Customs and Border Protection (“CBP”) seizes tens of thousands of packages each year for being suspected of intellectual property violations. CBP investigates suspect packages in an effort to protect American borders, consumers, and trademark owners from fake and counterfeit goods, an industry that is estimated to be worth over one trillion dollars. CPB may also inspect goods if they suspect the cargo contains illegal drugs, non-FDA-approved food or medical products, or goods from embargoed countries.
It’s hard to know what you can do when your merchandise is seized by Customs, but with the assistance of an experienced attorney, businesses can cooperate with CBP and potentially have their detained and seized merchandise returned. It must be noted, however, that all counterfeit goods found by CBP will be destroyed.
What makes a product counterfeit?
Counterfeit products are unauthorized or fake copies of genuine trademarked products. A trademark’s main purpose is to identify and distinguish one business’ goods from other businesses. Counterfeiters copy trademarked goods to leach off of a legitimate brand’s credibility and good reputation. They usually copy a brand’s trademark or logo and place it onto a fake product’s label, wrapper, or box, to misrepresent a legitimate brand’s trademark as their own. This misrepresentation of goods harms the trademark owner and is frankly illegal. If any goods are flagged and suspected of being counterfeit, Customs can and will detain and seize these goods and will eventually destroy them.
What happens when suspected merchandise is detained?
Any merchandise that has been seized at a port of entry will be taken by CBP to their Centralized Examination Station where the merchandise is further analyzed by CBP officers. CBP will then advise and inform the importing party of the seizure by mailing a written Detention Notice (“Notice”) to the importer’s address or legal representatives. This Notice will give an explanation of why the products were seized and the course of action that will be taken by CBP.
Customs take, on average, 35 days to examine and determine whether seized goods should be released or destroyed. As such, it is critical to respond as soon as possible to any Notice received to establish communication with CBP so that the importer can provide information on the products’ admissibility and/or request for manipulation to bring the merchandise into compliance. An importer also has the right to request samples of the seized merchandise for inspection and testing.
Cooperation with Customs is key because if the importer fails to respond to a Notice or provide information on the seized products to CBP within 7 days, CBP will escalate its investigation and potentially issue a formal seizure of the seized goods. As part of its investigation, CBP may contact the trademark owner and provide samples or photographs of the suspected counterfeits as well as other information such as serial numbers, batch numbers, universal product codes, date of import, port of entry, country of origin, and suspected quantity of counterfeit merchandise.
If CBP formally seizes merchandise, the only option to seek the return of such merchandise to the importer is by filing a Petition for Remission. A Petition for Remission must prove:
- That the suspected goods are not counterfeit;
- That the goods are for personal use and accompanying a traveler entering the United States;
- That the trademark owner consented to the importation;
- That the goods are permitted genuine gray market goods, such as refurbished or used merchandise.
In each situation, the importer has the burden of proving its innocence. In most cases, the assistance of an attorney helps greatly to provide a strong argument for the release of the seized goods.
What happens if my merchandise is determined to be counterfeit?
If a Notice of Seizure is ignored or a Petition for Remission rejected, not only will the merchandise be destroyed, but the importer is also likely to face legal consequences from both Customs and the trademark owner.
Customs can fine and penalize importers for shipping counterfeit goods into the United States, with penalties up to the equivalent of the MSRP or estimated domestic value of genuine products. Importers can contest these CBP penalties by filing a Petition of Mitigation, which points to mitigating factors for why the penalty should be reduced. Such factors include:
- A lack of knowledge of the counterfeit nature of the trademark;
- Prior good record of importation;
- Inexperience in importing;
- Cooperation with CBP officers in establishing the facts for the violation; and
- Inability to pay as determined by the CBP Office of Regulatory Audit.
Importers may also face the threat of federal lawsuits from trademark owners for damages to their reputation and lost profits relating to the counterfeit items. It is often the case that an importer will need to settle with a trademark owner in conjunction with paying the penalties imposed by Customs.
Fortunately, Wang IP Law Group, P.C. has experience and rapport around the globe in intellectual property litigation. Our attorneys maintain open lines of communication with Customs and Border Protection, making what can be a complicated and time-consuming process easy to manage for our clients. Contact our office today if your business needs help taking action against merchandise seizures by CBP.
Wang IP Law Group, P.C. is a Los Angeles based full service legal firm that specializes in intellectual property law (patent, trademark, copyright, and licensing agreement), business and commercial litigation, and a wide range of other legal matters including immigration, real estate, and landlord/tenant cases. Our multilingual attorneys represent clients from all over California and internationally from China, Taiwan, Hong Kong, Japan, and Israel.
If you have questions or would like a consultation in regards to the content of this publication, please contact us by calling (888) 827-8880 or email us at [email protected]. For more information about the firm and the services please visit www.TheWangIPLaw.com.