ECONOMIC POLICY COUNCIL MEETING - MAY 19, 1986

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88G01117R000602210002-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: February 22, 2011
• Sequence Number: 2
• Publication Date: May 16, 1986
• Content Type: MEMO

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THE WHITE HOUSE
WASHINGTON
Executive Re is
86- 21 72X
CABINET AFFAIRS STAFFING MEMORANDUM
Date: 5/16/86 Number: 317, 120 Due By: ----
Subject:
Economic Policy Council Meeting - May 19, 1986
1:00 P.M. Roosevelt Room
Action FYI
ALL CABINET MEMBERS ^ ^
Vice President
State
Treasury
Defense
Justice
Interior
Agriculture
Commerce
Labor
HHS
HUD
Transportation
Energy
Education
Chief of Staff
EPA
GSA
NASA
OPM
SBA
VA
REMARKS:
RETURN TO:
CEA
CEQ
OSTP
Poindexter
Svahn
Chew (For WH Staffing)
Executive Secretary for:
DPC
EPC
The Economic Policy Council will meet on Monday,
May 19, 1986 at 1:00 P.M. in the Roosevelt Room.
The background papers on Gray Market Goods are
attached-for your review.
Alfred H. Kingon ^ Don Clarey
Secretary ry ^ Rick Davis
456-2823 ^ Ed Stucky
(Ground Floor, West Wing)
Associate Director
Office of Cabinet Affairs
456-2800 (Room 235, OEOB)
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May 16, 1986
MEMORANDUM FOR THE ECONOMIC POLICY COUNCIL
FROM: EUGENE J. McALLISTER F' /
SUBJECT: Additional Paper for the May 19 Meeting
The paper for the third agenda item at Monday's Economic
Policy Council Meeting, gray market goods, is attached. The
papers on the other items were circulated earlier.
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WASHINGTON
May 16, 1986
MEMORANDUM FOR THE ECONOMIC POLICY COUNCIL
FROM: THE WORKING GROUP ON INTELLECTUAL PROPERTY
SUBJECT: Gray Market Goods
The Economic Policy Council directed the Working Group on
Intellectual Property to draft and publish in The Federal
Register a questionnaire soliciting information on altering the
existing Customs Service policy that permits gray market goods to
enter the United States where the American and foreign rights to
a product trademark are owned by the same or related entities or
individuals. Specifically, the Council requested information on
the relative merits and costs of requiring that such products be
labeled or "demarked", primarily to address consumer-related and
free-rider concerns.
The Working Group has not yet published the questionnaire.
However, on May 6, the Federal D.C. Circuit Court of Appeals in
Coalition to Preserve the Integrity of American Trademarks V.
United States held that the Customs policy, based upon its
interpretation of section 526 of the Tariff Act of 1930, is
invalid. Barring a rehearing by the Appeals Court (an unlikely
prospect), the Court will remand the case to the District Court
with instructions to issue a declaratory judgment that the
Customs Service regulations are unlawful.
In view of this fundamental turn-of-events, the question for the
Administration is whether to continue to consider refinements,
namely labeling or demarking, to the Customs policy permitting
gray market goods, even though that policy may ultimately be
reversed, i.e., should the Appeals Court opinion go unchallenged
and become final, gray market goods would be prohibited from
entering the United States. A split on the matter already exists
in the Federal Circuits, making Supreme Court review on the issue
more likely.
Recommendation
A majority of the the Working Group recommends the Administration
pursue the following course of action.
Move forward, as previously planned, to solicit throw h the
Federal Register information on the merits and costs of
labeling and demarking, but revising the draft to recognize
the potential implications of the COPIAT case.
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o Irrespective of the final outcome of COPIAT, the
Administration nonetheless requires information on the
merits and costs of labeling and demarking to guide it
in making a decision and, if necessary, drafting
implementing legislation.
o If the Appeals Court holding in COPIAT becomes final
and the Administration does not seek Supreme Court
review, gray market qoods will likely be prohibited.
o If that occurs, and the Administration seeks
subsequently to restore the Customs policy permitting
gray market goods or a policy requiring labeling, we
would have to seek implementing legislation.
o On the other hand, if the Appeals Court holding in
COPIAT is overruled, e.g., by the Supreme Court, the
Administration still eventually must seek legislation
should it decide to require specifically that gray
market goods entering the U.S. should be labeled.
Supreme Court Review
The Solicitor General will be formulating a derision as to
whether to seek Supreme Court review of the COPIAT decision.
Any comments to the Solicitor General by interested agencies
should be made through existing, traditional channels.
o If the private defendants in COPIAT, and/or the
Solicitor General request and receive a review by the
Supreme Court, the Customs policy permitting gray
market goods could be upheld.
If the Solicitor General requests review by the
Supreme Court, the chances are improved that the
Supreme Court will agree to hear the case.
If the Second Circuit Court of Appeals, which
is considering a similar case in Olympus v. United
States, upholds the Customs policy permitting gray
market goods, this will further improve the
chances that the Supreme Court will agree to
review the issue.
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