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 47 th 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 the manufacturer’s authorized distributor — is ultra 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 *914 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, in
Vivitar Corp. v. United States,
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 inter-venors. 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 of Vivitar and COPIAT and transfer of venue to the district of the District of Columbia, the motion of proposed inter-venor 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 inter-venors 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,
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 *915 cover the multitude of possible intervention situations.”
Restor-A-Dent Dental Lab v. Certified Alloy Products,
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,
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 in
NYPIRG, 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.,
As to the third requirement, quite clear: ly, 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 of
stare decisis
will not support intervention in all cases,
Oneida Indian Nation v. State of New York,
Finally, as to the fourth element of the
Brennan
analysis, I conclude that 47th Street Photo has met its burden of establishing that the Government’s representation may be inadequate because 47th Street Photo’s interests, as well as its perspective and expertise, may differ significantly from those of the Government’s. This burden is minimal,
Trbovich v. U.M.W.,
Accordingly, 47th Street Photo’s motion for intervention as of right is granted.
K-Mart’s Motion for Permissive Intervention
Under Rule 24(b), a district court may, in its discretion, permit intervention when “an applicant’s claim or defense and the main action have a question of law or fact in common.” In exercising its discretion the district court must principally consider “whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.” Additional considerations include the nature and extent of the intervenor’s interests, whether its interests are adequately represented by the other parties, whether the applicant will benefit by intervention, and whether the applicant will significantly contribute to full development of the underlying factual issues in the suit and to the just and equitable adjudication of the legal question presented.
Brennan, supra,
Having considered these factors in the context of the present ease, I conclude that K-Mart’s motion for permissive intervention should be granted. K-Mart’s defenses and the instant action plainly concern a common question of law or fact, the validity of 19 C.F.R. § 133.21(c). In addition, since K-Mart has raised different legal arguments to support the regulation, its interest may not be adequately represented by 47th Street Photo and the Government and may contribute to more complete development of the record. Most importantly, the enormity of K-Mart’s economic stake in the validity of the regulation in question, 1 though too contingent to justify intervention as of right, weighs heavily in favor of permissive intervention.
The foregoing determinations differ from those reached by the Court of International Trade in
Vivitar,
Motions for Dismissal or Stay
Primary Jurisdiction.
In
United States v. Philadelphia National Bank,
“requires judicial abstention in cases where protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme.... Court jurisdiction is not thereby ousted, but only postponed.”
In this Circuit primary jurisdiction is said to be based upon “a desire for uniformity of regulation and the need for an initial consideration by a body possessing special expertise in the issue presented.”
Board of Education of City School District v. Harris,
Applying these considerations to the instant case, I find it unnecessary and inappropriate to defer to the Treasury Department’s factfinding expertise because the issue presented is strictly legal and within the expertise of the judiciary.
Board of Education of City School District, supra,
In sum, then, the issue is not peculiarly within the agency’s discretion and has been before the agency for consideration formally and informally for several years. There is no compelling reason for this Court to defer its jurisdiction and postpone indefinitely consideration of the regulation at issue. I, therefore, decline to dismiss this case pursuant to the doctrine of primary jurisdiction.
Exhaustion of Administrative Remedies.
Federal defendants and intervenor-defendants correctly note that exhaustion of prescribed administrative remedies must generally precede resort to the federal judiciary.
Myers v. Bethlehem Ship Building Co.,
It is well recognized that several exceptions to the exhaustion doctrine exist, including,
inter alia,
the rule that the doctrine is inapplicable “when the issues presented to the court revolve around statutory interpretation.”
Touche Ross & Co. v. SEC,
“... and (3) when, as in the particular circumstances of this case, Touche Ross requested this Court to adjudicate the question whether the Commission has the authority to promulgate Rule 2(3) and to proceed thereunder.”
Id. at 574 (emphasis in original). Upon examination of the facts before it, the Touche Ross court concluded that agency expertise and discretion were unnecessary because “the issue is one of purely statutory interpretation.” Id. at 577.
The
Touche Ross
court held, in relevant part, that “because there is no need for further agency action to enable us to reach the merits ... appellants need not exhaust the administrative remedies.”
Id.
at 574. The Court of Appeals has held exhaustion to be unnecessary in other cases where the underlying purposes of the doctrine as outlined by the Supreme Court in
McKart, supra,
The instant case presents a situation virtually identical to that existing in Touche Ross. Plaintiff herein challenges the validity of an agency regulation, § 133.21(c), and the agency’s statutory authority to issue it. Determination of that question is properly vested in the federal judiciary because there is no difficulty in obtaining and identifying the relevant facts through analysis of the legislative and administrative history.
Further, exhaustion of administrative remedies is unnecessary for other reasons. Exhaustion is unnecessary where administrative remedies would be futile. Here, the Treasury Department has already decided not to modify the regulation.
See
Olympus Exhibit F;
see Diapulse Corp., supra.
The fact that plaintiff may petition the agency for amendment or rescission of the regulation is not determinative.
See Consumers Union v. Miller,
*919
Finally, defendant’s reliance on
Seafarers International Union of North America, AFL-CIO v. United States Coast Guard,
For all the foregoing reasons, federal defendants’ and defendant-intervenors’ motions to dismiss or stay this action on grounds of primary jurisdiction or failure to exhaust administrative remedies are denied.
Motions for Stay or Transfer of Venue
Because COPIAT and Vivitar have been decided during the pendency of these motions, the issues raised by defendants’ motions for a stay or transfer of venue are moot.
Motion to Dismiss for Failure to State a Claim
Defendant-intervenor 47th Street Photo contends that plaintiff’s complaint fails to state a claim under Section 42 of the Lan-ham Act, 15 U.S.C. § 1124, which provides in pertinent part that “no article of imported merchandise ... which shall copy of simulate a trademark registered in accordance with the provisions of this chapter ... shall be admitted to entry at any customhouse of the United States.... ” Plaintiff contends that this statute affords it protection against the importation by third parties of goods bearing authentic Olympus trademarks.
Section 42 of the Lanham Act is, with slight modifications, a re-enactment of Section 27 of the Trademark Act of 1905. 33 Stat. 724. It is agreed that up until
A. Bourjois & Co. v. Katzel,
While the Katzel decision was pending before the United States Supreme Court, Congress, after limited debate, enacted Section 526 of the Tariff Act, 19 U.S.C. § 1526. In 1923, the Supreme Court reversed the Second Circuit opinion in Katzel and held that the defendant could be enjoined from selling imported merchandise which was the authentic product of the French manufacturer and bore its trademark. This decision has been interpreted in two ways. One reading, urged herein by plaintiff, is that importation was prohibited under trademark law because such goods imported by anyone other than the American trademark registrant violated the holder’s property right in that trademark. The other reading, asserted herein by defendants, concludes that the Katzel holding was premised largely on the equities of the facts in the case — specifically, the unfairness of permitting the foreign manufacturer, which had sold its trademark rights to another, to subsequently have its goods imported into the United States in direct *920 competition with the independent American purchaser of the trademark.
A. Bourjois & Co. v. Aldridge,
The District Court for the District of Columbia, by Judge Johnson, concluded in
COPIAT
that
Katzel
and
Aldridge
were narrow holdings tied to the particular facts of those cases. Having made that finding, Judge Johnson held that, absent the
Katzel
facts, Section 42 of the Lanham Act must be read to apply only to merchandise bearing counterfeit or spurious trademarks that truly “copy or simulate” genuine trademarks. The Court of International Trade, by Judge Restani, did not address Section 42 of the Lanham Act in
Vivitar,
having decided in an earlier opinion that it lacked subject matter jurisdiction to do so.
Vivi-tar, supra.
However, in concluding that Section 526(a) of the Tariff Act could reasonably be read to authorize Customs Service regulation 133.21(c), Judge Restani also apparently read
Katzel
and
Aldridge
in the narrow manner urged herein by defendants. In
Osawa & Co. v. B & H Photo,
As is clear, judicial interpretation of the scope of
Katzel, Aldridge
and Section 42 is split. It appears to this Court that
Katzel
held that the independent owner of the registered trademark had the right to enjoin anyone else from selling the same product under that mark in the United States. In
Katzel,
the Supreme Court emphasized the equities, citing no statute or precedent. Justice Holmes wrote that it would be “most unfair” to permit the French trademark seller to arrange to have its goods marketed in the United States by someone other than the American owner “for the purpose of evading the effect of the transfer.”
This language makes clear, when read in conjunction with Section 42 of the Lanham Act, that a determination as to whether genuine foreign merchandise infringes a domestic trademark holder’s mark cannot be made at the customhouse *921 at the time of importation. If Section 42 regarding goods that “copy or simulate” a domestic trademark were interpreted to apply to genuine foreign merchandise such as that at issue in this case, Customs’ officials would be placed in the position of having to determine at the time of border crossing whether the domestic trademark holder had developed an independent public image in this country. Customs’ officials, in effect, would be given the power to determine infringement at the border, before the issue of domestic good will was clarified. That determination of copying and confusion is appropriately resolved through litigation in the courts where a full factual record can be developed. Accordingly, I conclude that plaintiff’s Section 42 cause of action fails to state a claim for relief and must be dismissed.
Cross-Motions for Summary Judgment
As a preliminary matter, it is necessary to address defendant-intervenors’ assertion that material factual issues exist requiring trial which preclude plaintiff from obtaining summary judgment. Such claimed factual disputes include plaintiff’s alleged injuries, plaintiff’s allegations that gray market imports are “free-riding” on its good will established through an expensive commitment to the Olympus-brand by national advertising, warranty and service programs, and the extent to which Olympus-brand goods are imported, without authorization and sold at a significantly lower wholesale price. These arguments, however, are unpersuasive in the context of the instant action for declaratory and injunc-tive relief. The allegedly disputed facts simply are not material issues relevant to this action under § 526 to invalidate Customs Service regulation § 133.21(c).
Of course, even the legal issue as to the proper construction of § 526 and the reasonableness of regulation § 133.21(c) requires identification and organization of the facts concerning the legislative and judicial history of § 526 and the administrative history regarding the promulgation and application of § 133.21(e). Such inquiry is, however, part of the determination of the law, not a matter of factual dispute. Accordingly, the parties to this action, including intervenors, have briefed in exhaustive detail the history of the statute and regulation in controversy. Although the parties have drawn different conclusions as to the significance or meaning of various legislative, judicial, and agency actions, none of the parties has challenged the basic historical chronology and the factual background of the statute and regulation at issue. Because this is so, the dispute is ripe for judicial interpretation and summary disposition.
The issue for determination, then, is whether § 113.21(c) is inconsistent with § 526 of the Tariff Act and, therefore, ultra vires. Plaintiff asserts that § 526 on its face permits Olympus to exclude all merchandise bearing the Olympus trademark but distributed by anyone other than the domestic mark holder. Plaintiff contends that § 133.21(c) effectively nullifies the protection that it claims Congress intended § 526 to provide United States trademark owners, as supported by the legislative and administrative history of the statute. Defendants contend that the broad language of § 526 cannot be applied without consideration of the intended purpose of the statute. Resorting to the same legislative history cited by plaintiff, defendants conclude the Congress enacted § 526 as a special, limited remedy aimed at protecting American businesses from perceived unfair competition occurring in Kat zel-type factual circumstances. Further, defendants argue that the administrative practice and congressional action or inaction subsequent to enactment of § 526 support their narrower construction of the statute.
Section 526 read literally would indeed give plaintiff the right to exclude all goods bearing the Olympus trademark. However, as Judge Patricia Wald of the District of Columbia Court of Appeals has observed while discussing the Supreme Court’s canons of statutory construction:
*922 “[Although the Court still refers to the ‘plain meaning’ rule, the rule has effectively been laid to rest. No occasion for statutory construction now exists when the Court will not look at the legislative history....”
Wald,
Some Observations on the Use of Legislative History in the 1981 Supreme Court Term,
68 Iowa L.Rev. 195 (1983). It is clear, then, that the Court may examine “the circumstances surrounding enactment” of § 526 including “the evil which it was designed to remedy ... contemporaneous events, [and] the situation ... as it was pressed upon the attention of the legislative body.”
Church of the Holy Trinity v. U.S.,
Having undertaken such review of the legislative history of and administrative practice with respect to § 526, I conclude that the statute was enacted in response to the Second Circuit’s Katzel decision and had a limited purpose. The broad interpretation that plaintiff urges upon the Court is contrary to the reading that is supported by the legislative history, longstanding administrative practice by the Customs Service, relevant judicial decisions, and legislative inaction or acquiescence of all of the above during the decades following enactment of § 526. Because the legislative history has been thoroughly set forth in Judge Restani’s opinion in Vivitar, there is no need to reiterate it herein. Further, Judge Restani and Judge Johnson in Vivi-tar and COPIAT, respectively, have exhaustively discussed the administrative practice of the Customs Service and congressional ratification thereof, again obviating the need for a similar recitation of that history by this Court. The Federal Circuit, however, in affirming Vivitar has stated its majority opinion in lengthy dicta, 5 that § 526 is of broader scope than the regulation. The majority concluded that § 526 should not be given the limited construction urged by defendants herein. In reaching that conclusion, the majority rejected the same arguments presented by defendants herein in favor of a limited construction based upon the legislative history, administrative interpretation, and implied congressional ratification of § 526. Although the Federal Circuit’s opinion is thorough and thoughtful, its conclusion as to the scope of the statute is less persuasive to this Court than that reached in Vivitar and COPIAT.
Accordingly, the motions of K-Mart and 47th Street Photo for leave to intervene are granted; the motions of the federal defendants and defendant-intervenors for dismissal based on the doctrines of primary jurisdiction or exhaustion and for stay or transfer of venue are denied; the motions of 47th Street Photo for dismissal of the Section 42 claim is granted; plaintiff’s motion for summary judgment is denied; and the cross-motions of all defendants for summary judgment on the § 526 claim are granted.
The clerk is directed to enter judgment dismissing the complaint and to mail a copy of the within to all parties.
SO ORDERED.
Notes
. K-Mart alleges and the parties don't dispute that it purchases $250-300 million annually of gray market goods.
. The court in Vivitar granted 47th Street Photo’s motion for intervention as of right and denied K-Mart’s application for similar relief.
. During a status conference on June 11, 1984, counsel for the United States, in response to a question from the Court, stated that "we don't contemplate for [sic] remand to the agency because the agency at this stage believes that its regulation is valid_’’ Tr. at p. 15.
. I do not reach a conclusion as to whether plaintiff has formally exhausted all potential avenues of agency review. However, as noted earlier, it appears that plaintiffs position has long been before the agency for consideration, and the agency has chosen, for its own policy, administrative or political reasons, not to issue a conclusive determination.
. As Judge Davis stated in his concurring opinion criticizing the majority’s "wholly inappropriate ... dicta” in Vivitar:
“All that we hold in this case is that the Customs regulation is now valid as a Customs enforcement regulation.”