U.S. Customs and Border Protection Proposes Greater Cooperation with IP Owners to Crack Down on Counterfeits

Earlier today, U.S. Customs and Border Protection (CBP) announced that it would disclose information to intellectual property owners regarding suspected counterfeit goods stopped at the border, in situations where CBP desires assistance from the IP owners to determine if the goods are genuine or counterfeit. According to the announcement, counterfeiting techniques have become so sophisticated that it is not always possible to tell the real from the fake. Without question, counterfeits can pose a grave danger to the health and safety of American consumers, as well as cause economic harm to legitimate businesses. In describing the purpose of its new disclosure policy, CBP shared a disturbing example of counterfeiting that is difficult to detect:

"In particular, counterfeit integrated circuits and electronic components can find their way into critical manufacturing, military, infrastructure, and consumer product applications. In fact, inquiries conducted by Congress and the Department of Defense (DoD) have revealed that counterfeit electronic components, including counterfeit integrated circuits, have entered military and government supply chains, posing a serious threat to our military and government personnel and infrastructure."

The types of information that CBP may disclose to IP owners includes bar codes, serial numbers, dates of manufacture, lot codes, batch numbers, and the like.

The new regulation affords importers an opportunity to avoid disclosure by demonstrating to CBP within seven days that “the detained merchandise does not bear a counterfeit mark.” While this language may appear reasonable at first blush, CBP should not allow parallel importers to use this provision as a back-door mechanism to avoid the Lever Rule, which allows trademark owners to block the importation of gray market good that are physically and materially different than the goods authorized for sale in the United States. Gray market goods are products that are intended for sale in foreign countries, and enter the United States without the permission of the trademark owner. Gray market goods are often formulated for different consumer preferences, do not comply with United States standards and labeling laws, and lack a valid U.S. warranty. Gray market goods are typically imported by middlemen seeking to exploit price differences in different geographic regions, and many take advantage of consumers who do not realize or appreciate the differences between the goods. Parallel imports that are physically and materially different from their U.S. counterparts can be excluded under the Lever Rule, and the trademarks appearing on those products should not be considered “genuine” within the meaning of the CBP regulation. Information on using the Lever Rule to prevent parallel imports is available from the International Trademark Association, which has recently published the Trademark Owner’s Guide to Parallel Imports in the United States.

Anyone wishing to comment on the new regulation may do so by June 25, 2012 by following these instructions.