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INTELLECTUAL PROPERTY RIGHTS VIOLATIONS INCREASE IN 2016

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Piracy, counterfeiting and the infringement of intellectual property threaten the U.S. economy, American businesses, and the safety of American consumers. Businesses face unfair competitive disadvantages when counterfeit goods enter their supply chains since these products undermine the validity of their patents, trademarks, and copyrights. Counterfeits are often manufactured cheaply in unsanitary and uncontrolled conditions, failing to meet standard regulations. This poses a threat to consumers as well, since fake products likely do not have the integrity of the products they are imitating. 

In 2016, the U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) seized approximately 31,560 shipments containing products violating Intellectual Property Rights, increasing 9 percent from 2015. These seized goods are valued at roughly $1.38 billion had they been sold at the values of the authentic products. This also resulted in 451 arrests and 272 convictions.

The largest source of the seized counterfeit goods is the People’s Republic of China, responsible for $616 million of the total value. Hong Kong was second, responsible for $600 million.

Proliferation through Online Sales

The increase in counterfeit shipments into the U.S. can largely be attributed to the facilitation by social media platforms and popular e-commerce sites, such as Amazon, the sixth most valuable company in the U.S. Although not deliberately promoting fake commodities, Amazon expedited overseas counterfeit products when they registered with the Federal Maritime Commission to provide ocean freight, streamlining Chinese shipments directly to Amazon fulfillment centers.

Despite having an anti-counterfeiting policy, Amazon is not legally responsible for keeping counterfeit products off their website. Instead, sellers must actively report fake goods to Amazon before Amazon will suspend the sale. Amazon has historically refrained from excessively intervening, allowing their basic guidelines to dictate the composition of the goods sold on their website. However, in November 2016, Amazon took their first step in combatting intellectual property violations, when they issued a number of lawsuits against vendors selling counterfeit products on their website. This is great news for legitimate vendors who have had to compete in the Amazon market against identical and illegal products sold at lower prices.

What Constitutes a Criminal Intellectual Property Rights Violation?

Although not every violation to intellectual property is considered criminal, criminal sanctions are often warranted to punish and deter violation of intellectual property rights. Offenses include:

  • Intentionally trafficking goods or services knowingly using a counterfeit mark
  • Intentionally infringing a copyright
  • Counterfeiting labels
  • Stealing trade secrets

Because violations of intellectual property rights do not often involve a loss of assets and generally don’t require direct involvement with rights holders, these rights holders often are unaware that they are victims until an alleged infringer’s activities are specifically brought to their attention. Congress has expanded and strengthened criminal laws for the above violations to provide adequate protection for owners of intellectual property.

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