August 31, 2016
CAFC Affirms CIT Decision:
Mobile Device Cases Do Not Qualify as “Containers” Under HTSUS Schedule Heading 4202
Represented by AMS attorneys Lou Mastriani, Page Hall, Beau Jackson, and James Ton-that, Plaintiff Otter Products, LLC (OtterBox) successfully argued that the U.S. Court of International Trade (CIT) correctly decided that U.S. Customs and Border Protection erred in taxing imports of OtterBox cases at a 20% duty under harmonized tariff schedule (HTSUS) Heading 4202. In 2015, the CIT granted OtterBox’s motion for summary judgment, finding that protective cases were more appropriately classified as “other articles of plastic” under HTSUS subheading 3926.90.99, at a duty rate of 5.3%. The United States appealed the CIT’s decision.
At issue was the proper HTSUS classification for the products in question. OtterBox made three arguments: (1) the products at issue are not, by definition, “containers” under HTSUS Heading 4202; (2) they do not share all four essential characteristics of goods listed under Heading 4202, namely “organizing, storing, protecting, and carrying”; and (3) the products have a specific purpose that is inconsistent with that of products under Heading 4202, namely “allow[ing] an article to be placed inside them and/or taken out without much effort by opening or closing the receptacle.”
Judge O’Malley, writing for the panel, stated: “We take this opportunity to clarify that there is no requirement that the subject merchandise meet all four characteristics to qualify as a ‘similar container’ under Heading 4202. Courts should consider the four characteristics collectively and then determine whether, in light of those considerations, the classification would lead to an inconsistency.”
The CAFC upheld the CIT’s conclusion that OtterBox’s products only “minimally resemble containers,” and “it is more common to think of the cases an addition/accessory to the electronic device which can be added or removed at the consumer’s liking.” The result of this litigation should have major impacts on the classification of imported cases, coverings, and other items that protect electronic devices such as smartphones and tablets.
For the full text of the CAFC decision, click on PDF below.