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Another Record Year for Seizures of Knock-Offs Entering the US, And How to Try to Stop More Knock-Offs
by Stephen G. Janoski, Butzel Long
In March 2018, the U.S. Department of Homeland Security reported that 2017 marked another record number of shipments of counterfeit or infringing products seized by the U.S. Customs and Border Protection ("CPB") agency working together with the U.S. Immigration and Customs Enforcement ("ICE") agency. Up about 8 percent from 2016, the seizures of knock-offs totaled more than 34,000 shipments, continuing a trend of annual increases in seizures. The estimated U.S. retail value of the 2017 seized products, had they been genuine, was well in excess of $1 billion. Globally, counterfeits cost genuine manufacturers, suppliers and sellers many billions of dollars. The automotive industry alone, which is the largest U.S. manufacturing industry, is estimated to lose tens of billions of dollars every year worldwide from counterfeits. The full statistics are here: https://www.cbp.gov/document/report/fy-2017-ipr-seizure-statistics.
Clothing items and jewelry related merchandise like watches accounted for the largest percentages of the U.S. seizures, roughly 15 percent and 13 percent, respectively, though footwear, consumer products, and electronics were close behind. Most industries, including automotive and aerospace, were not spared the rising influx of counterfeit products. Fuel pump assemblies and LED lighting devices, among other products, were the subjects of recent patent infringement complaints under Section 337 of the Tariff Act of 1930 following investigations by the U.S. International Trade Commission (“USITC”). The USITC is also completing an investigation of possibly infringing toner cartridges from China at the formal request of Canon Inc. and its affiliated companies.
Just under 90 percent of the seized shipments in the U.S. in 2017 originated from China and Hong Kong. With tens of millions of cargo containers of products arriving in the U.S. by air, sea and rail annually, the Department of Homeland Security's CBP and ICE agencies have daunting challenges in securing the borders from infringing and counterfeit goods and taking action against the individuals and businesses in violation of the intellectual property rights. Out of those more than 34,000 U.S. seizures, only just over 100 involved automotive products. How many more automotive part knock-offs and other products like consumer goods slipped into the U.S. can only be estimated because so much cargo arrives in terminals and ports daily. Intellectual property owners have willing partners in the USITC, CPB and ICE to assist in stemming the tide of economic damage as well as health and safety concerns and risks attributable to inferior counterfeits entering U.S. borders.
In addition to petitioning the USITC to investigate instances of believed trademark or patent infringement, the CBP through its partnership with the National Intellectual Property Rights Coordination Center ("IPR Center") provides cost-efficient mechanisms to further assist in the protection and enforcement at the border of trademarks, trade names and copyrights. In 2017, over 18,000 trademarks, trade names and copyrights were asserted by the CPB and ICE to enforce the seizures of products in violation of intellectual property rights. Specifically, the CBP can record in its database system trademark registrations, trade name registrations, copyright registrations, and more recently even pending copyright applications so that its agents can be best armed to bar entry into the U.S. of knock-offs and infringing shipments.
For costs more often considerably less than the costs attributable to clearance and ultimately registration in the USPTO and UCO, the CPB recordation system enables agents to monitor shipping manifests and work with port authorities to shield the intellectual property from the entry into the U.S. of infringing or knock-off merchandise.
The recordation process is generally streamlined and swift. Here is the link to e-recordation: https://iprr.cbp.gov/. The CPB is responsive and accommodating. The proverbial “devil is in the details” to provide to and to keep up-to-date information in the database so that the CPB agents can provide the assistance to block entries of the knock-offs. Overall, recordation of the granted right in the CPB, together with a current list of authorized foreign manufacturers and corresponding shipping or importing firms, as well as any listing of known infringers or unauthorized manufacturers, is all that is needed for owners and licensees of genuine intellectual property rights to utilize and benefit from an efficient means by the border service to further protect against infringement.
The CPB urges intellectual property owners to be proactively vigilant in sharing information with the CPB to assist the CPB in targeting shipments of counterfeits. In addition to recordation of the intellectual property assets, intellectual property owners can foster greater CBP effectiveness by creating a corresponding product manual or guide that includes detailed information about the genuine product, including photographs and pricing details, so that the border agents have at-hand relevant information when monitoring manifests and cargo containers. The CPB further invites intellectual property owners to even provide in-person training sessions about their genuine products to agents at relevant or advantageous U.S. entry points.
The economic, health and safety impact of counterfeits is a persistent global problem. Intellectual property owners need effective border enforcement strategies and procedures beyond the U.S. and particularly in the individual countries or territories like the European Union, for example, where the genuine products are intended for sale and promotion. The World Customs Organization ("WCO") in Brussels provides insight and resources relating to the 180 plus national customs agencies here: http://www.wcoipm.org. The various international customs agencies together with their collaboration with intellectual property owners and other agencies like the USITC and INTERPOL provide significant help in safeguarding intellectual property rights and protecting genuine product industries and consumers.