ITC Revisits Issue of Thread Count of Bed Sheets

On March 24, 2017, the United States International Trade Commission published in the Federal Register (82 FR 1506), notice the Commission has issued a general exclusion order barring entry of certain woven textile fabrics and products containing same.

The Commission instituted this investigation on December 18, 2015, based on complaint filed by AAVN, Inc. of Richardson, Texas ("AAVN"). 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 same, by reason of false advertising.

AAVN accused Pradip of false advertising, specifically alleging that Pradip misrepresented the thread count of sheets manufactured in India, imported into the United Sates, and sold in United States department stores.

The Commission determined that the appropriate remedy in this 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.

On March 10, 2021, the United States International Trade Commission published in the Federal Register (85 FR 13731) Certain Woven Textile Fabrics and Products Containing Same; Commission Decision Instituting a Rescission Proceeding and Granting a Petition for Rescission of a General Exclusion Order and Seizure and Forfeiture Orders; Termination of Rescission Proceeding.

On February 3, 2021, AAVN filed a petition to rescind the GEO and SFOs. AAVN contends that it disagrees with the testing protocol used by Customs and Border Protection to determine whether imported articles falsely advertise their thread counts. In particular, AAVN contends that the methodology is too strict as compared to alleged testing conducted by independent testing laboratories. AAVN further contends that the "exclusion of goods, including from AAVN's licensees and customers, even after qualified independent testing labs have confirmed the accuracy of those authorized products' thread counts, harms AAVN's business and its standing with reputable importers." AAVN recognizes that the GEO was originally issued to redress substantial injury to AAVN, but states that "AAVN is ultimately in the best position to evaluate injury to itself," and that rescission of the Commission remedial orders (the GEO and the SFOs issued pursuant to it) "would be less injurious to [AAVN] than continued enforcement of the GEO."

Having reviewed the petition, the opposition thereto, and the record of the investigation, the Commission determined that the petition complies with Commission Rule 210.76, 19 CFR 210.76. The Commission has determined to institute a rescission proceeding and to grant the petition. AAVN's petition alleges that the exclusion of articles pursuant to the GEO exacerbates rather than redresses any injury it faces from imports. Thus, the conditions that led to the issuance of the GEO no longer exist, and the Commission has determined to rescind the GEO. Because an SFO requires a predicate exclusion order, there is no basis to continue enforcement of SFOs after rescission of the underlying GEO. Accordingly, all SFOs in this investigation are likewise rescinded. The rescissions are effective as of the date of the Order issued herewith.

The rescission proceeding is terminated. The GEO and all SFOs are rescinded.

The Commission vote for this determination took place on March 4, 2021.

Certain Woven Textile Fabrics and Products Containing Same; Issuance of a General Exclusion Order

On March 24, 2017, the United States International Trade Commission published in the Federal Register (82 FR 1506), notice the Commission has issued a general exclusion order barring entry of certain woven textile fabrics and products containing same.

The Commission instituted this investigation on December 18, 2015, based on complaint filed by AAVN, Inc. of Richardson, Texas ("AAVN"). 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 same, by reason of false advertising.

AAVN accused Pradip of false advertising, specifically alleging that Pradip misrepresented the thread count of sheets manufactured in India, imported into the United Sates, and sold in United States department stores.

The Commission has determined that the appropriate remedy in this investigation is a general exclusion order prohibiting the entry of certain woven textile fabrics and products containing same that are falsely advertised through a isrepresentation of thread count.

ITC Seeks Public Input in Case of Fraudulently Labeled Bed Sheets from India

The Commission instituted this investigation on December 18, 2015, based on a complaint filed by AAVN, Inc. of Richardson, Texas. 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 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. The notice of investigation named fifteen respondents. In the course of the investigation, fourteen of the respondents were terminated from the investigation based upon settlement agreement or consent order. Remaining is Pradip Overseas Ltd. of Ahmedabad, India.

In the complaint, AAVN accused Pradip of false advertising, specifically alleging that Pradip misrepresented the thread count of sheets manufactured in India, imported into the United Sates, and sold in United States department stores ("800 Thread Count" sheets measured at 252.7 threads). Although Pradip responded to the complaint, Pradip later terminated its relationship with its attorneys and represented that it would not participate in the remainder of the investigation.

On September 2, 2016, AAVN moved for leave to file a summary determination motion. 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, that the false advertising was deceptive, material, and injurious to AAVN. AAVN sought a general exclusion order and 100 percent bond.

On November 10, 2016, the Administrative Law Judge granted the motion for summary determination as the subject 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). As to remedy, citing 19 U.S.C. 1337(d)(2), which sets forth the test for issuance of a general exclusion order, id. at 16, the ALJ found that ``the evidence shows a widespread pattern of violation of Section 337,'' id. at 17. The ALJ also found that ``the evidence shows that it is difficult to identify the source and manufacturers of the falsely advertised products,'' because ``U.S. retailers fail to identify the manufacturer, importer or seller of the textile products at the point of sale.'' Id. at 18. Nor do import records ``reveal the names of the original manufacturers of the materials used to construct the imported products.'' Id. Accordingly, the ALJ found ``that the evidence shows that it is difficult, if not impossible, to identify the sources of the falsely advertised goods.'' Id. Based on these findings the ALJ recommended the issuance of a general exclusion order. Id. In the alternative, the ALJ recommended the issuance of a limited exclusion order. Id. at 19. The ALJ recommended that bond be set at 100 percent of the entered value of the falsely advertised products. Id.

In connection with the final disposition of this investigation, the Commission may (1) issue an order that could result in the exclusion of the subject articles from entry into the United States, and/or (2) issue one or more cease and desist orders that could result in the respondent(s) being required to cease and desist from engaging in unfair acts in the importation and sale of such articles. Accordingly, the Commission is interested in receiving written submissions that address the form of remedy, if any, that should be ordered.

If the Commission contemplates some form of remedy, it must consider the effects of that remedy upon the public interest. The factors the Commission will consider include the effect that an exclusion order and/or cease and desist orders would have on (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) U.S. production of articles that are like or directly competitive with those that are subject to investigation, and (4) U.S. consumers. The Commission is therefore interested in receiving written submissions that address the aforementioned public interest factors in the context of this investigation.

If the Commission orders some form of remedy, the U.S. Trade Representative, as delegated by the President, has 60 days to approve or disapprove the Commission's action. During this period, the subject articles would be entitled to enter the United States under bond, in an amount determined by the Commission and prescribed by the Secretary of the Treasury. The Commission is therefore interested in receiving submissions concerning the amount of the bond that should be imposed if a remedy is ordered.

Written submissions and proposed remedial orders must be filed no later than close of business on January 6, 2017. Reply submissions, if any, must be filed no later than the close of business on January 13, 2017. Such submissions should address the ALJ's recommended determinations on remedy and bonding which were made in Order No. 21. No further submissions on any of these issues will be permitted unless otherwise ordered by the Commission.

Read the complete notice at https://www.gpo.gov/fdsys/pkg/FR-2016-12-27/pdf/2016-31085.pdf