At a recent program in Los Angeles, “IP Meets Pacific Rim, ” Perry Woo of Homeland Security Investigations (“HSI,” previously Immigration and Customs Enforcement) and Anne Maricich of Customs and Border Protection (“CBP”) described ways companies can protect their IP rights that are worth repeating.

Mr. Woo, Assistant Special Agent in Charge in the Los Angeles office of HSI, first discussed recent trends among criminal cases, which include: creating a website that mirrors that of the legitimate company and diverts business to that sham website; creating a website which is focused on selling counterfeit product (this is especially common with live and sporting events); activity seeking to conceal one’s identity on the Internet through increasing use of peer-to-peer networks and other forms of spoofing; money laundering through electronic funds transfer entities; and the increased imports of counterfeit brand name pharmaceuticals and other products. As more and more individuals use the Internet to make purchases, smuggling techniques have gotten more sophisticated, resulting in the online purchase of an increased volume of counterfeit products. This confluence means finding the sources of counterfeit goods is more difficult while the value of the individual cases is falling. Moreover, counterfeiters are now using the courier services to ship their goods, although CBP and HSI have taken steps to see the inspections rate for goods arriving via courier is steadily increasing.

Violations discovered by Food and Drug Administration investigators are increasingly being handled by state and local officials under various public health statutes. As the value of the cases declines and the already strapped resources of the U.S. Attorney's Office are no longer available to bring federal cases, it is reasonable to expect a similar trend with HSI investigations. All states have laws that protect intellectual property and provide other frameworks that can lead to convictions, such as mail fraud, money laundering, and the like.

Tips from HSI

  1. Cease and desist - Issue cease-and-desist letters and get court orders identifying counterfeiters and those trading in your counterfeit goods;
  2. Authentication - Help the agencies understand how to distinguish, in detail, your genuine goods from the counterfeit ones;
  3. Verify - Be clear: Who holds the rights to the mark in the U.S.? Who are your authorized licensees? How do you manage them?
  4. Provide - Beyond the usual who, what, when, where, why, and how, provide all the relevant details, including information about vehicles, business cards, and spoof websites; and engage in undercover buys and turn any evidence over to HSI;
  5. Other violations - HSI is looking for other economic crimes, such as money laundering, bulk cash smuggling, failure to be registered as a money transmitter, and tax fraud; so even evidence that does not seem to be directly on point or sufficient to prove an IP case may still be helpful in putting counterfeiters in jail; and
  6. MSRP - HSI and CBP value their cases based on the manufacturer’s suggested retail price (“MSRP”), i.e., the U.S. retail price, so the larger the case the better.

The National Intellectual Property Rights Coordination Center requests the following information when it receives a case from the private sector:

  1. Referree – Name and contact information so the IPR Center may contact you in the future;
  2. Rights holder – Include any registration with the Copyright Office or Patent and Trademark Office and any recordation with CBP;
  3. Alleged violator – Name, business name and address, domain name, other identifiers, reasons for suspicion of IPR theft, type of alleged infringement (e.g., manufacture, reproduction, import, export, distribution, etc.), and any prior, ongoing or contemplated civil actions;
  4. Description of commodity – Photograph or sample, explanation of infringement, approximate value of the item (MSRP), and estimated loss to industry resulting from the infringement;
  5. Origin and entry – Country of origin of the infringing item, any involved foreign persons or businesses, the date, location, and mode of entry into the U.S., names of shipper(s), Harmonized Tariff Schedule number, etc.;
  6. Description of crime – Discovery of alleged crime, examination reports of infringing goods, whether an internal investigation has been conducted, description of any evidence acquired, scope of theft or counterfeiting operation, estimated quantity and time period of illegal distribution, location of distribution, and location of counterfeiting activity; and
  7. Internet involvement – Primary URL or business name of alleged infringer, identity and location of website operator (individual and/or business), location of servers and website hosts, registration of domain names in U.S., whether test buys have been made, whether the rights holder has sent a cease-and-desist or take-down notice to the website, and any financial accounts belonging to the alleged violator, with identified financial institutions or payment processors.

Tips from CBP

Like Mr. Woo, Ms. Maricich encouraged companies to work closely with the agency. In this case, it starts with recording your mark with CBP. The cost is minimal and doing so makes the case much easier for CBP to pursue. Otherwise, the agency has to establish that the importer had knowledge he was infringing before CBP may act. When your mark is recorded with CBP, you get notice as a rights holder when shipments are detained or seized, and CBP is able to share certain shipment details with you that can help with any ensuing civil infringement case. CBP also wants rights holders to provide information it can use to train its inspectors to more easily spot counterfeit goods.

It is not uncommon for a U.S. rights holder to grant a license to a foreign entity to produce its goods. Those legitimate goods are typically made by the first and second shifts at the factory. However, when that foreign factory engages in unauthorized production and sale of your goods, the same molds, designs, etc., are used during a third shift to make counterfeit goods that go out the back door. There are ways to combat such unlawful activity. While there is no substitute for careful management of your business partners, there are independent means to double-check their output. For example, several publishers of ocean manifest data distribute information that allows a company to check the quantities of goods being shipped from a given factory to the U.S.

Ms. Maricich also spoke about the Centers of Excellence and Expertise. She headed up the pilot program that focused on the pharmaceutical industry. That program is now being expanded to include other industries and will operate in many locations. The program in Los Angles will deal with electronics.

Regardless of your industry, listing your legitimate licensees on your website makes it much easier for HSI and CBP to pursue their cases and also assists companies and individuals in determining the legitimacy of products being made available to them for purchase. These tips are just the beginning. Individual industries will surely create their own best practices, building on these constructive recommendations.