United States: Is Your Product Competing With Counterfeit Imports? Customs' New Rules Now Provide Additional Data To Thwart Counterfeit Imports

Last Updated: November 25 2015
Article by Lindsay B. Meyer and Samuel D. Boro

Owners of legitimate marks had been frustrated by the inability to receive sufficient information to confirm whether an imported article was legitimate or counterfeit, because of constraints of the Trade Secrets Act, 18 U.S.C. §1905 (Act). Now, because of a recent change to the regulations, U.S. Customs and Border Protection (CBP) will allow a more fulsome analysis of imported merchandise bearing suspected counterfeit trademarks or trade names. CBP adopted, as a final rule effective October 19, 2015, certain amendments to its regulations on importations of merchandise bearing suspected counterfeit trademarks or trade names. The interim amendments, published in April 2012, made changes to 19 C.F.R. § 133.21 regarding the detention of suspect merchandise and the disclosure of information to mark owners. As finalized, the new regulations:

(i) Allow CBP to disclose to a trademark or other mark owner information appearing on merchandise or its packaging that may otherwise be protected by the Trade Secrets Act for purposes of obtaining assistance in determining whether the merchandise bears a counterfeit mark;

(ii) Require CBP to release to the importer an unredacted sample or image of the suspect merchandise anytime after presentation of the suspect goods for examination, to further enhance information-sharing procedures; and

(iii) Require CBP to release limited importation information to the mark owner no later than the time of issuance of the detention notice to the importer, rather than within the formerly prescribed period of 30 business days from the date of detention.

Counterfeiters are developing more advanced techniques all the time. Counterfeit goods pose a safety risk to consumers, and even a national security risk through items like counterfeit computer circuitry. The new rules are not limited to computer products; rather, all importers of branded goods and mark holders, with marks registered with the U.S. Patent and Trademark Office and recorded with CBP, may be affected by these changes.

Historically, CBP had a difficult time confirming the legitimacy of suspected counterfeit goods. Because information contained on products and packaging (including markings, alphanumeric symbols, and codes) was deemed to be protected by the Trade Secrets Act, there were challenges to releasing such information to mark owners and importers. However, as now "authorized by law," the new rules aim to change that process by providing CBP with easier access to the information it needs. Indeed, CBP has only a 5-business-day window in which to make a "reasonable suspicion" determination. Additionally, CBP must notify the importer no later than 5 business days after a decision to detain merchandise; as such, an importer will learn of the detention within 10 business days of the goods being presented for examination.

The "Secret" Part of the Trade Secrets Act. The Trade Secrets Act covers a comprehensive array of business, commercial, and financial information. The Act bars the unauthorized disclosure by government officials of any information received in the course of their employment or official duties when such information concerns trade secrets included within a large range of data. For example, bar-coded data, commonly found on various goods to substantiate product and lot information, were typically considered to be protected by the Act. The Act also protects those required to furnish such information to the government by shielding them from the competitive disadvantage that could result from disclosure of that information by the government. The difficulty, however, was that CBP officers were unwilling to provide certain limited information to the mark owner, such as the date and port of importation, quantity, or country of origin of the goods, as well as any sample or other identification of the suspected items' markings.

Unredacted Samples Now Shared to Substantiate Legitimacy. Under the new rules, which went into effect in October, the mark owner and the importer are going to receive more information regarding the merchandise and related packaging than before. The mark owner will receive information appearing on the merchandise or its packaging that may otherwise be protected by the Trade Secrets Act. The importer will also receive an unredacted sample or image of the suspect merchandise or its packaging anytime after presentation for examination. In addition, the mark holder will receive unredacted samples and photographs, and will be given an opportunity to assist CBP with any unresolved suspicion.

Any Impact on Legitimate Gray Market Imports? Concern has been voiced regarding both releases of information. The mark owner may be receiving information that reveals details of the importer's supply chain. In addition, there are concerns that mark owners might abuse the information provided to them to disrupt or eliminate lawful parallel market competition of "gray market" goods. The CBP believes that it has covered these concerns. First, CBP provides the information to the mark owner with the express notification that some of this information may be covered by the Trade Secrets Act. Second, CBP reiterates that it provides information to mark owners only after an importer has been notified and has had an opportunity to establish that the goods bear genuine marks, so that the rule should not impede the legal importation of gray market goods. The rules do not change the way in which CBP enforces restrictions on gray market imports, as the 7-business-day response period from the interim regulation neither impairs the mark owner's ability to make data available to CBP nor increases the risk of counterfeit goods being admitted.

Likewise, there are concerns about the importer receiving this information. Typically, mark owners do not want the importer to have the principal role in authenticating suspected counterfeit marks. The CBP reiterates that this role is retained by CBP, along with any input received from the mark holder, and that the shared information better enables CBP to determine a good's admissibility, while concurrently safeguarding data under the Act.

The release of confidential company information is a major concern to any brand, whether because it wants to protect its proprietary information or it wants to keep a new product launch secret. The CBP's new rules, just like the interim amendments, may cause some of this proprietary information to be released to outside parties like a mark owner or importer. The Trade Secrets Act provides certain protections, and CBP has stated that sufficient safeguards exist. Nonetheless, a wary brand may want to consider modifying its business practices or implementing other actions to protect its information. As a precaution, a brand may want to contract with its importer to delineate what information is protected, or limit what the importer can do with the information it may receive from CBP.

Take Action! Are your registered marks recorded with CBP? Are you aware of suspect imports that are competing with your goods? If you are a mark holder or importer of goods with protected trademarks and trade names, you should consider whether any change to your business practice is warranted as a result of this new rule.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions