Shoes With Bluetooth Connection Remain Classifiable as Shoes, CBP Rules

Nike shoes that include Bluetooth connectivity, data processing, flash memory and auto-fit technology are classifiable as shoes, CBP said in an April 30 ruling. The company had argued the shoes should be classified based upon the Bluetooth transceiver, similar to smartwatches that rely on Bluetooth to transmit data, under subheading 8517.62. "Wearable 'smart' technology is a growing segment of the marketplace," CBP said. "Without a doubt, these types of goods will require individual, or case-by-case, analyses in order to determine their essential character." Jeffrey Whalen, a lawyer for Nike, requested the tariff classification ruling from CBP.

"As imported, the Nike Adapt BB contains one pair of shoes (incorporating the above electronics components), a wireless charging pad, a USB cable/wall charger combo and operating manual packaged together for retail sale," CBP said. The Adapt "is a fitness platform, which combines wireless communication technology with sensing and fitness tracking, and packages it into auto-adjustable performance footwear," the agency said. Nike told CBP that "the Adapt’s transceiving subsystem imparts its essential character and argue that it is indispensable to the Adapt’s core and condition," and these "components make the article 'what it is' in the eyes of the consumer."

CBP disagreed with Nike. The Bluetooth chip "is just one of the electronic components of the Adapt," it said. "This article provides wireless capability to the module, which is in turn also incorporated within the footwear. In our view, the act of providing wireless connectivity supports the primary function of the electronic module, which is imparted by the fitness sensors or the auto-lacing platform. The act of wirelessly exchanging that data with a host device is a support or secondary function. The function of the Bluetooth chip, in theory, could be replaced by a wire, but there is no way to replace the sensor assembly, it is the component that proves to be indispensable. This makes it clear that the wireless function is a support function and not the essential character when viewing the electronic module on its own."

It is clear "that the basketball shoe is indispensable for the engagement of all of the 'experience" options offered by the additional components," CBP said. "It predominates in size, weight, function (if not the cost) and delivers the experience of walking, running, and training as compared with the ancillary use of the technological features." Unlike smartwatches, the value of the shoes isn't based upon the "information they convey," CBP said.

Instead, "the Adapt serves a utilitarian function that provides the value to the user while the information conveyed supplements that usefulness," it said. The shoes are classified under subheading 6404.11.90 "as footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials, [tennis shoes], basketball shoes, gym shoes, training shoes and the like: other: valued over $12/pair." That subheading has a 20% duty rate.