Interim regulations provide U.S. Customs and Border Protection (“CBP”) with a new tool to interdict counterfeit imported goods by permitting CBP to disclose certain information to trademark holders to assist CBP in its efforts to identify and, where appropriate, seize goods bearing infringing marks (the “Interim CBP Rules”).

Interim CBP Rules Are In Effect During The Final Rulemaking Process; CBP Requested Comments From The Public

The Interim CBP Rules became effective upon publication in the Federal Register on April 24, 2012. See 77 Fed. Reg. 24375 (Apr. 24, 2012). As part of the rulemaking process, however, CBP invited interested persons to participate in the final rulemaking process by “submitting written data, views, or comments on all aspects of the interim rule.” Id. CBP also sought comments on “the economic, environmental, or federalism effects that might result from this rule.” Id.

CBP required any comments to be filed by June 25, 2012. See id. No date for publication of the final rules has been announced.

CBP Justified The Interim CBP Rules By Reference To Public Health, Safety, And National Security

CBP stated that a principal policy justification for the Interim CBP Rules is to better “protect the public from unsafe and substandard products, which, in some cases, can be a threat to public health and safety, and also a threat to national security.” Id. at 24376. CBP cited threats posed by counterfeit integrated circuits and other electronic components to “critical manufacturing, military, infrastructure, and consumer product applications.” Id.

CBP placed particular emphasis on Congressional and U.S. Department of Defense investigations which found the presence of counterfeit components in “military and government supply chains” that pose “a serious threat to our military and government personnel and infrastructure.” Id.

CBP also justified the new rule because the “sophisticated techniques of some counterfeiters and the highly technical nature of some imported goods” have made it more challenging for CBP “to determine whether some goods suspected of bearing counterfeit marks in fact bear counterfeit marks.” Id.

CBP explained that its prior regulations did not permit the disclosure of information as a means to help “CBP in its efforts to identify goods bearing infringing marks, prior to CBP’s making a determination to seize.” Id. CBP believes that the Interim CBP Rules “will enhance CBP’s enforcement capability against increasingly sophisticated counterfeit products that threaten the public health and safety and national security.” Id.

The Trade Secrets Act And The Interim CBP Rules

The Interim CBP Rules are designed to address limitations imposed by The Trade Secrets Act (18 U.S.C. § 1905) upon the ability of CBP to share relevant information with intellectual property right holders. The Trade Secrets Act prohibits the unauthorized disclosure of trade secrets and other sensitive information by government officials that receive the information in the course of their employment or official duties. The law is designed to protect parties from whom the government requests or requires the submission of information, the disclosure of which could cause competitive disadvantage or other harm. The protection is designed to incentivize the submission of accurate and reliable information to the government.

In promulgating the Interim CBP Rules, however, CBP explained that the protections “must be balanced against the important and legitimate interests of government.” Id. CBP also explained that The Trade Secrets Act does not prohibit disclosure of protected information if otherwise “authorized by law” by statute or under “properly promulgated substantive agency regulations authorizing disclosure based on a valid statutory interpretation.” Id. CBP stated that The National Defense Authorization Act For Fiscal Year 2012 (“NDAA”) contains specific language permitting it to “share information appearing on, and unredacted samples of, products and their packaging and labels, or photographs of such products, packaging, and labels, with the rightholders of the trademarks suspected of being copied.” Id. The purpose of the NDAA information-sharing provision is to determine “whether the products are prohibited from importation” into the United States in violation of section 42 of the Lanham Act, which prohibits the importation of merchandise bearing a mark that copies or simulates a registered mark. Id.

In the Interim CBP Rules, CBP appears to have anticipated potential opposition by providing “further statutory analysis” to justify the new rules. In particular, CBP stated its view that disclosure authorized by the NDAA is not limited to trademarks, and includes certification, collective, and service marks. See id. CBP also stated that, to the extent that the legislative history of the NDAA may suggest that Congress intended the information-sharing mechanism “to apply only to military sales,” CBP is removing any ambiguity and to clarify that “the disclosure authority extends to all imports and not just those associated with military sales.” Id.

Key Provisions Of The Interim CBP Rules

  1.  Registration And Recordation Requirement

The Interim CBP Rules only apply to trademarks that are registered with the U.S. Patent and Trademark Office and recorded with CBP.

  1. Detention Of Articles Bearing A Suspected Counterfeit Mark

CBP may detain any article made in the United States or abroad that is imported into the United States and “that bears a mark suspected of being a counterfeit version of” a registered and recorded trademark. Id. at 24379. The detention lasts 30 days from the date the merchandise is presented for examination but may be extended for up to an additional thirty days for good cause shown by the importer. Id.

  1. Notice To Importer Of Detention And Possible Disclosure

Under the Interim CBP Rules, CBP will notify the importer in writing of the detention within five days. CBP will also notify the importer of the potential for disclosure of information to the owner of the mark to assist with the counterfeit determination.

The importer has seven days from the date of the notification to present information “establishing to CBP’s satisfaction that the detained merchandise does not bear a counterfeit mark.” Id. at 24377 and Interim Rule 19 C.F.R. § 133.21(b)(1).

An exception to the notice requirement is available in certain situations, such as criminal or national security investigations. See id. at 24377 and Interim Rule 19 C.F.R. § 133.21(c).

  1. CBP Discretion Regarding Timing And Scope Of Information Disclosure To Trademark Owner

The Interim CBP Rules provide significant discretion to CBP regarding the timing and scope of any disclosure to a trademark holder for assistance in determining whether marks are counterfeit.

For example, during the time between presentment of merchandise for examination until a notice of detention is issued, CBP may disclose to the trademark holder information including: (1) the date of importation, (2) the port of entry, (3) a description of the merchandise, (4) the quantity, and (4) the country of origin of the merchandise. See id. and Interim Rule 19 C.F.R. § 133.21(b)(2).

Once a notice of detention is issued, however, CBP must provide this information to the trademark holder, if available, within thirty days. See id.

Likewise, CBP may also provide the trademark holder with “images or a sample of the detained merchandise or its retail packaging” any time after presentation of the merchandise for examination. See id. and Interim Rule 19 C.F.R. § 133.21(b)(3). “Identifying information” on the images or sample disclosed in this manner must be “removed, obliterated, or otherwise obscured.” Id. Under the Interim CBP Rules, some examples of “identifying information” include serial numbers, dates of manufacture, lot codes, batch numbers, universal product codes, the name or address of the manufacturer, exporter, or importer of the merchandise, or any mark that could reveal the name or address, in alphanumeric or other formats. See id.

The Interim CBP Rules also permit CBP to provide an unredacted sample, although no guidance is provided regarding what situations prior to seizure might warrant the provision of an unredacted sample in lieu of a redacted sample. See id. and Interim Rule 19 C.F.R. § 133.21(c). The language of the interim rule, therefore, appears to conflict with narrative in the Federal Register notice, in which CBP stated that “information, images, or samples” will be “shared with the right holder” only where the importer fails to demonstrate that the article in question does not bear a counterfeit mark. See id. at 24377.

  1. Bond Requirement

To obtain a sample, the trademark holder must first furnish CBP a bond in the form and amount specified by the port director. The bond must contain statements holding “the United States, its officers or employees, and the importer or owner of the imported article harmless from any loss or damage to the sample resulting from the furnishing of a sample by CBP to the owner of the mark.” Id. at 24379 and Interim Rule 19 C.F.R. § 133.21(b)(3).

The owner must return the sample upon demand by CBP, or after any examination, testing, or other procedures performed on the sample. See id. If the sample is damaged, destroyed, or lost while in the possession of the trademark holder, the owner must file a certification with CBP. See id.

  1.  Post-Seizure Information Disclosures

CBP will seize any merchandise that it determines to be bearing a counterfeit mark. See id. at 24379 and Interim Rule 19 C.F.R. § 133.21(d). When merchandise is seized, CBP will make additional information disclosures to the trademark owner within thirty days from the date of the notice of seizure, if available: (1) the date of importation, (2) the port of entry, (3) a description of the merchandise, (4) the quantity, (5) the name and address of the manufacturer, (6) the country of origin of the merchandise, (7) the name and address of the exporter, and (8) the name and address of the importer. See id.

  1.  Post-Seizure Sample For Examination, Testing, Or Use In Trademark Infringement Case

Following seizure, CBP may also “provide a sample and its retail packaging, in its condition as presented for examination, to the owner of the mark.” See id. at 24380 and Interim Rule 19 C.F.R. § 133.21(e). The sample may be used “for examination, testing, or other use in pursuit of a related private civil remedy for trademark infringement.” Id.

As with other samples under the Interim CBP Rules, the owner must furnish a bond and return the sample or certify damage, destruction, or loss of the sample during examination, testing, or use. See id.

  1.  Importation Of Seized Merchandise Upon Written Consent Of Trademark Holder

The Interim CBP Rules permit the trademark owner to consent to the importation of the seized merchandise “in its condition as imported or its exportation, entry after obliteration of the mark, or other appropriate disposition.” See id. at 24380 and Interim Rule 19 C.F.R. § 133.21(f).