New provisions in the Trade Facilitation and Trade Enforcement Act of 2015 arm the government with new enforcement tools that rights holders can use to bolster intellectual property right (IPR) protection, especially for semiconductor components.

These measures come on top of a sharp increase in border seizures of products by US Government agencies in 2015. In recent Congressional testimony, the Commissioner of Customs and Border Protection, R. Gil Kerlikowske has indicated that a new Trade Enforcement Team will bring unprecedented attention to enforcement matters, including IPR enforcement.

The law, which we summarized in two previous alerts (on February 17, 2016 and March 1, 2016)), contains the most far reaching set of changes since the Customs Modernization (MOD) Act, including significant changes to the operations and programs of US Customs and Border Protection (CBP or Customs), new provisions for combating evasion of the antidumping (AD) and countervailing duty (CVD) laws, and the inclusion of new measures to protect intellectual property rights (IPR).

These provisions help rights holders protect their brand. Customs places a priority on enforcing trademarks and copyrighted materials that are registered with Customs. Rights holders can work with Customs to enforce the marks at the border. These changes help to facilitate those efforts – in particular for semiconductors.

By not redacting images and by sharing information and samples of suspect counterfeit parts for rapid identification, communication between customs officials and semiconductor manufacturers can be facilitated making it possible to root out the circulation and reduce the risks of counterfeit chips (e.g., public health, safety, national security), problems that cost US-based semiconductor companies over $7.5 billion a year as estimated by the US Semiconductor Industry Association.

New Protection Provisions

Title III of the Trade Facilitation and Trade Enforcement Act of 2015 includes measures for strengthening enforcement of intellectual property rights for imported products. Provisions of the law expand enforcement of copyrights and circumvention devices, including through information sharing and enforcement of pending copyright applications.

  • Section 302 authorizes and directs CBP to share information with rights holders so that they could help to quickly identify whether a product entering the United States is in violation of a copyright or trademark. The information includes sharing unredacted packaging and samples with copyright and trademark holders when the agency suspects products are being are being imported in violation of their intellectual property rights.
    • A final rule CBP issued in September 2015 had only provided for information sharing related to suspected trademark infringement.
    • The copyright information sharing provisions also apply to circumvention devices.
    • CBP may only share information if the trademark or copyright has been recorded with the agency.
  • Section 303 allows CBP to seize circumvention devices that are prohibited for importation under 17 USC 1201 (e.g., devices designed to circumvent technological protection measures used to control access to copyrighted material).
    • CBP will have to notify the copyright holder injured by the seized circumvention device within 30 days after the seizure.
    • However, CBP will only notified copyright holders provided the copyright holder is on a list maintained by CBP.
    • CBP is required to issue regulations by February 2017 to create the list.
  • Section 304 calls for the Department of Homeland Security (effectively CBP) to develop a process to enforce copyrights for which the owner has submitted an application for registration with the US Copyright Office (i.e., pending copyright applications) at the same level as if the copyright were already registered, including sharing of unredacted samples by August 2016.
  • Section 305 establishes a National Intellectual Property Rights Coordination Center to coordinate actions with other agencies and conduct outreach to importers. Effectively the law codifies the center that has been operating since 2008.
  • Section 307 calls for an increase in IPR enforcement personnel at CBP, US Immigration and Customs Enforcement (ICE), which houses the National IPR Coordination Center.
  • It is expected the government will work closely with the private sector on all aspects of the new measures, and will invite donations of technology for detecting IP infringing goods (called for in Section 308).

Prior laws allowed CBP to share unredacted images and samples with rights holders; however, the act now requires CBP to share information about merchandise that potentially infringes trademarks or copyrights with the rights holder, if CBP believes that this would assist in determining whether a violation has occurred.

In a 2012 Interim Final Rule, CBP amended its regulations to allow for more information to be provided to rights holders. The information included serial numbers, universal product codes, and stock keeping unit (SKU) numbers appearing on the imported merchandise and its retail packaging, whether in alphanumeric or other formats.

Enforcement Focus

US Customs and Border Protection (CBP) and US Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) released their annual report stating that the total number of products seized containing Intellectual Property Rights (IPR) infringements increased nearly 25 percent in fiscal year 2015.

There were 28,865 seizures of shipments with an estimated value of over $1.35 billion in 2015.

“CBP’s frontline interdictions, steadfast targeting, and close collaboration with ICE and other law enforcement agencies produced a record number of seizures of counterfeit and pirated goods,” said, CBP Commissioner R. Gil Kerlikowske. “The large increase in the number of IPR seizures reflects the hard work and dedication of our people across the country every day.”

The report indicates that in fiscal year 2015, apparel and accessories along with watches and jewelry were the top two product categories for number of IPR volatile shipments seized. Watches and jewelry along with handbags and wallets were at the top of the list for value. Consumer electronics and parts were also high in terms of numbers of shipments seized and value.

CBP seized 62 shipments of circumvention devices for violations of the Digital Millennium Copyright Act, a 57% decrease from 144 such seizures in FY 2014.