[ ]] the manufacturer of the sheets that Niche seeks to import . . . [[ ]].” Ruling Request at 2.

Whether [[ ]] is not relevant to whether the articles at issue are subject to the 976 GEO. The underlying violation at issue in the 976 GEO is false advertising through the misrepresentation of thread count; it is not infringement of an intellectual property right owned by AAVN. Consistent with this reasoning, the 976 GEO does not provide an exception for [[ ]]. Compare, e.g., 337-TA-976 General Exclusion Order at ¶ 1 (only provides “except as provided by law.”) with 337-TA-1056 General Exclusion Order, which involves intellectual property rights owned by complainant, at ¶ 1 (provides for both “except under license of the patent owner or as provided by law.”). Accordingly, whether [[ ]] is not relevant to the underlying question of whether the articles at issue are subject to the general exclusion order for false advertising through the misrepresentation of thread count.

Moreover, a patent does not grant the patent owner any right to make their own invention; instead the patent gives the patent owner the right to exclude others from making, using, selling, or importing the invention. See, e.g., 35 U.S.C. § 271; see also Leatherman Tool Grp. Inc. v. Cooper Indus., 131 F.3d 1011, 1015 (Fed. Cir. 1997) citing Bloomer v. McQuewan, 55 U.S. 539, 548, 14 L. Ed. 532 (1852) (“In fact, the federal patent laws do not create any affirmative right to make, use, or sell anything. As the Supreme Court has stated, “the franchise which the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented, without the permission of the patentee. This is all that he obtains by the patent.”); see also Advanced Cardiovascular Sys., Inc. v. Medtronic, Inc., 265 F.3d 1294, 1309 (Fed. Cir. 2001)). The patent holder’s (or licensee’s) right to make their own invention is dependent upon the rights of others and whatever general laws might be applicable.

We further note that any implication that [[ ]] could negate the injury element that is part of the false advertising analysis (i.e., injury under the Lanham Act), is misplaced. Determinations of the Commission, including any conclusion of law or finding of fact, that arise from an investigation, or related proceeding, are binding authority on CBP, and applied by CBP with preclusive effect in the administration of exclusion orders issued under 19 U.S.C. § 1337. See, e.g., Eaton Corp. v. United States, 29 C.I.T. 1149, 1164–65 (Ct. of Int’l Trade 2005) (“[T]he Commission has paramount authority and responsibility under section 337 of the Tariff Act. Its opinion and resultant orders have set the substantive law of this case. . . .”). The Commission’s finding in the 976 investigation that injury under the Lanham Act was met was based on misrepresentation of thread count. See, e.g., ALJ ID (Order No. 21) at 14 (“The evidence shows that AAVN has been injured as a result of Pradip’s misrepresentation of thread counts.”). The Commission did not base, in any way, their finding that this injury element was met on alleged infringement of AAVN’s intellectual property rights. Id. Indeed, in the 976 investigation, the last remaining respondent, Pradip, was not accused of infringing the ’790 patent (or any of AAVN’s intellectual property rights). Comm’n Op. at 1.

In addition, we also note the Commission’s finding that AAVN demonstrated injury or the threat of substantial injury to “an industry in the United States”, as required by 19 U.S.C. § 1337(a)(l)(A)(i), was similarly based on the false claims of Pradip and its competitors regarding the actual thread count of its products, and not based on allegations of patent infringement. See e.g., Comm’n’ Op. at 3. Indeed, if the alleged 337 violation was infringement of a “valid and enforceable United States patent” the statutory provision at issue would be 19 U.S.C. § 1337(a)(l)(B). Thus, as CBP is bound by the findings of the Commission, if the articles at issue misrepresent the thread count, then it follows that injury under the Lanham Act, and injury as required by 19 U.S.C. § 1337(a)(l)(A)(i) must be met. Had AAVN believed that it would only be injured under the Lanham Act, or under 19 U.S.C. § 1337(a)(l)(A)(i) by Pradip’s misrepresentation of thread count, then perhaps AAVN should have only asked the Commission for a limited exclusion order against Pradip, and not a general exclusion order against everyone.

Yet, AAVN further demonstrated the heightened requirements of 19 U.S.C. § 1337(d)(2) to obtain a general exclusion order, which applies to the importation of violative articles by everyone. AAVN does not now have the authority to unilaterally determine against whom this general exclusion order is enforced.

Moreover, whether there is misrepresentation of thread count is not for AAVN to decide. AAVN neither sets nor dictates ASTM Standard 3775. AAVN’s intellectual property rights are an entirely separate, and unrelated issue. The purported existence of a license with AAVN has no bearing on whether the labels or markings on the articles at issue will accurately reflect the thread count of the articles at issue. It would be a troubling result if AAVN were permitted to use these “injury” elements to manipulate and claim “injury” only against certain entities that misrepresent thread count (e.g., unlicensed entities), and not against other entities that misrepresent thread count (e.g., licensed entities) as this would in essence permit AAVN to set and dictate the thread count standard for the textile industry, turning it into a “private” right.

Niche’s Sample Laboratory Reports

Next, we turn to the “sample documentation,” particularly the outside laboratory reports, provided with Niche’s Ruling Request, and the sufficiency of said sample documentation for Niche to meet its burden to prove that the articles at issue are not subject to the 976 GEO. See, e.g., Ruling Request at 1, and Exhibits 5 and 6 of Ruling Request. For at least the reasons provided below, we find that the sample documentation is not sufficient for Niche to meet its burden to show that the articles at issue are not subject to the 976 GEO.

First, in discussing “CBP’s [c]onsideration of [s]imilar [t]ransactions,” Niche states, “[[ ]] had a . . . shipment to an unrelated party of 1200 thread count (‘1200 TC’) sheets manufactured by [[ ]] excluded.” Ruling Request at 3. Niche speculates that “this was based on an internal CBP laboratory report that found the thread count to be overstated.” Id. at 3–4 (citing Exhibits 7 and 8 of the Ruling Request). Niche asserts “that result confuses us” and further notes, “[s]hortly prior to the exclusion, SGS North America, Inc.—the same lab that CBP has accredited to undertake other types of commercial testing—performed testing on the identical 1200 thread count sheets and verified the thread count, taking into account the yarns that were laid in parallel.” Id. at 4 (citing Exhibit 9 of Ruling Request).

Niche’s Ruling Request does not disclose where Niche obtained the information regarding this purported “similar transaction,” thus we will not comment on the accuracy of Niche’s statements or whether the purported Notice of Action provided as Exhibit 7 of the Ruling Request, or the purported CBP laboratory report provided as Exhibit 8 of the Ruling Request are genuine. However, in the interest of addressing Niche’s confusion, we will assume arguendo that what Niche says about this “similar transaction” is true. Niche states that the “result confuses us”, Ruling Request at 4, but Niche fails to make a conclusive showing, that the testing method used by the CBP laboratory is in error, or that any of CBP’s laboratory results are erroneous. “It is well settled that the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Alcoa v. United States, 477 F.2d 1396, 1398 (1973) (citations omitted). In the absence of a conclusive showing that the testing method used by the CBP laboratory is in error, or that the CBP’s laboratory results are erroneous, there is a presumption that the results are correct. See e.g., Exxon Corp. v. United States, 462 F. Supp. 378, 81 Cust. Ct. 87 (1978). There are generally two ways in which the presumption of correctness afforded to a CBP laboratory report may be overcome. As the court stated in American Sporting Goods v. United States, 259 F. Supp. 1302, 1308, “the plaintiff in a case such as this may make out a prima facie case either by showing that Customs’s results or methods are erroneous, [Consolidated Cork v. United States, 54 Cust. Ct. 83, 85 (1965)], or by ‘submitting evidence of analysis [that the plaintiff] applied to the merchandise which gave a result different from that claimed by the Government.’” Here, while Niche provided an outside laboratory report, which purports to find a different thread count, we note that “conflicting results alone, however, are not enough to establish the prima facie case required to rebut CBP’s presumption of correctness.” See e.g., HQ H233041 dated April 1, 2014; see, also e.g., Alcoa v. United States, 477 F.2d at 1399 (the “evidence of analysis” submitted by the Appellant, which the Court found sufficient to establish a prima facie case, consisted of more than a conflicting test result).

Niche appears to have further reviewed CBP’s HQ H302369, dated February 6, 2019, which involved the same exclusion order, but merchandise of a party unrelated to Niche. See, e.g., Ruling Request at 3. Yet, other than pointing out that the articles at issue are not the same as the articles in HQ H302369, Niche again fails to make any attempt to show that the testing method used by the CBP laboratory is in error, or that the CBP’s laboratory results are erroneous.

Moreover, Niche has not provided any samples of the articles at issue for CBP to test, and we find that the reliability and accuracy of Niche’s sample outside laboratory reports are questionable for at least two primary reasons. First, the outside laboratory reports provided by Niche all indicate that the “Client” may have ability to influence, and potentially dictate, the thread count results found by the outside laboratory. The outside laboratory reports all have a disclaimer stating, in relevant part, “[a]ny holder of this document is advised that information contained hereon reflects the Company’s findings . . . within the limits of Client’s instructions, if any.” See generally, Exhibits 5 and 9 of Ruling Request (emphasis added). Niche makes no mention in the Ruling Request whether there were any “Client[] instructions” provided to the outside laboratories. However, looking at the outside laboratory reports, it appears that there may have been instructions or specifications provided to the outside laboratory. For example, it appears that the number of “inserts/pick” was specified by the Client or applicant, and not independently found by the outside laboratory through a “blind test.” Of note, there are identifiers seemingly from the applicant on each of the samples tested by the outside laboratories in the sample documentation, and these identifiers contain at least the alleged total thread count. See Exhibit 5 of Ruling Request. Thus, if the outside laboratory knows at the start what the target thread count should be, then once the basic yarn count of the warp and filling is complete, simple arithmetic will permit the laboratory to “find” the claimed number of “inserts/pick.” The fact that the outside laboratory seems to know the “target” count at the start is suspect. Even more suspect is that in some cases the applicant seems to outright tell the laboratory what the number of “inserts/pick” should be. See, e.g., Exhibit 5 of Ruling Request, Test Report No. 4662910TX-01 at 1 and 3 (“The following sample was submitted and identified by applicant as: . . . 1000 TC CVC Lot 304- 60s x 14D / 184 X 66 (12)”, and the test results indicate, “Note: 12 inserts / pick.”) (emphasis added). Second, even assuming arguendo no instructions were provided to the outside laboratory, outside of a bare “ASTM D 3775—17e1” indication on the outside laboratory reports, there is no information showing how the outside laboratory reached their counts (e.g., there is no “evidence of analysis”). Particularly, there is no information showing how the outside laboratory found the specific number of “inserts/pick” (assuming the outside laboratory did find this number independently). For example, there are no pictures or photomicrographs showing the alleged number of “laid-in together and parallel” yarns in the sample, and no unedited, uncut video showing the thread count process from start to finish, particularly focusing on the steps that the outside laboratory used to consistently identify the claimed number of “inserts/pick.” The outside laboratory reports may claim that they used “ASTM D 3775—17e1”, but there is no corroborating support. Rather we note, the word “insert” is not even defined in ASTM, and is noticeably absent from ASTM D3775-17 e1. See e.g., Exhibit 2 of Ruling Request.

Further, Niche attempts to explain in their Ruling Request that “[[

]]. . . .” Ruling Request at 2. Thus, Niche asserts, “[[

]].” Id. at 3. We disagree. Niche takes the phrase “laid-in together and parallel,” which is used in 9.1.3 of ASTM D3775-17 e1, to describe purportedly what happens during the weaving process; however ASTM D3775 uses “laid-in together and parallel” to refer to yarns that can be found in the finished fabric. See e.g., Certain Woven Textile Fabrics and Products Containing Same, Investigation No. 337-TA-976, EDIS Doc. No. 568883, Second Amended Complaint (Nov. 12. 2015) at ¶ 62 (“The thread count is a measurement of how many yarns – individual spun threads – can be found in a square inch of fabric.”) (emphasis added). Again, as noted, Niche has not provided CBP with any samples of the articles at issue, thus CBP was not able to test these articles. However, for reference purposes, looking at the example picture below of cotton staple yarns in the FILLING direction of a 100% cotton sheet, we note that we can see multiple yarns per pick. Each pick in the photomicrograph of the 100% cotton sheet (see e.g., the red brackets) contains multiple yarns. Each yarn is separate, and is counted for purposes of the thread count. In contrast, Niche has not shown, or provided pictures of the multifilament polyester yarns in the FILLING direction of the articles at issue to show whether it is possible to identify multiply yarns per pick under magnification, or if it not possible to do so, explain for example, how without any guidance or information from the applicant, the laboratory would know to look for, and consistently identify, more than one yarn that is allegedly “laid-in and parallel.”

Based on the information provided by Niche in its Ruling Request, it is CBP’s position that Niche has not met its burden to show that the articles at issue are not subject to the general exclusion order issued in the 976 investigation. Specifically, the “sample documentation” provided with Niche’s Ruling Request is not sufficient “to meet the importer’s burden with respect to paragraph 3 of the March 20, 2017 General Exclusion Order issued in . . . Investigation No. 337-TA-976. . . .” Ruling Request at 1.

No Self Certification

The exclusion order in this case also contains a standard certification provision. See e.g., Certain Road Construction Machines and Components Thereof, Inv. No. 337-TA-1088 (Modification), Commission Opinion (Sept. 14, 2020) at 14 (the certification the Commission stated was “standard” is substantially identical to the one in ¶ 3 of the 976 GEO). “The standard [certification] provision does not allow an importer to simply certify that it is not violating the exclusion order . . . . CBP only accepts a certification that the goods have been previously determined by CBP or the Commission not to violate the exclusion order.” Certain Network Devices, Related Software and Components Thereof (I), lnv. No. 337-TA-944, Comm’n Op. at 54 n.19 (June 23, 2016), USITC Pub. 4909, (June 2019). As shown above, CBP found that the “sample documentation” provided with Niche’s Ruling Request is not sufficient to show that the articles at issue do not violate the exclusion order. Thus, there has been no finding by CBP that the articles at issue do not violate the exclusion order.

In addition, we found nothing in the 976 investigation to indicate that the articles at issue were previously determined by the Commission to not violate the exclusion order. The exclusion order issued in the 976 investigation is a general exclusion order. See, e.g., Comm’n Op. at 7 (“The Commission has determined to issue a general exclusion order pursuant to 19 U.S.C. § 1337(d)(2) prohibiting entry into the United States of certain woven textile fabrics and products containing the same that falsely advertise their thread counts. The requirements of 19 U.S.C. § 1337(d)(2) are met.”). Thus, the 976 GEO bars the importation of certain woven textile fabrics and products containing the same that falsely advertise their thread counts by everyone. See, e.g., Yingbin-Nature (Guangdong) Wood Indus. Co., 535 F.3d at 1330.

Further, while [[ ]] was terminated from the 976 investigation based on a settlement agreement and consent order stipulation, nothing in the underlying investigation record shows that there was a determination by the Commission that “Chief Value Cotton bed linens” manufactured by [[ ]] did not falsely advertise through the misrepresentation of thread count, or did not violate section 337. See, e.g., See Certain Woven Textile Fabrics and Products Containing Same, Investigation No. 337-TA-976, EDIS Doc. No. 578722, ALJ Order 13 (April 16, 2016); Certain Woven Textile Fabrics and Products Containing Same, Investigation No. 337-TA-976, EDIS Doc. No. 581179, Notice of Commission Decision Not to Review (May 13, 2016). Indeed, there are no carve outs or exceptions in the 976 GEO for [[ ]] or articles manufactured by [[ ]]. See 976 GEO. Further, as articulated in 19 U.S.C. § 1337(c)(2), “[t]he Commission shall determine, with respect to each investigation conducted by it under this section, whether or not there is a violation of this section, except that the Commission may, by issuing a consent order or on the basis of an agreement between the private parties to the investigation, including an agreement to present the matter for arbitration, terminate any such investigation, in whole or in part, without making such a determination.”) (emphasis added). Because [[ ]] exited the investigation early, there is no determination from the Commission on which [[ ]] can rely on to show that its articles do not violate section 337.

Accordingly, as (1) there has been no determination by the Commission, as of the date of this ruling, regarding the articles at issue and whether they are subject to the 976 GEO; and (2) CBP has not found that the articles at issue are not subject to the 976 GEO, the certification procedure outlined in paragraph 3 of the 976 GEO does not apply to the articles at issue. See, e.g., Eaton Corp. v. United States, 29 C.I.T. 1149, 1164 (Ct. of Int’l Trade 2005) (“An interpretation of the subject certification provision such that the provision would apply to [articles] for which no determination on infringement has been made by either the Commission or Customs would be contrary to the Commission’s long-standing practice.”).

Should Niche wish to submit another request for an administrative ruling addressing at least the deficiencies noted supra, and should CBP subsequently find that Niche has successfully met its burden to show that the articles it seeks to import are not subject to the general exclusion order issued in investigation no. 337-TA-976, CBP may exercise its discretion at that time to permit certification. See ¶ 3 of 976 GEO. Or, should the Commission later determine that the articles at issue do not violate the 976 GEO, CBP may also exercise its discretion at that time to permit certification. However, at present, there has been no finding by either CBP or the Commission that the articles at issue do not falsely advertise through the misrepresentation of thread count, thus there is no basis to use the certification provision in paragraph 3 of the GEO issued in the 976 investigation.

V. HOLDING CBP’s position is Niche has not met its burden to show that the articles at issue are not subject to the 976 GEO. CBP further found no determination by the Commission, as of the date of this ruling letter, either in the 976 investigation, or in any subsequent ancillary proceeding, that the articles at issue do not violate the 976 GEO. Accordingly, Niche is not permitted to use the standard certification provision provided in paragraph 3 of the 976 GEO.

The decision is limited to the specific facts set forth herein. If articles differ in any material way from the articles at issue described above, or if future importations vary from facts stipulated to herein, this decision shall not be binding on CBP as provided from in 19 C.F.R. Part 177.2(b)(1), (2), and (4), and Part 177.9(b)(1) and (2).

Sincerely,

(for) Chief, Exclusion Order Enforcement Branch
Regulations and Rulings, Office of Trade
U.S. Customs and Border Protection