Given rapid advances in manufacturing technology and online commerce, counterfeiting has become a serious problem across virtually all business sectors. Despite brand owners’ best efforts, counterfeiting has expanded both in nature and scope to encompass not only knockoff designer handbags and watches, but also automotive parts, pharmaceuticals and personal care products, and consumer electronics. With the advent of 3-D printing and ever-improving reproduction technology, and an onslaught of new generic top-level domains (“gTLDs”) in the Internet domain name space, it has never been easier for counterfeiters to manufacture and distribute illicit products.
Since 2009, seizures of counterfeit goods by U.S. government officials have increased by 53 percent. On a typical day, U.S. Customs and Border Protection (CBP) seizes roughly $4.7 million dollars’ worth of products at U.S. borders for intellectual property rights violations. In 2013, CBP seized illicit merchandise with a total value of over $1.7 billion, a 38% increase over the previous year. Despite the enforcement mechanisms and remedies available through CBP, only a small percentage of eligible brand owners enlist the assistance of CBP to enforce their IP rights at the border. There are almost two million active federal trademark registrations—and many more copyright registrations—that are eligible for enhanced protection against illicit imports, but just 32,000 or so trademarks, copyrights, and eligible trade names have been recorded with CBP for border enforcement.
In this day and age, it is more important than ever for brand owners to develop and regularly revisit anti-counterfeiting strategies; yet, brand owners are often restricted by limited resources for self-policing their brands. Working with CBP offers a relatively low-cost way for businesses to further their anti-counterfeiting efforts. Given CBP’s expertise and resources in combatting the importation of illicit products, partnering with customs authorities is a key element of a comprehensive brand protection strategy.
Available IP Enforcement Mechanisms
U.S. Customs and Border Protection is authorized to exclude, detain and/or seize violative trademarked products, and provides similar protection for registered copyrighted works and eligible trade names. In its enforcement efforts, CBP recognizes three levels of trademark infringement: (i) counterfeit products, which bear spurious marks that are identical with, or substantially indistinguishable from, a federally registered mark, (ii) products bearing “copying or simulating marks”, i.e., trademarks that are confusingly similar to a federally registered and recorded mark, and (iii) gray market goods, also known as parallel imports, which are products bearing a trademark that is authorized by the owner for use outside of the United States.
CBP will seize any product that it identifies as bearing a counterfeit of a federally registered and recorded mark. Absent the brand owner’s written consent to importation, the products will be forfeited and destroyed. The agency may also impose civil fines against persons who direct, assist, or aid and abet the importation of counterfeits. While customs authorities are authorized to seize products bearing a counterfeit of a federally registered mark that is not recorded with CBP, they will only do so when administratively feasible and appropriate. Given the limited resources and competing priorities of the agency, the enforcement of registered trademarks that are not recorded with CBP is unlikely.
When counterfeit products are seized, CBP notifies the brand owner and discloses the identity of the manufacturer, exporter, and importer, as well as details regarding the shipment, if the information is available. The agency may also provide a sample of the suspect products for examination, testing, or other use in seeking private civil remedies against the importer.
CBP personnel may also detain and seize products bearing a copying or simulating mark. The merchandise can be denied entry and detained for a thirty (30) day period. If the importer does not remove the trademarks at issue or furnish written consent from the owner during the detention period, the goods may be denied entry into the United States, or destruction of the products may be ordered. It bears noting that only federally registered marks that are recorded with CBP are entitled to protection against confusingly similar marks.
In addition to seizing merchandise bearing counterfeit marks and copying or simulating marks, CBP may prevent the importation of gray market goods that it deems to be “physically and materially different” from authorized products in the United States, subject to certain exceptions. Physical and material differences may include varying product construction, labeling, warranties, accessories and/or accompanying documentation. When seeking protection against the import of gray market goods, brand owners must provide CBP with sufficient evidence of the differences between its U.S. and foreign manufactured goods. Unlike counterfeit products, CBP will not seize and destroy gray market goods; instead, CBP is likely to only deny entry. It is also worth noting that an importer may obtain entry for its gray market goods by either removing the protected trademarks from the products, or affixing a disclaimer that sufficiently complies with agency regulations. Like products bearing a copying or simulating mark, only recorded trademarks are entitled to gray market protection.
Partnering with CBP to Protect Your Brand
To maximize CBP enforcement of your federally registered trademarks, you should strongly consider recording your trademark registrations with CBP. This is a fairly simple and inexpensive process. When recording a registered trademark, you must provide information concerning persons or entities authorized to use the mark and where goods bearing the mark are manufactured. To apply for gray market protection, you must also provide evidence establishing that the foreign manufactured products sought to be blocked from importation are physically and materially different from those produced for the U.S. market.
Additionally, you can assist CBP in their enforcement efforts by notifying the agency of any suspected shipments, activities or parties. For example, if you have information that that potentially-infringing shipments will arrive on a particular date, you are encouraged to submit such information to CBP. The agency then disseminates the information to the appropriate office or port of entry for further investigation; in some instances, CBP may refer the matter for criminal investigation.
CBP also encourages brand owners to develop and submit product identification training guides for agency personnel to help CBP determine whether or not suspected products are legitimate, and many brand owners provide product identification training to CBP personnel at ports of entry. By building strong relationships with the officers who inspect shipments, you can ensure more effective enforcement of your IP rights.
When taking advantage of CBP enforcement mechanisms, brand owners must be ready and willing to fully cooperate with agency personnel in their intellectual property protection efforts. The relationship between brand owners and CBP is reciprocal; brand owners must promptly respond to CBP requests for assistance, and also educate and inform CBP in making infringement determinations.
Certainly, there are many other elements necessary for an effective brand protection and anti-counterfeiting program. However, brand owners should give serious thought to partnering with customs authorities to protect their key brand assets, and seek the advice of an experienced practitioner to develop and maintain a comprehensive plan of attack against counterfeiting and other infringements.