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August 22, 1985


The opinion of the court was delivered by: SIFTON



This is an action brought by Olympus Corporation, a New York Corporation, doing business in Nassau County, for declaratory and injunctive relief against the enforcement of 19 C.F.R. § 133.21(c), which provides that certain restrictions upon the importation of trademarked goods do not apply when "the foreign and domestic trademark . . . owners are Parent and subsidiary companies or are otherwise subject to common ownership and control."

 As set forth in this Court's Memorandum and Order of November 15, 1984, it is essentially undisputed that plaintiff is the exclusive United States distributor of Olympus-brand optical products, including photographic products and accessories such as cameras, lenses, flash units, and filters, all of which are manufactured in Japan, and that it owns the rights in this country to the Olympus trademark for those products. Olympus is a subsidiary corporation of Olympus Optical Company Ltd. ("Olympus Optical"), a Japanese corporation which is the manufacturer of Olympus-brand products, and the owner of the rights to the Olympus mark in Japan.

 Defendants are the United States of America; Donald T. Regan, in his capacity as Secretary of the Treasury; and William Von Raab, Commissioner of the United States Customs Service (the "federal defendants"). In addition, 47th Street Photo and K-Mart Corporation have sought leave to intervene as defendants. It is not disputed that 47th Street Photo is a New York City retailer of electronic equipment, including Olympus-brand products or that K-Mart is a national retailer operating more than 2,000 stores. Both proposed defendant-intervenors sell or propose to sell so-called "gray market" goods, as hereinafter defined, to consumers at discount prices.

 In April 1978, the United States Customs Service accepted the Olympus trademark for import protection, pursuant to 15 U.S.C. § 1124 ("Section 42") and 19 U.S.C. § 1526 ("Section 526"). However, Customs specifically declined to prohibit importation into the United States by unrelated third parties (such as K-Mart and 47th Street Photo) of merchandise bearing the Olympus trademark and manufactured by Olympus Optical. Olympus alleges in its complaint that 19 C.F.R. § 133.21(c), which permits the importation of what are colloquially referred to as "diverted" or "gray market" goods -- goods produced by a foreign manufacturer and bearing that manufacturer's trademark which are purchased abroad and imported by persons other than that manufacturer's authorized distributor -- isultra vires. Plaintiff argues that the regulation is inconsistent with two statutes, 15 U.S.C. § 1124 and 19 U.S.C. § 1526, which together prohibit the importation into the United States of goods bearing a trademark identical or confusingly similar to a mark owned by a United States citizen or corporation which is registered with the United States Patent and Trademark Office and recorded with the United States Custom Service, without the authorization or consent of the American trademark proprietor. Olympus accordingly requests that this Court enjoin the Customs Service from enforcing the provisions of 19 C.F.R. § 133.21(c)(2) as to it.

 Because of the controversy surrounding the current Customs' regulations, the Customs Service on May 21, 1984, published a notice soliciting economic data from the public concerning the effects of the importation of gray market goods. In addition, two actions seeking relief similar to that sought by Olympus were brought in other forums. First, inVivitar Corp. v. United States, 7 C.I.T. 170, 585 F. Supp. 1419, and 593 F. Supp. 420 (C.I.T. 1984),aff'd, 761 F.2d 1552 (1985),rehearing denied, No. 84-1638 (D.C. Cir. June 12, 1985), Vivitar sought a writ of mandamus in the Court of International Trade to compel Customs to revise 19 C.F.R. § 133.21. In addition, inCoalition to Preserve the Integrity of American Trademarks v. United States, 598 F. Supp. 844 (1984), (the so-called "COPIAT" case), an association of foreign manufacturers sought declaratory and injunctive relief halting the administration of 19 C.F.R. § 133.21. Recently, defendants in both cases have been granted summary judgment, and theVivitar decision has been affirmed on appeal by the Court of Appeals for the Federal Circuit.

 By Memorandum and Order dated November 15, 1984, the undersigned denied a motion by the federal defendants seeking dismissal of the complaint for lack of subject matter jurisdiction. That decision did not address a number of other motions filed by the parties and proposed intervenors. The matter, therefore, is now before the Court for consideration of the balance of motions: the motions of K-Mart and 47th Street Photo for leave to intervene, the motions of the federal defendants and proposed intervenors for dismissal or a stay due to plaintiff's alleged failure to exhaust administrative remedies and under the doctrine of primary jurisdiction, the motions of the federal defendants and proposed intervenors for a stay pending resolution ofVivitar andCOPIAT and transfer of venue to the district of the District of Columbia, the motion of proposed intervenor 47th Street Photo for dismissal for failure to state a claim upon which relief can be granted, plaintiff's motion for summary judgment, and the cross-motions of the federal defendants and proposed intervenors for summary judgment.

 Motions for Intervention As of Right

 Under Rule 24(a)(2), a proposed intervenor must show that (1) the application is timely, (2) the applicant claims an interest relating to the property or transaction which is the subject matter of the action, (3) the protection of the interest may, as a practical matter, be impaired by the disposition of the action, and (4) the interest is not adequately protected by an existing party.United States Postal Service v. Brennan, 579 F.2d 188, 191 (2d Cir. 1978). The parties do not dispute that proposed intervenors' applications are timely.

 With respect to the second requirement, the Court of Appeals for this Circuit has recently noted:

 "The term 'interest' in this context defies a simple definition. Before the 1966 amendment, Rule 24(a) allowed intervention as of right only where the applicant 'is or may be bound by a judgment in the action' or where the 'applicant is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof.' Clearly, the 1966 amendment was intended to expand the right to intervene beyond those situations. However, as another court has aptly observed, 'the amendments made the question of what constitutes an "interest" more visible without contributing an answer.'

 "In discussing 'interest in the context of intervention as of right,' the Supreme Court has stated that the interest must be 'significantly protectable.' Moreover, it is said that such an interest must be direct as opposed to remote or contingent.

 "These definitions are, of course, imprecise, but it is difficult to be more than general in stating criteria designed to cover the multitude of possible intervention situations."

 Restor-A-Dent Dental Lab v. Certified Alloy Products, 725 F.2d 871 (2d Cir. 1984) (citations omitted).

 Applying these principles to the applications before me, I conclude that the interests of 47th Street Photo, but not those of K-Mart, rise to a level sufficient to require intervention as of right.

 47th Street Photo has submitted affidavits which are essentially undisputed indicating that it purchases a substantial quantity of Olympus products from authorized distributors of Olympus merchandise abroad. According to these documents, if 47th Street Photo were forced to purchase the Olympus products that it sells solely from United States distributors, which would happen only if plaintiff prevailed in this action, it would be unable to continue selling Olympus products at discount prices. In addition, 47th Street Photo's access to other foreign-manufactured gray market products, which apparently are not available through the manufacturer's United States distributors, would be curtailed. Overall, 47th Street Photo's ability to do business would be substantially threatened.See NYPIRG v. Regents, 516 F.2d 350 (2d Cir. 1975);see also Planned Parenthood v. Citizens for Community Action, 558 F.2d 861 (8th Cir. 1977);Atlantic Refining Co. v. SOCAL, 113 U.S. App. D.C. 20, 304 F.2d 387 (D.C. Cir. 1962).

 K-Mart, while a substantial purchaser of gray market goods, stands in a somewhat different position with respect to this case because it merely claims to be a "potential customer for imported Olympus gray market products." Its interest, therefore, is more remote and contingent. In one sense, K-Mart's position is analagous to that of the pharmacists inNYPIRG, supra, because K-Mart seeks to intervene in a suit challenging a regulation quite possibly inimical to its livelihood.Compare Atlantic Refining, supra,and Natural Resources v. U.S. Nuclear Reg. Comm., 578 F.2d 1341 (10th Cir. 1978)with Wade v. Goldschmidt, 673 F.2d 182 (7th Cir. 1982)and Rosebud Coal Sales Co. v. Andrus, 644 F.2d 849 (10th Cir. 1981). However, I am persuaded by practical considerations recently discussed inRestor-A-Dent, supra, to deny K-Mart's motion to intervene as of right. Most importantly, to open the door to K-Mart's intervention as of right would do so to a class of persons or entities only remotely affected by the outcome of a challenge to a federal regulation and would preclude exercise of discretion in weighing the adverse effect of intervention on the prosecution of the plaintiff's cause of action.Restor-A-Dent, supra, at 876;see also United States ex rel. Carmona v. Ward, 416 F. Supp. 276, 279 (S.D.N.Y. 1976). Accordingly, K-Mart's motion for intervention as of right is denied because the applicant claims too remote and contingent an interest in the property or transaction that is the subject matter of this action.

 As to the third requirement, quite clearly, 47th Street Photo's ability to protect its interests will, as a practical matter, be impaired if 47th Street Photo is not permitted to intervene. Although apprehension concerning the force ofstare decisis will not support intervention in all cases,Oneida Indian Nation v. State of New York, 732 F.2d 261 (2d Cir. 1984), its effect under the circumstances presented here, presenting a significant case of apparent first impression, suffices to establish the third element ofBrennan. Natural Resources Defense Council, supra, 578 F.2d at 1345,see ...

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