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Private Sector Key to Stopping Counterfeits; Goes Beyond Trademark Recordation

When most people think of counterfeits in the U.S., they think of luxury fashion -- purses and watches -- but CBP also is concerned about safety issues from counterfeit medicines, sunscreen, baby formula and poorly made electronics whose lithium-ion batteries can cause fires.

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A session at the CBP Trade Facilitation and Cargo Security Summit on IPR Enforcement Trends noted that the No. 1 thing to do for those worried about competing with, or brand dilution from, counterfeits is to record your trademark.

Unsurprisingly, the top trend for counterfeits is that they're coming more often in small packages, under the de minimis threshold. Chris Mabelitini, the director of the IPR/e-commerce division in the Office of Trade at CBP, said that last year, more than 80% of IPR seizures were of small packages. But he said that's not always through the mail or express carriers -- he said CBP has discovered a whole container full of individually stamped packages, and all of them were counterfeit, including the postal stamps. Mabelitini said the fact that small packages are a growing conduit for counterfeits is one of the "driving reasons we started the e-commerce pilots."

And, he said, the information from the Section 321 data pilot and Type 86 submissions helped CBP identify which packages to seize.

Brandon Lord, CBP executive director for trade policy and programs, said one of the data elements in the Section 321 data pilot is the known seller flag, and he said CBP's vision is that if the agency later finds that known seller sent counterfeits to the U.S., the agency could notify counterparties who named that seller and tell them about the violation.

Combatting counterfeits relies on private-public partnership, and panelists from both government and business talked about how fruitful those partnerships have been.

Alan Aprea, director of the Electronics Center of Excellence, said that the exam process for the goods at his center can be quite technical, sending photos of products, opening up the housing and looking at the chips, wiring and so on inside. He gave an example of evaluations of Cisco (or purported) Cisco routers -- "Sometimes it was weeks before we would get to conclusion," he said. "We ended up holding a lot of genuine switches."

Then Cisco donated a barcode scanner to the center, and allowed them access to a look-up tool at the company. Aprea said after they started using those tools, they had "49 seizures right off the bat." Once they expanded access to the tools to nine ports around the country, they were able to stop millions of dollars worth of routers and switches that were claiming to be from Cisco from entering U.S. commerce.

From the other direction, Joe Wheatley, senior corporate counsel at Amazon in the corporate crimes division, talked about sharing information with prosecutors so they can consider criminal cases against counterfeiters. Wheatley, who worked as a government prosecutor and investigated organized crime when he was in the federal government, said Amazon is trying to work its way back from the seller to the manufacturer of counterfeits, and stop the goods at the source.

He said that Amazon has either sued or referred to law enforcement around the world against 1,300 "bad actors."

He added, "We have done some civil suits with information we received from a notice of seizure."

During questions from the audience, several people expressed concerns that brands are complaining that goods for sale on Ebay or Amazon are counterfeit, and get the listings removed, or that CBP detains goods as counterfeit when those goods are not counterfeit, but rather are being shipped or offered by unauthorized resellers, the "gray market."

Lord acknowledged that the gray market is legal, but said it can be difficult to balance protecting intellectual property rights and facilitating trade from those resellers. Mabelitini said maybe the Commercial Customs Operations Advisory Committee could talk about gray market issues.