The Department of Homeland Security (DHS) is tasked with the monitoring of and enforcement of intellectual property rights (IPR). In DHS’s annual report, it discusses over 11 million containers arriving at seaports, 10 million transported on land by trucks, 3 million transported by train, and another quarter billion express packages transported by mail and plane. This report serves delves the work done by DHS.
The DHS’ annual report investigates products that infringe US trademarks and copyrights or are subject to exclusion orders issued by the US International Trade Commission as it threatens the health and safety of American consumers and poses risks to our national interests.
In fiscal year 2017, more than 450 individuals were arrested by CBP or ICE for violations related to IPR violations. Although only 242 convictions proceeded (read this to see how counterfeit UGG’s led to a jail sentence), the total number of IPR seizures increased by 8% from the previous year. Surprisingly, while the number of seizure increased from 31,560 in 2016 to 34,143 in a 2017, the manufacturer’s suggested retail price (MSRP) dropped from $1,382,903,001 to $1,206,382,219.
In 2017, the two biggest offenders of IPR infringements came from essentially one nation. Out of the 34,143 total seizures last year, 29,895 (87%) came only from China and Hong Kong. The products seized from those nations also account for roughly 80% of the total MSRP.
IPR and Seizure Facts
According to the report, CBP concentrates its IPR enforcement on trademarks and copyrights. Over the course of the year, 12 national operations were conducted to combat IPR infringements. These operations resulted in 1845 seizures of goods worth $44 million. To effectively combat IPR infringements, recordations permit CBP to police trademarks with precision. Only trademark and copyright holders are eligible for CBP recordations – it establishes a standard of accountability and organization. In fact, at the close of 2017, CBP had enforced trademarks and copyrights to 18,209 active recordations, while total IPR enforcement actions increased by 12%.
The Digital Millennium Copyright Act (DMCA), experienced a 324% increase in seizures, from 70 in 2016, to nearly 300 in 2017. The sharp increase in seizures exemplify CBP’s commitment to enforcing current law, while also illuminating a previously undressed problem.
CBP also has the authority to issue penalties to counterfeiters. It’s another benefit to U.S. trademark owners that record their trademark with CBP, which provides the authority for CBP to issue monetary fines against anyone who facilitates the attempted introduction into the U.S. of seized and forfeited counterfeit merchandise. It is the anti-counterfeiting consumer protection act which provides authority for U.S. Customs to impose civil fines pursuant to 19 U.S.C. § 1526(F), in addition to the seizure and forfeiture of imported merchandise bearing counterfeit marks. The parties subject to monetary fines are any person who “directs, assists financially or otherwise, or aids and abets the importation of merchandise.”
IPR & E-Commerce
E-commerce is another industry lavished by IPR violations. Considering that each year 260 million packages are shipped by mail, and that 89% of IPR seizures take place by mail shipments, CBP established the e-Commerce and Small Business Branch, which directly deals with mail and express shipping IPR violations. CBP recognizes the links between Asian origin goods, mail or express shipping, and IPR violations. Based off the report, it is evident that IPR violations are prevalent and various shipment methods are used to evade CBP IPR enforcement; however, the most common underlying themes are: where the product originated, and its mode of shipment.
Contact us for assistance protecting your IPR, being proactive is the number one method to protect your goods from potentional counterfeiters. If you unknowingly purchase illegitimate goods that were seized by CBP, we strongly recommend contacting us to assist you in the detention, seizure, and/or penalty process.