K Mart Corp. v. Cartier, Inc.

Justice Brennan,

with whom Justice Marshall and Justice Stevens join, and with whom Justice White joins as to Part IV, concurring in part and dissenting in part.

Section 526 of the Tariff Act of 1930 (1930 Tariff Act), 46 Stat. 741, as amended, 19 U. S. C. § 1526, provides extraordinary protection to certain holders of trademarks registered in the United States. A United States trademark holder covered by § 526 can prohibit or condition all importation of merchandise bearing its trademark, thereby gaining a virtual monopoly, free from intrabrand competition, on domestic distribution of any merchandise bearing the trademark. For half a century the Secretary of the Treasury has consistently interpreted § 526 to grant this exclusionary power not to all United States trademark holders, but only to certain ones with specifically defined relationships to the manufacturer. Specifically, Treasury has a longstanding practice, expressed currently in 19 CFR § 133.21 (1987) (Customs Service regulation), of not extending § 526’s extraordinary protection to the very firm that manufactured the gray-market merchandise abroad, to affiliates of foreign manufacturers, or to firms that authorize the use of their trademarks abroad. Consequently, a multibillion dollar industry has emerged around the parallel importation of foreign-manufactured merchandise bearing United States trademarks.

In the face of this longstanding interpretation of § 526’s reach, respondent Coalition to Preserve the Integrity of American Trademarks and its members, most of whom are United States trademark holders or affiliates of United States trademark holders that compete against the gray market, have waged a full-scale battle in legislative, executive, *296and administrative fora against the Customs Service regulation, and particularly the common-control exception, 19 CFR §§ 133.21(c)(1) and (c)(2) (1987). See Eisler, Gray-Market Mayhem: It’s Makers vs. Importers in Lobbying Onslaught, Legal Times, Nov. 17, 1986, p. 1, col. 1. Largely unsuccessful in the political branches, they have more recently brought the battle to the courts, asserting that Treasury is (and, since 1922, has been) statutorily required to extend to them the same exclusionary powers as it extends to what the Court refers to as the “prototypical gray-market victim.” Ante, at 286.1 This is such a suit.

There is no dispute that §526 protects the trademark holder in the first of the three gray-market contexts identified by the Court — the prototypical gray-market situation in which a domestic firm purchases from an independent foreign firm the rights to register and use in the United States a foreign trademark (case 1). See ante, at 292. The dispute in this litigation centers almost exclusively around the second context, involving a foreign manufacturer that is in some way affiliated with the United States trademark holder, whether the trademark holder is a subsidiary of (case 2a), the parent of (case 2b), or the same as (case 2c), the foreign manufacturer. The Customs Service’s common-control exception denudes the trademark holder of §526’s protection in each of the foregoing cases. I concur in the Court’s judgment that the common-control exception is consistent with § 526, but I reach that conclusion through an analysis that differs from Justice Kennedy’s. See ante, at 292-293.

Also at issue, although the parties and amici give it short shrift, is the third context (case 3), in which the domestic firm authorizes an ’ independent foreign manufacturer to use its *297trademark abroad. See ante, at 287, 293-294. The Customs Service’s authorized-use exception, 19 CFR § 133.21(c)(3) (1987), deprives the trademark holder of § 526’s protection in such a situation. For reasons set forth in Part IV of this opinion, I dissent from the Court’s judgment that the authorized-use exception is inconsistent with § 526.

I

A

An assessment of the reasonableness of the Customs Service’s interpretation of § 526 of the 1930 Tariff Act begins, as always, with an assessment of “the particular statutory language at issue, as well as the language and design of the statute as a whole.” Ante, at 291 (citations omitted). Section 526 requires consent of the trademark owner to import a United States trademarked product if (1) the product is “of foreign manufacture”; (2) the trademark it bears is “owned by” either a United States citizen or “a corporation . . . created or organized within . . . the United States”; and (3) “a person domiciled in the United States” registered the trademark.

The most blatant hint that Congress did not intend to extend § 526’s protection to affiliates of foreign manufacturers (case 2) is the provision’s protectionist, almost jingoist, flavor. Its structure bespeaks an intent, characteristic of the times, to protect only domestic interests. A foreign manufacturer that imports its trademarked products into the United States cannot invoke §526 to prevent third parties from competing in the domestic market by buying the trademarked goods abroad and importing them here: The trademark is not “registered in the Patent and Trademark Office.” The same manufacturer cannot protect itself against parallel importation merely by registering its trademark in the United States: It is not “a person domiciled in the United States. ” Nor can the manufacturer insulate itself by hiring a United States domiciliary to register the trademark: The *298owner is not “organized within . . . the United States.” For the same reason, it will not even suffice for the foreign manufacturer to incorporate a subsidiary here to register the trademark on the parent’s behalf, if the foreign parent still owns the trademark.

The barriers that Congress erected seem calculated to serve no purpose other than to reserve exclusively to domestic, not foreign, interests the extraordinary protection that § 526 provides. But they are fragile barriers indeed if a foreign manufacturer might bypass them by the simple device of incorporating a shell domestic subsidiary and transferring to it a single asset — the United States trademark. Such a reading of § 526 seems entirely at odds with the protectionist sentiment that inspired the provision. If a foreign manufacturer could insulate itself so easily from the competition of parallel imports, much of § 526’s limiting language would be pointless.

B

The language of § 526 can reasonably be read, as the Customs Service has, to avoid such an anomaly. Section 526 defines neither “owned by” nor “of foreign manufacture,” and both phrases admit of considerable ambiguity when applied to affiliates of foreign manufacturers. More specifically, in each of the disputed gray-market cases involving a domestic affiliate of a foreign manufacturer (case 2), it cannot be confidently discerned either which entity owns the trademark or whether the goods in question are “of foreign manufacture.”

As every Member of this Court agrees, § 526 does not unambiguously cover the situation in which a domestic subsidiary of a foreign manufacturer registers its parent’s trademark in the United States (case 2a), because the trademark is not clearly “owned by” a domestic firm. See ante, at 292; post, at 318 (opinion of Scalia, J.). “The term [‘owner’] is . . . nomen generalissimum, and its meaning is to be gathered from the connection in which it is used, and from the subject-matter to which it is applied.” Black’s Law Dic*299tionary 996 (5th ed. 1979). But whether “ownership” is the “[c]ollection of rights to use and enjoy property, including [the] right to transmit it to others,” or “[t]he complete dominion, title, or proprietary right in a thing,” or “[t]he entirety of the powers of use and disposal allowed by law,” id., at 997, the parent corporation — not the subsidiary whose every decision it controls — better fits the bill as the true owner of any property that the subsidiary nominally possesses. Cf. Copperweld Corp. v. Independence Tube Corp., 467 U. S. 752, 771 (1984) (parent and wholly owned subsidiary cannot engage in “conspiracy” within meaning of § 1 of the Sherman Act, 15 U. S. C. § 1, because they “always have a ‘unity of purpose or a common design’ ”) (citation omitted) (emphasis in original). Because of this ambiguity “[t]he Patent and Trademark Office takes the position that ownership of marks among parent-subsidiary corporations ... is largely a matter to be decided between the parties themselves.” 1 J. McCarthy, Trademarks and Unfair Competition 748 (2d ed., 1984) (footnote omitted).

The same ambiguity does not, of course, infect cases 2b and 2c. A domestic parent plainly owns the trademark registered in its name, whether or not it also owns a manufacturing subsidiary (case 2b) or division (case 2c) abroad. Nevertheless, § 526 does not unambiguously cover cases 2b and 2c because it is unclear whether merchandise manufactured abroad by a division or a subsidiary of a domestic firm is “merchandise of foreign manufacture.” That phrase could readily be interpreted to mean either “merchandise manufactured in a foreign country” or “merchandise manufactured by a foreigner.” Under the former definition, the merchandise manufactured abroad in cases 2b and 2c would fall within § 526’s ban. Under the latter definition, however, the coverage is not as clear. Surely a domestic firm that establishes a manufacturing facility abroad (case 2c) is not in any sense a foreigner, and it is at the very least reasonable to view as “American” the foreign subsidiary of a domestic firm.

*300HH HH

Even if the language of § 526 clearly covered all affiliates of foreign manufacturers, “[i]t is a ‘familiar rule, that a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers.’”2 It is therefore appropriate to turn to our other “traditional tools of statutory construction” for clues of congressional intent. INS v. Cardoza-Fonseca, 480 U. S. 421, 446 (1987). The purpose and legislative history of § 526 confirm that if Congress had any intent as to the application of § 526 to affiliates of foreign manufacturers, it was that they ought not enjoy § 526’s protection. There is, admittedly, evidence suggesting that some legislators might have understood §526 otherwise. That evidence, however, is slim, ambiguous, and interspersed among more — and more convincing-evidence that Congress had a contrary intent.

A

Section 526 can be fully understood only in the context of the controversial judicial opinion that spawned it. In A. Bourjois & Co. v. Katzel, 275 F. 539 (CA2 1921), rev’d, 260 U. S. 689 (1923), a French producer of “Java” face powder sold to an independent United States company at a considerable premium all its United States business, along with its goodwill and full rights in its United States trademarks. The United States company, Bourjois & Co., registered the newly acquired trademarks under its own' name and continued to import the powder from the French producer, selling it to domestic consumers under the French trademark and its own name. All the while, the United States company went to great expense to develop an identity independent from *301that of the French producer of its product. But much of the expense went to waste, for a competitor began to buy Java directly from the French producer abroad and market it here under the French trademark in competition with Bourjois. In sum, Bourjois was a “prototypical gray-market victim” — a United States trademark holder that purchased its trademark rights, at arm’s length and at substantial cost, from an unaffiliated foreign producer. Ante, at 286.

Despite the apparent unfairness of the competition, the Court of Appeals for the Second Circuit declined to enjoin the encroachment on the trademark holder’s newly purchased market. The court could find no trademark violation so long as the competitor’s French labels accurately identified the product’s manufacturer. It adhered to the then-prevailing “universality” theory of trademark law, a view that it had espoused for several years. See, e. g., Fred Gretsch Mfg. Co. v. Schoening, 238 F. 780, 782 (1916). Under that view, trademarks do not confer on the owner property interests or monopoly power over intrabrand competition. Rather, they merely protect the public from deception by indicating “the origin of the goods they mark.” Katzel, supra, at 643.

While Bourjois, the prototypical (case 1) gray-market victim, evoked little sympathy from the Court of Appeals, it would have been a far less sympathetic plaintiff had it not bargained and paid so dearly for the Java trademark and distribution rights. And the gray-market encroachment on the Java market would have been considerably less troubling had Bourjois had control over the foreign manufacturer’s import conduct or over its sales abroad to third parties who might import; it would essentially have been seeking to protect itself from its own competition.

A comparison of Bourjois to the parties seeking § 526’s protection in this litigation aptly illustrates the profound difference between the equities presented by the prototypical gray-market victim and those implicated in case 2. First, *302the United States trademark holder that, like Bourjois, has purchased trademark rights at arm’s length from an independent manufacturer stands to lose the full benefit of its bargain because of gray-market interference. In contrast, a United States trademark holder that acquires identical rights from an affiliate (case 2a) or creates identical rights itself and permits them to be used abroad by an affiliate (cases 2b and 2c) does not have the same sort of investment at stake.

Second, without §526, the independent trademark purchaser has no direct control over the importation of competing goods, much less over the manufacturer’s sale to third parties abroad. In contrast, if the gray market harms a United States trademark holder in case 2a, 2b, or 2c, that firm and its foreign affiliate (whether a parent, subsidiary, or division) can respond with a panoply of options that are unavailable to the independent purchaser of a foreign trademark. They could, for example, jointly decide in their mutual best interests that the manufacturer (1) should not import directly to any domestic purchaser other than its affiliate; (2) should, if legal, impose a restriction against resale (or against resale in the United States) as a condition on its sales abroad to potential parallel importers; or (3) should curtail sales abroad entirely.

These differences furnish perfectly rational reasons that Congress might have intended to distinguish between a domestic firm that purchases trademark rights from an independent foreign firm and one that either acquires identical rights from an affiliated foreign firm or develops identical rights and permits a manufacturing subsidiary or division to use them abroad.

B

There no dispute that the perceived inequity in case 1, as exemplified by Katzel, was the “major stimulus” for the enactment of § 526. Coalition to Preserve the Integrity of American Trademarks v. United States, 252 U. S. App. D. C. 342, 348, 790 F. 2d 903, 909 (1986) (hereafter COPIAT); see also *303Sturges v. Clark D. Pease, Inc., 48 F. 2d 1035, 1037 (CA2 1931) (A. Hand, J.); Coty, Inc. v. Le Blume Import Co., 292 F. 264, 268-269 (SDNY 1923) (L. Hand, J.). United States trademark holders, many of which had purchased foreign trademarks from unrelated foreign corporations, demanded an immediate legislative response to Katzel. Congress responded with §526 of the 1922 Tariff Act, without even waiting for this Court to reverse the Second Circuit (which it ultimately did three months later). The hastily drafted provision was introduced as a “midnight amendmen[t]” on the floor of the Senate, 62 Cong. Rec. 11602 (1922) (remarks of Sen. Moses), and allotted a miserly 10 minutes of debate, in the context of a debate on a comprehensive revision of tariff (not trademark) law. The specific wording of the response was by no means carefully considered, which provides all the more reason to avoid a hypertechnical interpretation that would “make trouble rather than allay it.” Fort Smith & Western R. Co. v. Mills, 253 U. S. 206, 208 (1920); see United States v. Bass, 404 U. S. 336, 344 (1971).

The language that was originally introduced prohibited in essence the importation, without the trademark owner’s consent, of “any merchandise if such merchandise . . . bears a trade-mark registered in the Patent Office by a person domiciled in the United States.” 62 Cong. Rec. 11602 (1922). As initially drafted, § 526 lacked two of its three current limitations. See supra, at 297. First, it did not limit the import prohibition to goods that were “of foreign manufacture”; that limitation was added later by floor amendment whén an opponent pointed out that the provision as written would preclude, for example, a United States citizen from importing a domestically manufactured product that had been exported to, and then purchased by him in, Canada. Second, the bill lacked the requirement that the trademark be “owned by a citizen of, or by a corporation or association created or organized within, the United States”; that limitation appeared for the first time, without explanation, in the Conference *304Report. H. R. Conf. Rep. No. 1228, 67th Cong., 2d Sess. (1922). See infra, at 306-307.

The sparse legislative history confirms that Congress’ sole goal was to overrule Katzel. Section 526’s sponsors and proponents categorically rejected any suggestion that its effect might be broader than necessary to overrule Katzel on its facts. They emphasized repeatedly that § 526 would serve at the very most to protect domestic companies who (like Bour-jois) purchased trademark rights from unrelated foreign manufacturers.3 In fact, the first Senator to object to § 526 was troubled by the impropriety of enacting a provision designed to do no more than reverse Katzel while it was still pending before this Court, 62 Cong. Rec. 11603 (1922) (“[T]he whole subject matter involved in [§ 526]. . . has been heard in the circuit court of appeals [in Katzel] and is now on its way to the Supreme Court of the United States for final determination”) (remarks of Sen. Moses), a characterization with which no one took issue.

If anything, the most outspoken supporters of § 526 characterized it as even more limited than Katzel for they seemed to have been operating under the mistaken impression that the French producer in Katzel was itself importing Java in competition with Bourjois and in violation of its agreement. Thus, several proponents, like Senator Sutherland, repeatedly described the “only aim” of § 526 as the “prevention] [of] a palpable fraud,” 62 Cong. Rec. 11603 (1922), or the protection of domestic firms that purchase trademarks ft-om foreign manufacturers, which then “deliberately violate the property rights of those to whom they have sold these trade-marks by *305shipping over to this country goods under those identical trade-marks.” Ibid.4

The Court of Appeals read an exchange between Senators Lenroot and McCumber to suggest that § 526 could have been understood to go further than necessary merely to overrule Katzel on its facts.5 The exchange began with Senator *306Lenroot’s inquiry whether § 526 would protect from parallel imports a foreign manufacturer whose “American agents . . . register a trade-mark . . . here in the United States,” 62 Cong. Rec. at 11605 (emphasis added), to which Senator McCumber gave the following opaque response:

“[I]f there has been no transfer of trade-mark, that presents an entirely different question. But suppose the trade-mark is owned exclusively by an American firm or corporation. The mere fact of a foreigner having a trade-mark and registering that trade-mark in the United States, and selling the goods in the United States through an agency, of course, would not be affected by this provision.” Ibid. (emphasis added).

Dissatisfied with the response, Senator Lenroot rephrased the question: whether the foreign owner of “an international trade-mark . . . , registered by an American, with American domicile” could preclude parallel importation of the product “without the written consent of the [foreign firm], or their agent domiciled here in America.” Ibid, (emphasis added). Time ran out before Senator McCumber could answer.

I disagree with both the inference that the Court of Appeals drew from Senator Lenroot’s question and its reading of the answer. In the first place, the question, in either formulation, does not suggest that “Senator Lenroot . . . was concerned that foreign corporations could obtain the statutory monopoly simply by incorporating an American subsidiary.” COPIAT, 252 U. S. App. D. C., at 350, 790 F. 2d, at 911 (emphasis added). It refers only to the possibility of a foreign company “hav[ing] an agent” (not necessarily “incorporating a subsidiary”) in the United States to “register” (not necessarily to “own”) the foreign trademark. The question *307seems to have been directed to the inadvertent omission, subsequently remedied by the Conference Committee, of the requirement that the trademark be “owned by a citizen of, or by a corporation . . . created . . . within the United States.”

Secondly, even if I could accept the conclusion that Senator Lenroot initially read §526 as permitting a foreign firm to invoke §526 merely through the artifice of creating a subsidiary, Senator McCumber’s response laid to rest any such fear. He reiterated what had been said repeatedly: Section 526 would apply only to a situation in which there has been a “transfer” — presumably at arm’s length — of the trademark; and only where the trademark “is owned exclusively— by an American” — presumably an exclusively American— firm. Thus, even if both Senators meant “subsidiary” when they used the word “agent,” Senator McCumber’s answer squarely negated any suggestion that §526 would apply; such a situation, “of course, would not be affected by this provision.”

C

The sliver of legislative history on which the Court of Appeals relied most heavily in support of its reading of § 526 was the following statement in the Conference Report:

“A recent decision of the circuit court of appeals holds that existing law does not prevent the importation of merchandise bearing the same trade-mark as merchandise of the United States, if the imported merchandise is genuine and if there is no fraud upon the public. [Section 526] makes such importation unlawful without the consent of the owner of the American trade-mark, in order to protect the American manufacturer or producer_” H. R. Conf. Rep. No. 1223, 67th Cong., 2d Sess., at 158.

The Court of Appeals read the statement that § 526 “makes such importation unlawful” as meaning that § 526 would prevent the importation of any merchandise bearing a United *308States trademark, so long as the imported merchandise is genuine and there is no fraud on the public, even though the holder of the United States trademark is affiliated with the manufacturer. That is, concededly, a plausible reading of that brief passage. But cf. Atwood, Import Restrictions on Trademarked Merchandise — The Role of the United States Bureau of Customs, 59 Trademark Rep. 301, 304 (1969) (describing Conference Report as “evidence of the misunderstanding of the facts of the Katzel case”). More plausible, though, is that the first sentence quoted above merely described the well-established legal theory that compelled the result in Katzel, and the second sentence, declaring the unlawfulness of “such importation” referred to the type of importation at issue in Katzel — i. e., parallel importation of goods bearing a United States trademark purchased by an independent domestic company from a foreign manufacturer. Only if the second sentence were so limited would §526 “protect the American manufacturer or producer,” as the Conference Report itself says it does, for (as this case aptly demonstrates) the alternative would constitute Government-enforced insulation of the United States markets of foreign corporations.

As the Court of Appeals had to concede, COPIAT, supra, at 349, 790 F. 2d, at 910, its own reading imputed to Congress an intent to effect a sweeping transformation of the then-prevailing trademark doctrine. Congress, the argument goes, intended to reject squarely the Second Circuit’s “universality theory” that a trademark was a device to protect the public against fraud by properly identifying the product’s manufacturer, not a device to protect the trademark owner against competing sales of its own goods. See supra, at 301. When Congress intends to effect so radical a departure from prevailing legal doctrine, it ordinarily acknowledges as much and does so in more than a single cryptic comment in a conference report. Moreover, Congress typically would not sneak such a sweeping doctrinal change into a *309massive legislative overhaul on an unrelated topic (here tariff revision). And it usually would (though did not here) refer the matter to the committee with expertise in the area. See 62 Cong. Rec. 11602 (1922) (remarks of Sen. Moses). Since Congress did not so much as hint that it was engaged in such an ambitious task, the more plausible reading of the cryptic Conference Report is that Congress intended merely to remedy a specific inequity that the prevailing doctrine produced, not to abolish the entire doctrine that produced it.6

In sum, the legislative history and purpose of §526 confirm, and Justice Scalia does not dispute, that if Congress had any particular intent with respect to the application of § 526 to trademark owners affiliated with foreign manufacturers, it was to exclude them from its shield. At the very least, that interpretation — which forms the basis of the Customs Service regulation — is reasonable. See Cardoza-Fonseca, 480 U. S., at 445-449.

Ill

The conclusion that the common-control exception is consistent with § 526 is further buttressed by the deference owed to an agency interpretation that represents a longstanding agency position. See Zenith Radio Corp. v. United States, *310437 U. S. 443, 450 (1978); NLRB v. Bell Aerospace Co., 416 U. S. 267, 275 (1974). While the precise language of the importation bar has varied over the years, Treasury has for 50 years adhered to the basic premise of the common-control exception — that §526 does not require exclusion of all gray-market goods.

Until 1936, Treasury’s regulations merely tracked the language of §526, see Oust. Reg. 1923, art. 476; Cust. Reg. 1931, arts. 517(a), 518, but respondents point to no evidence that the Customs Service had any practice of excluding goods bearing trademarks registered by affiliates of foreign corporations. That year Treasury explicitly adopted for the first time a “same-company” exception, which barred foreign manufactured goods bearing United States trademarks except if the foreign and domestic trademarks “are owned by the same person, partnership, association, or corporation.” See T. D. 48537, 70 Treas. Dec. 336-337 (1936) (amending art. 518(b)). Contrary to the assertion of the Court of Appeals, COPIAT, 252 U. S. App. D. C., at 353, and n. 14, 790 F. 2d, at 914, and n. 14, Treasury’s preamble specifically invoked its authority under §§ 526 and 624 of the 1930 Tariff Act (as well as § 27 of the Trade-Mark Act of 1905) in introducing the same-company exception. Treasury adhered to an identical same-company formulation of the exception upon reissuing the regulation in 1937, see Cust. Reg. 1937, arts. 536(a), 537; in 1943, see 19 CFR § 11.14(b) (1943); and in 1947, see 19 CFR § 11.14(b) (1947), each time citing specifically §526 as partial authority for the interpretation. For 17 years thereafter, the regulation remained unchanged, and the Customs Service permitted parallel importation so long as the manufacturer and the United States trademark holder were affiliated, including situations where the holder was the manufacturer’s subsidiary. See In re Georg Jensen Inc., T. D. 52711, 86 Treas. Dec. 92 (1951); Derenberg, The Impact of the Antitrust Laws on Trade-Marks in Foreign Commerce, 27 N. Y. U. L. Rev. 414, 429 (1952).

*311In 1953, Treasury revised its regulations “[t]o eliminate obsolete material [and] correct discrepancies,” T. D. 53399, 88 Treas. Dec. 376, that arose as international corporate relationships grew in complexity. It adhered to the same-company exception but enlarged.it to encompass the situation in which the foreign manufacturer is a “related company as defined in section 45 of the [Lanham Trade-Mark] Act, [15 U. S. C. § 1127 (1982 ed. and Supp. IV)],” one that “legitimately controls, or is controlled by” the domestic trademark owner “in respect to the nature and quality of the goods in connection with which the mark is used.” T. D. 53399, 88 Treas. Dec., at 384. Although the new regulations, for the first time, omitted reference to § 526, contemporaneous commentators uniformly recognized that the omission was inadvertent. ' See, e. g., Derenberg, The Seventh Year of Administration of the Lanham Trade-Mark Act of 1946, 44 Trade-Mark Rep. 991, 996-1000 (1954); Note, Trade-Mark Infringement: The Power of an American Trade-Mark Owner to Prevent the Importation of the Authentic Product Manufactured by a Foreign Company, 64 Yale L. J. 557, 559-562, 566-568 (1955). It would have been nonsensical in the extreme for Treasury to announce that goods excludable in any event under § 526 are not barred by the Lanham Trade-Mark Act.

That exception remained in place until 1959, when (for reasons not relevant here) Treasury deleted the related-company formulation of the exception and returned to the same-company formulation. Significantly, however, Treasury and the Customs Service continued to apply the provision as if the related-company language had still been there, permitting importation of gray-market goods where “the foreign producer is the parent or subsidiary of the American [trademark] owner or the firms are under a common control.” T. D. 69-12(2), 3 Cust. Bull. 17 (1969); see also Letter from Deputy Customs Commissioner Flinn to Felix Levitan (Mar. 15, 1963), App. 63 (articulating Customs Service’s “position *312for many years” that § 526 is inapplicable where “merchandise [is] manufactured or sold by the foreign parent or subsidiary corporation of an American trademark owner”).

In 1972, Treasury promulgated the current Customs Service regulation, with its common-control exception once more codifying the practice that the Customs Service has adhered to for 50 years. In sum, the agency has (to quote the Customs Service's long-time attorney) “always denied complete exclusionary protection to an American trademark registrant when it knew the importer to be a subsidiary or parent of the foreign user of the trademark.” Atwood, 59 Trademark Rep., at 305-307. We do not lightly overturn administrative practices as longstanding as the ones challenged in this action. This is particularly true where, as here, an immense domestic retail industry has developed in reliance on that consistent interpretation. Zenith Radio Corp. v. United States, 437 U. S., at 457.

IV

I turn now to my small area of disagreement with the Court’s judgment — the Court’s conclusion that the authorized-use exception embodied in 19 CFR § 133.21(c)(3) (1987) is inconsistent with the plain language of § 526. In my view, § 526 does not unambiguously protect from gray-market competition a United States trademark owner who authorizes the use of its trademark abroad by an independent manufacturer (case 3).

Unlike the variations of corporate affiliation in case 2, see supra, at 299, the ambiguity in § 526, .admittedly, is not immediately apparent in case 3. In that situation, the casual reader of the statute might suppose that the domestic firm still “own[s]” its trademark. Any such supposition as to the meaning of “owned by,” however, bespeaks stolid anachronism not solid analysis. It follows only from an understanding of trademark law that established itself long after the 1922 enactment and 1930 reenactment of § 526. Cf. Potomac Electric Power Co. v. Director, OWCP, 449 U. S. 268, 280 *313(1980) (in interpreting a “statute enacted over 50 years ago, the view that once ‘dominate[d] the field’ is more enlightening than a recent state-law trend that has not motivated subsequent Congresses to amend the federal statute”) (footnote omitted).

When § 526 was before Congress, the prevailing law held that a trademark’s sole purpose was to identify for consumers the product’s physical source or origin. See, e. g., Macmahan Pharmacal Co. v. Denver Chemical Mfg. Co., 113 F. 468, 475 (CA8 1901). “Under this early ‘source theory’ of protection, trademark licensing was viewed as philosophically impossible, since licensing meant that the mark was being used by persons not associated with the real manufacturing ‘source’ in a strict, physical sense of the word.” 1 McCarthy, Trademarks and Unfair Competition, at 826; see Macmahan Pharmacal Co., supra, at 475 (“An assignment or license without [a] transfer [of the business] is totally inconsistent with the theory upon which the value of a trademark depends”); H. Nims, The Law of Unfair Competition and Trade-Marks 46 (1917) (identifying Macmahan as “the usual rule”). Thus, any attempt by a trademark holder to authorize a third party to use its trademark worked an abandonment of the trademark, resulting in a relinquishment of ownership. See, e. g., Everett O. Fisk & Co. v. Fisk Teachers’ Agency, Inc., 3 F. 2d 7, 9 (CA8 1924).

Nor was it at all obvious then that a trademark owner could authorize the use of its trademark in one geographic area by selling it along with business and goodwill, while retaining ownership of the trademark in another geographic area. There were, as Justice Scalia points out, isolated suggestions that a foreign firm could ^alidly assign to another the exclusive right to distribute th assignor’s goods here under the foreign trademark. See post, at 326. The cases, however, were rife with suggestions to the contrary.7 And *314we have found no contemporaneous case even suggesting that a domestic firm could retain ownership of a trademark after attempting to assign to another the right to use the trademark on goods that the other manufactured abroad. Cf. Scandinavia Belting Co. v. Asbestos & Rubber Works of America, Inc., 257 F. 937, 956 (CA2 1919) (raising similar issue whether assignee of right to use trademark in the United States might use trademark on products not produced by the foreign manufacturer, but concluding “[t]hat question is not here and is not decided”). Aá one commentator writing as late as 1932 observed: “[T]here is much confusion in the books in regard to the transferability of trade marks and trade names. The law on the matter is neither clearly stated nor always uniformly applied.” Grismore, The Assignment of Trade Marks and Trade Names, 30 Mich. L. Rev. 490, 491.8

Not until the 1930’s did a trend develop approving of trademark licensing — so long as the licensor controlled the quality of the licensee’s products — on the theory that a trademark might also serve the function of identifying product quality for consumers. 1 McCarthy, Trademarks and Unfair Competition, at 827-829; see Grismore, 30 Mich. L. Rev., at 499. *315And not until the passage of the Lanham Trade-Mark Act in 1946 did that trend become the rule. See, e. g., Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F. 2d 358, 366-367 (CA2 1959). Similarly, it was not until well after § 526’s enactment that it became clear that a trademark owner could assign rights in a particular territory along with goodwill, while retaining ownership in another distinct territory. See, e. g., California Wine & Liquor Corp. v. William Zakon & Sons, Inc., 297 Mass. 373, 378, 8 N. E. 2d 812, 814 (1937).

Manifestly, the legislators who chose the term “owned by” viewed trademark ownership differently than we view it today. Any prescient legislator who could have contemplated that a trademark owner might license the use of its trademark would almost certainly have concluded that such a transaction would divest the licensor not only of the benefit of § 526’s importation prohibition, but of all trademark protection; and anyone who gave thought to the possibility that a trademark holder might assign rights to use its trademark, along with business and goodwill, to an unrelated manufacturer in another territory had good reason to expect the same result. At the very least, it seems to me plain that Congress did not address case 3 any more clearly than it addressed case 2a, 2b, or 2c. To hold otherwise is to wrench statutory words out of their legislative and historical context and treat legislation as no more than a “collection of English words” rather than “a working instrument of government . . . .” United States v. Dotterweich, 320 U. S. 277, 280 (1943).

Justice Scalia’s assertion that the foregoing analysis of case 3 is not based on the “resolution of textual ‘ambiguity,’” post, at 323, depends on the proposition that an ancient statute is not ambiguous — and judges can never inform their interpretation with reference to legislative purpose — merely because the scope of its language has, by some fortuitous development, expanded to embrace situations that its drafters never anticipated. The proposition is unexceptionable where the postenactment development does not implicate the *316purpose of the statute. Thus, to use Justice Scalia’s illustration, no one would doubt that “[a] 19th-century statute criminalizing the theft of goods” applies unambiguously to “theft of microwave ovens,” post, at 323, for the post-enactment development (the invention of new “goods”) in no way implicates the statute’s purpose (to deter “theft of goods”). The proposition is fallacious, however, when the postenactment development does implicate the statute’s purpose. For example, had the same 19th-century legislature passed a statute requiring a utility commission to “inspect all ovens installed in a home for propensity to spew flames,” the statute would not unambiguously apply to microwave or electric ovens. Although it would not be absurd to read the statute to cover such developments, a court might decline to do so, depending upon the extent to which the statute’s purpose would be furthered by inspection of ovens that spew fewer flames than do conventional ovens. So too, the drastic doctrinal change in the nature of trademark ownership that occurred after § 526’s enactment directly implicates the statute’s purpose — to protect United States trademark owners from intrabrand competition arising from the manufacture abroad of trademarked goods by firms having certain relationships with the owner.

Since I believe that the application of §526 to case 3 is ambiguous, the sole remaining question is whether Treasury’s decision to exclude case 3 from § 526’s prohibition is entitled to deference. The same considerations that lead me to uphold Treasury’s treatment of the case 2 variations compel the same conclusion here. In the first place, the equities in case 3, as in case 2, differ significantly from the equities that motivated Congress to protect the prototypical gray-market victim (case 1) that purchases its trademark rights at arm’s length from an independent manufacturer. While the prototypical gray-market victim stands to lose the full benefit of its bargain because of gray-market interference, the United States trademark holder that develops identical rights and *317authorizes a third party to use them abroad does not have the same sort of investment at stake. Similarly, while a trademark purchaser has no direct control over the importation of competing goods or over the manufacturer’s sale abroad to third parties, the holder of a United States trademark in case 3 can avoid competition simply by declining to license its use abroad or even (if contractually permitted) revoking an already-issued license. Thus, it would have been perfectly rational for Congress to treat case 3 like case 2, excluding both from the § 526’s prohibition.

The legislative history that I have already discussed at length confirms Congress’ intent to do exactly that, and merely to overrule Katzel. There is no more indication that Congress intended to permit a United States trademark holder to prohibit importation of trademarked goods manufactured abroad under its authorization than that Congress intended to permit a United States trademark holder to exclude goods produced by its affiliates or divisions abroad.

Finally, Treasury has, at least since 1951, declined to protect trademark holders who authorize the use of their trademarks abroad. Almost as soon as the Lanham Trade-Mark Act codified the quality theory, enabling trademark holders to license the use of their trademarks without thereby relinquishing ownership, see supra, at 311, the Customs Service took the position that § 526’s protection would be unavailable to domestic firms that authorized independent foreign firms to use their trademarks. See Letter from Customs Commissioner Dow to Sen. Douglas (Mar. 23, 1951), App. 52, 53 (“[A] foreign subsidiary or licensee of the United States trademark is considered to stand in the same shoes as such trademark owner”) (emphasis added). See also T. D. 69-12(2), 3 Cust. Bull., at 17. Particularly in light of that longstanding agency interpretation, I would uphold the authorized-use exception as reasonable.

See, e. g., Olympus Corp. v. United States, 792 F. 2d 315 (CA2 1986), aff’g 627 F. Supp. 911 (EDNY 1985), cert. pending, No. 86-757; Vivitar Corp. v. United States, 761 F. 2d 1552 (CA Fed. 1985), aff’g 593 F. Supp. 420 (Ct. Int’l Trade 1984), cert. denied, 474 U. S. 1055 (1986); Lever Brothers Co. v. United States, 652 F. Supp. 403 (DC 1987).

Steelworkers v. Weber, 443 U. S. 193, 201 (1979) (quoting Holy Trinity Church v. United States, 143 U. S. 457, 459 (1892)). See also INS v. Cardoza-Fonseca, 480 U. S. 421, 432, n. 12 (1987) (citing cases); Kelly v. Robinson, 479 U. S. 36, 43-44 (1986); Offshore Logistics, Inc. v. Tallentire, 477 U. S. 207, 220-221 (1986).

See 62 Cong. Rec. 11604 (1922) (bill’s cosponsor, Sen. McCumber, complains that after Katzel, “the American purchasers of these [trademark] rights are entirely unprotected”) (emphasis added); ibid, (purpose “is to give the opportunity to protect the American purchaser”) (emphasis added) (remarks of Sen. McCumber); ibid. (Sen. Simmons describes case of domestic purchasers of Bayer Aspirin trademark from German company, whose investment § 526 would protect by precluding importation of aspirin by third party under same trademark).

See also id,., at 11604 (describing §526 as “a prohibition against the violation of .•. . contract”; “In a thousand ways we have guarded against fraud, and this [is] one among the thousand”) (remarks of Sen. McCumber).

It is conceivable, as the Court of Appeals suggested, that the quoted statements were merely “efforts by proponents of a bill to understate its significance,” COPIAT, 252 U. S. App. D. C. 342, 350, 790 F. 2d 903, 911 (1986). But without firmer evidence tending to impugn a legislator’s integrity, the presumption that legislators mean what they say would seem more appropriate than the opposite presumption that the Court of Appeals applied. At any rate, if a sponsor of legislation needs to understate the significance of a provision in order to secure its passage, it is reasonable to assume that other legislators relied on the sponsor’s statements in casting their votes.

The Court of Appeals also made much of a question posed by Senator Lenroot, which prompted an amendment of § 526 on the Senate floor. Senator Lenroot objected that under § 526, as originally drafted, a United States citizen who purchased an American product while in Canada could not carry the product across the United States border. In recognition of the absurdity of that result, Senator McCumber offered, and the Senate adopted, an amendment limiting the prohibition to goods “of foreign manufacture.” 62 Cong. Rec. 11603-11604 (1922). The Court of Appeals thought it significant that Senator McCumber felt compelled to amend the provision rather than “simply noting (as the Customs Service would under its regulations) that the owners of the American and Canadian trademarks were the same company, or that the American trademark owner had authorized the use of the trademark.” COPIAT, supra, at 350, 790 F. 2d, at 911. Senator McCumber’s response is not as telling as the Court of Appeals suggests. In the first place, it is not at all clear that there was a Canadian trademark in Senator Lenroot’s illustration. Second, even if such an assumption were implicit, a legislator’s choice of one solution does not prove that he considered others nonviable. Third, the hypothetical demonstrated one respect in which the hastily drafted provision was not narrowly tailored to Katzel’s facts. Senator McCumber’s prompt floor amendment is just as consistent with a motive to tailor the provision more to Katzel’s specific facts as it is with a suggestion that § 526 was never in*306tended to be so limited in the first place. Indeed, the Senators’ concern that domestic companies not be shielded from importation of their own goods suggests a desire not to extend § 526’s protection to domestic companies from the parallel imports disputed in this litigation over which they have control.

If the congressional debates surrounding the initial enactment of § 526 were less than clear, the reenactment of § 526 in the 1930 Tariff Act was utterly confused. One proposal, which Congress ultimately rejected, was to substitute for § 526 a new and substantially different provision. See 71 Cong. Rec. 3871-3876, 3889-3906 (1929). The only two Senators who discussed § 526’s current meaning mischaracterized it as a provision designed to protect United States trademark owners from infringement of their trademarks, rather than from the competition of valid trademarks. See id,., at 3837 (remarks of Sen. Reed); id., at 3872 (remarks of Sen. George). The debates certainly do not evince the level of understanding that one might expect of a Legislature that only eight years earlier is said to have effected through that provision a sweeping doctrinal revision. Significantly, in discussing the reenactment of § 526, no one suggested that it was no longer limited to the facts of Katzel, as the Congress that originally enacted it intended.

See, e. g., Independent Baking Powder Co. v. Boorman, 175 F. 448, 454 (CC NJ 1910) (“[T]he assignor cannot, after the assignment, continue *314the same identical business and at the same places as before, under unassigned trade-marks, and at the same time authorize his assignee to conduct the same business elsewhere under an assigned trade-mark”); Eiseman v. Schiffer, 157 F. 473 (CC SDNY 1907) (trademark owner may not assign trademark and then continue to engage in same business under different trademark).

Justice Scalia cites United Drug Co. v. Theodore Rectanus Co., 248 U. S. 90, 100-101 (1918), and Hanover Star Milling Co. v. Metcalf, 240 U. S. 403, 415 (1916), in support of his contention that the law by 1920 clearly permitted a trademark owner to retain ownership and use a trademark in one territory after assigning the identical trademark along with goodwill in another. Post, at 326. Those eases held only that a firm can develop a trademark that is identical to a trademark already in use in a geographically distinct and remote area if the firm is unaware of the identity. Thus, those cases bore on the territorial extent of trademark protection, not on the transferability of a trademark by territory once developed.