CBP Publishes Intellectual Property Rights Seizure Data For Fiscal Year 2009 (Dec. 11, 2009)
On December 3, 2009, CBP released intellectual property rights (IPR) seizure statistics for fiscal year 2009. A link to the report is below. We all know why CBP places a heavy emphasis on IPR seizures: they hurt the U.S. economy by robbing intellectual U.S. property rights holders of their exclusive right to use their mark in commerce, and counterfeit goods themselves are often of poor quality that can pose a safety hazard. We will take this opportunity to opine on several statistics that are worthy of note.
Although overall trade volumes were down a significant 25% from FY 2008 to FY 2009, the overall number of IPR seizures dropped only by 1% to 14,841. This is interesting because CBP has been on a constant effort to ramp up enforcement, and even so the volume of goods being entered continues to far outstrip CBP’s resources. CBP also has the luxury of using its ample data regarding imports to target those shipments that frequently have IPR issues.
So what does the lower seizure figure mean? Could it be that enforcement is paying off, and fewer importers are trying to enter counterfeit goods? Perhaps. Manufacturers of electronics, for example, have learned that it is cheaper to obtain a license to incorporate technology such as Bluetooth into their goods than it is to endure the stigma and potential economic loss associated with regularly shipping counterfeit product to the U.S. CBP enforcement assists U.S. buyers in insisting that manufacturers overseas demonstrate that their goods are legitimate prior to placing an order. Because there is a very real threat that a CBP seizure will disrupt a transaction, due diligence is key, and the past few years of increased CBP seizure activity may be paying off.
The lower number of seizures as a statistic may not mean much at all insofar as the average domestic value of a single seizure in FY 2009 was $65,951, whereas in FY 2005 it was $11,622. The most effective deterrent may not be grounded in quantity; the seizure of high-domestic-value shipments hits exporters of counterfeit goods harder in their wallet. This is clear evidence that CBP’s targeting methods are effective.
When reading the statistics, it is notable that when one adds the percentage of seized goods originating in China with those originating in Hong Kong, an amazing 89% of seized goods are accounted for. The rest of the world’s contribution to CBP’s docket of seized goods is negligible by comparison. From China, footwear was the number one seized good, while from Hong Kong it was electronics and watches. Seizures of electronics increased from 8% of overall seizures in FY 2008 to 12% in FY 2009. Incredibly, the domestic value of just seized footwear in FY 2009, exceeded the domestic value of all seized goods combined in FY 2003.
In its zeal to interdict imports of counterfeit goods, CBP can make mistakes. The high number of seizures means that import specialists often cannot give goods more than a cursory inspection. It can then fall upon the importer to educate CBP as to the legitimate source of the goods. Other times, what may be considered by CBP to be a “confusingly similar” logo or mark may actually be fair use, or not so similar as to cause confusion among consumers as to the source of the good. Federal intellectual property law establishes the contours of what is infringes and what does not. CBP import specialists are not intellectual property lawyers and, not infrequently, their quick decision to detain or seize that is made in the field is reversed when presented with legal arguments grounded in intellectual property law. CBP may also be amenable to requests that infringing labels be removed or covered with new labels.
Overall, CBP’s task of policing U.S. intellectual property rights is a difficult job. An importer’s ounce of prevention in vetting foreign suppliers as to compliance with U.S. intellectual property laws is worth a pound of cure in attempting to undo a seizure after the fact. CBP, however, provides parties with a property right in seized goods the opportunity to present legal arguments in favor of release, and due process must be afforded to importers before they are permanently deprived of their property.
