At the end of September 2017, Shi Wei Zheng, 42, plead guilty to one count of trafficking in counterfeit goods. During a five-month period, Zheng trafficked over 15,000 pairs of counterfeit UGG boots, with a total estimated retail value of over $2.5 million.
Zheng created an elaborate scheme in order to receive and sell counterfeit UGG boots. From September 2016 through February 2017, Zheng received several shipping containers from an individual overseas, of which at least three containers were filled with counterfeit UGG boots. After the containers reached the Port of Entry, in this instance, Port of Newark, Zheng had individuals working at the port, remove the containers from the port before U.S. Customs and Border Patrol (CBP) could examine them. Once removed, the containers were delivered to other individuals, paid by Zheng to distribute the counterfeit boots in New Jersey and other places.
Lucky for the owners of the UGG brand, Deckers Outdoor Corporation (Deckers), CBP halted Zheng’s operation, in part as a result of Decker recording its registered trademark with CBP on June 7, 2016. After the recordation was processed, CBP began a more intense “guard dog watch” of the UGG brand merchandise at all Ports of Entry throughout the U.S. This meant that Deckers exercised its right to protect its word mark “UGG” at all U.S. borders. The recordation of the protected mark ultimately lead CBP to identifying counterfeit UGG merchandise and holding the culprit, Zheng, accountable for violating 18 U.S.C. § 2320, trafficking in counterfeit goods, because Zheng was never authorized by Deckers to import authentic UGG merchandise.
CBP encourages trademark owners to not only register their trademark with the U.S. Patent and Trademark Office (USPTO), but also to record their trademark with CBP. The cost of recordation is only $190 and provides trademark holders substantial benefits like CBP acting as your own personal trademark infringement policeman at the border. Deckers was able to assist CBP in comparing Zheng’s merchandise bearing the UGG logo with the recorded UGG word mark and determine that Zheng’s merchandise was counterfeit.
There are instances where the use of a protected mark is permissible under the “restricted grey market” exception. However, in this case, Zheng’s merchandise did not fall into a “restricted gray market article” exception. Restricted gray market articles are “foreign-made articles bearing a genuine trademark or trade name identical with or substantially indistinguishable from one owned and recorded by a citizen of the United States or a corporation or association created or organized within the United States and imported without the authorization of the U.S. owner.” These gray market articles may be imported if they fall under one to the exceptions outlined in 19 CFR § 133.23.
Zheng will be sentenced on January 23, 2018, and could face up to ten years in prison and a $2 million dollar fine.
If you have any questions about protecting your intellectual property rights and the CBP recordation process, we at Diaz Trade Law can help you navigate through the process of protecting your merchandise from being detained. Contact us today at email@example.com, or 305-456-3830.