‘Mede In China’: US Customs May Bring In Rights-Holders To Help Stop Counterfeiters

The United States Customs and Border Patrol (CBP) this week said it is considering sharing more information with the intellectual property rights holders about possible counterfeit goods entering the US, in order to improve prevention. But CBP said it is still unclear whether changes in the law will be required to allow it to do this.

CBP also needs to coordinate with US Immigration and Customs Enforcement (ICE) on information-sharing, a CBP representative said.

The issue was raised in a 6 March Senate hearing on counterfeiting by CBP International Affairs and Trade Director Kimberly Gianopoulos. Her testimony is available here [pdf]. [Editor’s note: the US Chamber of Commerce industry group also testified at the hearing, and republished an article based on their testimony on Intellectual Property Watch here.]

She stated: “Representatives of rights holders and e-commerce websites noted that information shared by law enforcement entities is critical to private sector IPR enforcement, such as pursuing civil action against a counterfeiter or removing counterfeit items from websites. In the Trade Facilitation and Trade Enforcement Act of 2015, Congress provided CBP with explicit authority to share certain information with trademark and copyright owners before completing a seizure. CBP officials stated that they share information about identified counterfeits with e-commerce websites and rights holders to the extent possible under current regulations. However, according to private sector representatives we spoke to, restrictions on the amount and type of information about seized items shared by CBP limit the ability of rights holders and e-commerce websites to protect IPR. CBP officials noted that there are legal limitations to the amount and type of information they can share, particularly if the e-commerce website is not listed as the importer on forms submitted to CBP.”

Gianopoulos described a key shift in counterfeit sales from secondary markets such as sidewalk vendors to primary markets such as corporate and government supply chains. In the former, customers more often knew they were buying counterfeits, but less so in the latter. And knockoffs have become even more sophisticated and hard to distinguish. This can make it increasingly useful to have the rights holding companies involved in examining goods, as they are best equipped to identify fakes, she said.

Among the statistics she presented was the fact that seizures of IP rights-related seizures rose 38 percent from 2012 to 2016, and that 88 percent originated in China or Hong Kong. Express carriers and international mail have become the predominant form of transportation for IP rights-infringing goods, she added.

Gianopoulos also gave some notable statistics on the percent of goods purchased from third parties on popular e-commerce sites are counterfeit. With a range of different products, 20 out of 47 were found to be counterfeit.

In the end, when private sector experts were consulted, they were able to identify the counterfeits. Some were not too difficult, others were more subtle.

“Rights holders were able to determine that items we purchased were not authentic on the basis of inferior quality, incorrect markings or construction, and incorrect labeling,” she said. “Some counterfeit items we purchased were easily identifiable as likely counterfeit once we received them. For example, one item contained misspellings of “Austin, TX” and “Made in China.” These were spelled “Ausin” and “Mede in China.”

Image Credits: US Government Accountability Office