journal - University of Maryland School of Law

26 MD. JOURNAL OF INTERNATIONAL LAW & TRADE [Vol. 14
were valid, the Court held that the "reviewing court must first determine
if [the Customs Service] regulation is consistent with the language
of the statute. ' 34 "If the statute is silent or ambiguous with respect
to the specific issue addressed by the regulation, the question
becomes whether the agency regulation is a permissible construction of
the statute." 3 5
A.
The Court held that § 526 was ambiguous when applied to the
three variations of case 2. An ambiguity is created in case 2a because
the language "bearing a trademark owned by a citizen of, or by a corporation
or association created or organized within . . .the United
States . . . " does not make it clear which company owns the United
States trademark. On one hand it could be argued that the foreign parent,
which owns the American subsidiary also owns the trademark, in
which case the protections provided in § 526 do not apply. On the other
hand it could be argued that it is the American company which owns
the trademark regardless of who owns the American company, and
therefore the protections of § 526 should apply. 36
The Court found a second ambiguity in the phrase "merchandise
of foreign manufacture. '37 When applied to the situations involved in
cases 2b and 2c, it is possible to interpret "merchandise of foreign manufacture"
to mean "goods manufactured in a foreign country" '38 in
which case protection would be granted. But the phrase can also be
read to mean "goods manufactured by a foreign company" 3 9 in which
case § 526 would apply only if the foreign subsidiary or unincorporated
division were considered to be foreign, even though actually owned by
an American company.
The Customs Service regulations contained in subsections (1) and
(2) resolve these ambiguities by removing the protection of § 526
whenever the companies involved are under common control. Thus, a
foreign parent in case 2a is considered to own the trademark and is not
permitted to prohibit the entry of the genuine product. In cases 2b and
2c similar products manufactured by companies abroad are not consid-
34. Id. at 291.
35. Id. (citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837, 843 (1984)).
36. Id. at 292.
37. Id. Only Justice White joined in this particular portion of the opinion.
38. Id.
39. Id.