United States Court of Appeals for the Federal Circuit
05-5178
ACADIA TECHNOLOGY, INC.,
and
GLOBAL WIN TECHNOLOGY, LTD.,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee.
Mattaniah Eytan, of Corte Madera, California, argued for plaintiffs-appellants.
Marla T. Conneely, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for defendant-appellee.
With her on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director; and Mark A. Melnick, Assistant Director. Of counsel was Marta Whearley, Office
of Assistant Chief, U.S. Bureau of Customs and Border Protection, of San Francisco,
California.
Brian F. Burke, Baker & McKenzie LLP, of Washington, DC, for amicus curiae. With
him on the brief was Kristine E. Pirnia. Of counsel on the brief were Nancie G. Marzulla
and Roger J. Marzulla, Defenders of Property Rights, of Washington, DC.
Appealed from: United States Court of Federal Claims
Senior Judge Robert H. Hodges, Jr.
United States Court of Appeals for the Federal Circuit
05-5178
ACADIA TECHNOLOGY, INC.,
and
GLOBAL WIN TECHNOLOGY, LTD.,
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: August 8, 2006
___________________________
Before BRYSON, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit
Judge.
BRYSON, Circuit Judge.
The appellants, importers of computer parts, contend that their imported goods
were taken without just compensation, in violation of the Fifth Amendment, when the
government seized their goods upon importation and did not return them for a period of
more than four years. The Court of Federal Claims held that the appellants failed to
state a claim on which relief could be granted. Acadia Tech., Inc. v. United States, 65
Fed. Cl. 425 (2005). We affirm.
I
Appellants Acadia Technology, Inc., and Global Win Technology, Ltd.,
(collectively, “Acadia”) own the property at issue in this appeal, 20,923 cooling fans for
computer central processing units. Acadia sought to import those goods into the United
States in three shipments in October 1997 and February 1998.
Underwriters Laboratories (“UL”) is a testing laboratory that examines and tests
various products for compliance with safety standards. If UL finds that a manufacturer’s
goods comply with applicable standards, UL authorizes the manufacturer to affix UL’s
certification marks to its goods. The “reverse UR” is a certification mark that UL issues
for electrical components of multi-component devices (such as computer cooling fans).
Section 42 of the Lanham Act, 15 U.S.C. § 1124, forbids importation of
merchandise “which shall copy or simulate a [registered] trademark.” Section 526(e) of
the Tariff Act of 1930, 19 U.S.C. § 1526(e), provides that any merchandise bearing a
counterfeit mark (within the meaning of 15 U.S.C. § 1127) that is imported into the
United States in violation of 15 U.S.C. § 1124 “shall be seized and, in the absence of
the written consent of the trademark owner, forfeited for violations of the customs laws.”
In October 1997, U.S. Customs and Border Protection (“Customs”), acting
pursuant to section 526(e) of the Tariff Act, detained a shipment of Acadia’s cooling
fans that bore the “reverse UR” mark. After receiving a letter from UL on October 16,
1997, stating that UL believed the use of the marks to be unauthorized and counterfeit,
Customs seized the fans. On February 2 and 3, 1998, Customs seized two more
shipments of Acadia’s cooling fans, again after receiving letters from UL stating that UL
believed that the use of the “reverse UR” mark on the fans was unauthorized and
05-5178 2
counterfeit. According to the complaint, the three shipments of cooling fans had a total
value of approximately $125,130 when they were seized.
After Customs seized the fans, it notified Acadia of the seizure and advised
Acadia that it would initiate summary forfeiture proceedings unless Acadia filed a claim
of ownership. In letters dated April 16, 1998, and July 29, 1998, Acadia requested that
Customs terminate the summary forfeiture proceedings. Acadia submitted forms in
which it requested that the matter be transferred to the Department of Justice for the
institution of a judicial civil forfeiture action.
The matter was transferred to the Department of Justice in accordance with
Acadia’s request, but a forfeiture complaint was not promptly filed. On October 8, 2002,
after a period of more than four years, the Department of Justice filed a civil forfeiture
action in the United States District Court for the Northern District of California, seeking
forfeiture of all three of Acadia’s shipments. A year later, on October 15, 2003, the
district court entered a stipulation and order of dismissal. Under the terms of the order,
the forfeiture action was dismissed. The stipulated dismissal provided that each party
was to bear its own costs. The fans were thereafter returned to Acadia. At that point,
according to Acadia’s complaint, the fans had become obsolete and their only value
was as scrap, for which purpose they were worth only about $41,000.
After the dismissal of the forfeiture action, Acadia filed this action in the Court of
Federal Claims, claiming the right to recover the difference between the value of the
fans at the time they were seized and their value when they were returned. The
government moved to dismiss the complaint for lack of subject matter jurisdiction and
for failure to state a claim upon which relief could be granted. In its opposition to the
05-5178 3
government’s motion to dismiss, Acadia conceded that the Court of Federal Claims
lacked jurisdiction over two of its claims, but it argued that the court had jurisdiction over
its claim that the government’s actions violated the Takings Clause of the Fifth
Amendment and that Acadia was entitled to recover the loss in the value of the fans as
just compensation for the taking. The Court of Federal Claims granted the
government’s motion to dismiss the takings claim for failure to state a claim, and Acadia
now appeals.
II
Acadia argues that the government’s actions constituted a taking for two
independent reasons. First, Acadia argues that the seizure of its goods was a taking
because it was not authorized by the statute under which Customs seized Acadia’s
goods. Second, Acadia argues that the government’s delay of several years in initiating
forfeiture proceedings was unreasonable and therefore constituted a taking regardless
of whether the initial seizure was lawful.
A
With respect to the lawfulness of the original seizure, Acadia contends that 19
U.S.C. § 1526(e), the statute on which Customs relied to seize the cooling fans, applies
only to counterfeit trademarks, and not to false certification marks such as the “reverse
UR” mark at issue in this case. Section 1526(e) provides that any merchandise
“bearing a counterfeit mark (within the meaning of section 1127 of title 15) imported into
the United States in violation of the provisions of section 1124 of title 15, shall be seized
and . . . forfeited for violations of the customs laws.” 19 U.S.C. § 1526(e). Section 1127
of title 15 defines a “mark” to include “any trademark, service mark, collective mark, or
05-5178 4
certification mark,” and it defines “counterfeit” as “a spurious mark, which is identical
with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127.
Section 1124 of title 15 provides, in pertinent part, that “no article of imported
merchandise . . . which shall copy or simulate a trademark registered in accordance
with the provisions of [the Lanham] Act . . . shall be admitted to entry.” 15 U.S.C.
§ 1124. Acadia points to the use of the term “trademark” in section 1124 and argues
that section 1124 (and thus the seizure and forfeiture provisions of section 1526(e))
apply to trademarks, but not to certification marks. For that reason, Acadia argues, the
seizure of Acadia’s cooling fans was unlawful and therefore compensable as a taking.
Both the trial court in this case and the United States District Court for the
Northern District of California in United States v. 10,510 Packaged Computer Towers,
152 F. Supp. 2d 1189, 1194-97 (N.D. Cal. 2001), have disagreed with Acadia’s
construction of section 1526(e) and have held that the statute applies to counterfeit
certification marks as well as counterfeit trademarks. This court has never addressed
that question, and it is unnecessary for us to do so here. For purposes of determining
whether there has been a taking of Acadia’s property without just compensation, it is
unnecessary to determine whether section 1526(e) applies to the particular goods at
issue in this case. That is because a takings claim is separate from a challenge to the
lawfulness of the government’s conduct: a taking does not result simply because the
government acted unlawfully, nor does a takings claim fail simply because the
government’s conduct is subject to challenge as unlawful.
As we explained in Rith Energy, Inc. v. United States, 247 F.3d 1355 (Fed. Cir.
2001), “an uncompensated taking and an unlawful government action constitute ‘two
05-5178 5
separate wrongs that give rise to two separate causes of action.’” Id. at 1365 (quoting
Del-Rio Drilling Programs, Inc. v. United States, 146 F.3d 1358, 1364 (Fed. Cir. 1998)).
“[A] property owner is free either to sue in district court for asserted improprieties
committed in the course of the challenged action or to sue for an uncompensated taking
in the Court of Federal Claims.” Id. As such:
[I]n a takings case we assume that the underlying action was lawful and
we decide only whether the governmental action in question constituted a
taking for which compensation must be paid. [The appellant’s] complaints
about the wrongfulness of the [government action] are therefore not
properly presented in the context of its takings claim. The only question
before us is whether [the appellant] was entitled to be compensated for
the effects of that action.
Rith Energy, Inc. v. United States, 270 F.3d 1347, 1352-53 (Fed. Cir. 2001) (on petition
for rehearing); see also Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 543 (2005); Lion
Raisins, Inc. v. United States, 416 F.3d 1356, 1369 (Fed. Cir. 2005) (“We have made
clear that a claim premised on a regulatory violation does not state a claim for a
taking.”); John Corp. v. City of Houston, 214 F.3d 573, 579 n.9 (5th Cir. 2000) (citing
cases for the proposition that “the Takings Clause presupposes legitimate government
action”); Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir. 1997) (Tucker Act
does not create jurisdiction in the Court of Federal Claims for a party contesting the
propriety of a seizure); Tabb Lakes, Ltd. v. United States, 10 F.3d 796, 802 (Fed. Cir.
1993) (“[The] claimant must concede the validity of the government action which is the
basis of the taking claim to bring suit under the Tucker Act.”); Fla. Rock Indus., Inc. v.
United States, 791 F.2d 893, 905 (Fed. Cir. 1986). Acadia’s assertion that Customs’
actions ran afoul of the Customs statutes therefore does not form the basis for a legal
claim under the Takings Clause of the Fifth Amendment. See Lion Raisins, 416 F.3d at
05-5178 6
416 (“Because Lion’s takings claim was premised on the allegations that the
[government agency] violated the statute and regulations, the Court of Federal Claims
properly dismissed the complaint.”). For takings purposes, we therefore must assume
the government conduct at issue in this case was not unlawful.
Assuming that Customs’ seizure of Acadia’s goods was lawful, the question
presented by Acadia’s first argument becomes whether the seizure of property to
enforce an intellectual property provision of the Tariff Act is the sort of “public use” of
private property for which the Takings Clause of the Fifth Amendment requires
compensation. The case law makes clear that it is not.
When property has been seized pursuant to the criminal laws or subjected to in
rem forfeiture proceedings, such deprivations are not “takings” for which the owner is
entitled to compensation. Bennis v. Michigan, 516 U.S. 442, 452-53 (1996); Calero-
Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680 (1974); Van Oster v. Kansas,
272 U.S. 465, 468 (1926). The same rule applies even if the property is seized as
evidence in a criminal investigation or as the suspected instrumentality of a crime, but is
ultimately returned to the owner either because the government does not pursue
forfeiture proceedings or because the owner prevails in a forfeiture action. See, e.g.,
United States v. $7,990.00 in U.S. Currency, 170 F.3d 843, 845-46 (8th Cir. 1999)
(“[T]he government’s temporary possession of seized property that it ultimately returned
to a forfeiture claimant . . . is not a ‘taking’ for Fifth Amendment purposes.”); United
States v. One 1979 Cadillac Coupe de Ville, 833 F.2d 994, 1000 (Fed. Cir. 1987);
United States v. Various Gambling Devices, 478 F.2d 1194, 1198 (5th Cir. 1973); Seay
05-5178 7
v. United States, 61 Fed. Cl. 32, 35 (2004); Crocker v. United States, 37 Fed. Cl. 191,
195-96, aff’d, 125 F.3d 1475 (Fed. Cir. 1997).
In One 1979 Cadillac, the government seized the claimant’s car and brought a
forfeiture action in district court, alleging that the car had been used in a narcotics
transaction. The jury ruled in favor of the owner of the car, and the district court ordered
the government to pay $4,050 in damages, which represented the decrease in value
over the 30 months between the initial seizure and the court’s ruling. 833 F.2d at 996.
We reversed, holding that the government’s seizure and retention of the property did not
constitute a taking. Id. at 1000-01. Similarly, in Seay, the Court of Federal Claims held
that the government did not have a duty to compensate the claimant where the
government seized property and returned it to the claimants in a damaged condition
nearly six years after the seizure. 61 Fed. Cl. at 35. The government’s seizure,
retention, and damaging of the property did not give rise to an actionable claim for a
taking, the court reasoned, because “items properly seized by the government under its
police power are not seized for ‘public use’ within the meaning of the Fifth Amendment.”
Id.
Although there is no underlying allegation of criminal conduct in the present case
as there was in One 1979 Cadillac and Seay, there is no reason to treat civil forfeitures
differently for purposes of takings analysis simply because Congress has directed that
the forfeitures be enforced through civil rather than criminal proceedings. A Customs
seizure of goods suspected of bearing counterfeit marks is a classic example of the
government’s exercise of the police power to condemn contraband or noxious goods,
an exercise that has not been regarded as a taking for public use for which
05-5178 8
compensation must be paid. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1027-
28 (1992) (“[I]n the case of personal property, by reason of the State’s traditionally high
degree of control over commercial dealings, [the owner] ought to be aware of the
possibility that new regulation might even render his property economically worthless.”);
Andrus v. Allard, 444 U.S. 51, 66-67 (1979) (“Regulations that bar trade in certain goods
have been upheld against claims of unconstitutional taking.”); $7,990.00 in U.S.
Currency, 170 F.3d at 845 (“[T]he forfeiture of contraband is an exercise of the
government’s police power, not its eminent domain power.”); see also Lee v. City of
Chicago, 330 F.3d 456, 476 (7th Cir. 2003) (D. Wood, J., concurring) (“[I]n rem
forfeitures of property used for illicit purposes are non-compensable exercises of the
government’s police power.”). While it is insufficient to avoid the burdens imposed by
the Takings Clause simply to invoke the “police powers” of the state, regardless of the
respective benefits to the public and burdens on the property owner, the prohibition on
importing goods bearing counterfeit marks that misrepresent their quality and safety is
the kind of exercise of the police power that has repeatedly been treated as legitimate
even in the absence of compensation to the owners of the imported property. See
generally Calero-Toledo, 416 U.S. at 680 (statutory forfeiture scheme authorizing
forfeiture of a vessel used to transport marijuana does not violate the Takings Clause);
Miller v. Schoene, 276 U.S. 272, 279-80 (1928) (state-ordered destruction of red cedar
trees, hosts to cedar rust, which attacks apple trees held not to be a taking for which
compensation is required: “[W]here the public interest is involved, preferment of that
interest over the property interest of the individual, to the extent even of its destruction,
is one of the distinguishing characteristics of every exercise of the police power which
05-5178 9
affects property.”); Mugler v. Kansas, 123 U.S. 623 (1887) (state law outlawing
manufacture and sale of alcoholic beverages did not constitute a taking of private
property for public use: “A prohibition simply upon the use of property for purposes that
are declared, by valid legislation, to be injurious to the health, morals, or safety of the
community, cannot, in any just sense, be deemed a taking or an appropriation of
property for the public benefit.”).1
B
Acadia’s second argument is that, regardless of the legitimacy of the initial
seizures of the cooling fans, the delay in returning the fans was unreasonable and the
unreasonable delay resulted in a compensable taking. We reject that argument as well.
As in the case of the challenge to the initial seizures, the flaw in Acadia’s argument
regarding unreasonable governmental delay is that it is predicated on the unlawfulness
of the delay. Acadia acknowledged at oral argument that if the delay in this case were
considered reasonable under the circumstances, there would be no taking requiring
compensation under the Takings Clause. Under the authorities cited above, such as
1
In Shelden v. United States, 7 F.3d 1022 (Fed. Cir. 1993), this court held
that an innocent owner of a mortgage interest in property that was subject to a criminal
forfeiture could pursue a takings claim. As we subsequently made clear in Vereda,
Ltda. v. United States, 271 F.3d 1367 (Fed. Cir. 2001), the decision in Shelden was
limited to an in personam criminal forfeiture following the criminal conviction of a third
party, in which an innocent owner-claimant sought to recover his interest in the forfeited
property. It did not involve an in rem forfeiture directed against the property itself.
Shelden and other cases involving claims of innocent third parties with respect to
property that is subject to criminal in personam forfeitures, see, e.g., Froudi v. United
States, 22 Cl. Ct. 290 (1991), are not applicable to in rem seizures and forfeiture
proceedings of the sort at issue in this case, involving alleged contraband or counterfeit
goods. We need not address in this case whether the decision in Shelden is still valid in
light of the subsequent decision of the Supreme Court in Bennis v. Michigan, supra.
05-5178 10
the Rith Energy case, that concession makes clear that the true nature of Acadia’s
action is one for damages based on unlawful conduct by the government, not on a
taking of private property for public use.
Acadia contends that if it cannot obtain compensation through a takings action
for unreasonable delay in instituting forfeiture proceedings, it will have no remedy
against governmental abuse in holding seized property indefinitely without either filing a
judicial forfeiture action against the property or returning it to its owner. In fact, the
courts have recognized a right not to have property held in such settings for an
unreasonable time and have crafted a remedy to vindicate that right. Following the
seizure of property, the owner of the property has a due process right to have the
government either return the property or initiate forfeiture proceedings without
unreasonable delay. See, e.g., United States v. Eight Thousand Eight Hundred & Fifty
Dollars, 461 U.S. 555, 564-67 (1983) (“$8850”); Fuentes v. Shevin, 407 U.S. 67, 80
(1972); United States v. $7,990.00 in U.S. Currency, 170 F.3d 843, 846 (8th Cir. 1999);
United States v. Premises Known as 608 Taylor Ave., 584 F.2d 1297, 1302-05 (3d Cir.
1978) (“[D]ue process . . . requires forfeiture proceedings against seized property be
brought without unreasonable delay.” (citing cases)); United States v. Ivers, 581 F.2d
1362, 1368 (9th Cir. 1978) (“Due Process requires that these proceedings be
commenced with some promptitude.”). In the case of such delay, the Supreme Court
has held that a property owner has a remedy in a United States district court that has
been recognized since the early nineteenth century:
A claimant is able to trigger rapid filing of a forfeiture action if he desires it.
First, the claimant can file an equitable action seeking an order compelling
the filing of the forfeiture action or return of the seized property. See
05-5178 11
Slocum v. Mayberry, [15 U.S. (2 Wheat.) 1, 10 (1817)] (Marshall, C.J.).
Less formally, the claimant could simply request that the Customs Service
refer the matter to the United States Attorney. If the claimant believes that
the initial seizure was improper, he could file a motion . . . for a return of
the seized property.
$8,850, 461 U.S. at 569; see also United States v. Von Neumann, 474 U.S. 242, 244
n.3 (1986). By invoking that remedy, a property owner may force the government either
to return the property or to initiate forfeiture proceedings. If the government
commences forfeiture proceedings after an inordinate delay, the owner may file a
motion with the court requesting dismissal of the proceeding and return of his property
on the ground that the delay has violated his due process rights, even if the property
would otherwise be forfeitable. See $7,990.00 in U.S. Currency, 170 F.3d at 846;
United States v. One 1973 Buick Riviera Auto., 560 F.2d 897, 901 (8th Cir. 1977) (citing
cases); United States v. One Motor Yacht Named Mercury, 527 F.2d 1112, 1114 (1st
Cir. 1975). Such a due process violation may also give rise to a right to money
damages against individual defendants in a court with jurisdiction to grant such a
remedy. See Seguin v. Eide, 720 F.2d 1046, 1047-48 & n.2 (9th Cir. 1983); States
Marine Lines, Inc. v. Shultz, 498 F.2d 1146, 1155-57 (4th Cir. 1974). A violation of due
process rights, however, does not give rise to a claim for money damages against the
United States in the Court of Federal Claims. See James v. Caldera, 159 F.3d 573, 581
(Fed. Cir. 1998); Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir. 1997);
LeBlanc v. United States, 50 F.3d 1025, 1028 (Fed. Cir. 1995).2
2
The Supreme Court has suggested that an owner in Acadia’s position
might be able to bring a suit under the Tucker Act for money damages under a theory of
breach of an implied-in-fact contract of bailment between the owner and Customs. See
Kosak v. United States, 465 U.S. 848, 860 n.22 (1984). That theory, however, was not
05-5178 12
In sum, we hold that the trial court correctly dismissed Acadia’s complaint for
failure to state a claim on which relief could be granted. While the Court of Federal
Claims has jurisdiction to enter an award of damages for a violation of the Takings
Clause of the Fifth Amendment, the court correctly held that Acadia’s allegations did not
give rise to a takings claim under the governing authorities.3
AFFIRMED.
asserted in this case, and we express no opinion as to whether the facts in Acadia’s
complaint might support such a claim.
3
The government argues in the alternative that the trial court lacked
jurisdiction over Acadia’s takings claim, principally on the ground that Acadia’s remedy
was in the district court under the comprehensive statutory scheme for administrative
and judicial review of forfeitures. See Vereda, 271 F.3d at 1374-75. A principal thrust
of Acadia’s takings claim, however, was that the government engaged in unreasonable
delay before initiating forfeiture proceedings in this case and that the delay caused
Acadia’s loss. Because the statutory scheme for in rem forfeitures does not provide a
means to address pre-forfeiture delay, the forfeiture statutes do not preempt the
jurisdiction of the Court of Federal Claims over Acadia’s takings claim. In this regard,
we follow the court’s analysis in Vereda, 271 F.3d at 1376, where the court explained
that the takings claim in Shelden was not preempted because, under circumstances
such as those in Shelden and in this case, the civil forfeiture statutes did not provide the
plaintiff with “specific and comprehensive scheme for administrative and judicial review”
of its claim of a violation of its rights in the subject property.
05-5178 13