Last week, I presented Part I of my written interview with Edward Moriarty, U.S. Customs and Border Protection Assistant Port Director for Trade Enforcement, Area Port of Philadelphia. That column presented his answers to the first two of my five questions and focused on the range of resources CBP offers to IP owners, as well as CBP’s efforts to educate the public about the harms of supporting counterfeiters. What follows are the answer to my remaining questions. As usual, I have added some brief commentary to the answers below, but have otherwise presented them as he provided it.
3) Often, counterfeit or mislabeled items produced overseas can pose public health hazards, such as when unsafe foods are imported. How does CBP dedicate resources to prevent unsafe items from being imported for sale in the U.S.?
To protect both private industry and consumers, Customs and Border Protection has made IPR enforcement a priority trade issue. CBP has developed a multi-layered, strategic approach to IPR enforcement. In addition to seizing goods at U.S. borders, the strategy includes extending our nation’s borders through post-import audits of companies that have been caught bringing fake goods into the U.S., collaboration with our trading partners, and partnering with industry and other federal agencies to enhance these efforts. CBP also issues civil fines and, where appropriate, refers cases to other law enforcement agencies for criminal investigation.
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The health and safety of American consumers is of paramount concern to Customs and Border Protection. When consumers purchase counterfeit or pirated goods at significant discounts, they take a dangerous risk. These risks could be injury, illness or even death from substandard materials, or excessive lead exposure, or potentially deadly counterfeit pharmaceuticals. These risks may also include identify or financial theft through viruses concealed in the coding of electronic devices or storage mediums. Recently, CBP officers in Philadelphia seized a shipment of nearly 1,200 counterfeit JUUL pods that were manufactured in China in unregulated facilities and consisting of unknown ingredients. CBP continues to work with our partners at Homeland Security Investigations, the Consumer Product Safety Commission, the Food and Drug Administration, and with trademark holders to seize counterfeit or pirated consumer goods at our nation’s ports of entry. This process starts with a robust CBP enforcement posture that includes officers examining manifests to identify potentially counterfeit shipments laden on vessels or in air cargo and express delivery parcels, and verifying the authenticity of those goods with trademark holders.
GK: We may not always appreciate the risks engendered by unregulated and counterfeit products being brought into this country. But we should appreciate the valiant efforts of CBP to help keep these manifold dangers at bay. Their efforts are even more important as the world continues to shrink, with American consumers able to buy products directly from overseas suppliers.
4) What cooperation does CBP receive from foreign governments trying to stop the export of unauthorized goods from their countries?
About 87 percent of CBP’s counterfeit seizures during 2017, originated in China (48 percent) and Hong Kong (37 percent).
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Customs and Border Protection acknowledges that stemming the proliferation of counterfeit and pirated consumer goods is a daunting challenge, and all nations and agencies with an interest in enforcing intellectual property rights recognize the importance of sharing information and resources. CBP coordinates with U.S. trade industries, 47 partner agencies in the U.S., and foreign governments to detect anomalies, trends, and violations in the global supply chain, and to target shipments that are high-risk to be counterfeit.
Additionally, CBP is a signatory partner of the Immigration and Customs Enforcement (ICE)–led National Intellectual Property Rights Coordination Center. The IPR Center brings together 24 partner agencies, consisting of 19 key federal agencies, Interpol, Europol, and the governments of Canada, Mexico, and the United Kingdom to share information, and to disrupt counterfeit shipments
These efforts combat criminal organizations that illegally exploit American trade and allow U.S. industry to compete on a level playing field.
GK: The statistics speak for themselves with respect to the source of much of the counterfeit products that CBP deals with. None of this should be a surprise to anyone following the news with respect to the IP component of the current trade dispute between America and China. We can only hope that the continued focus on the issue will lead to measurable changes going forward that actually reduce counterfeiting activity.
5) What can be done to further educate the American people of the hazards of purchasing unauthorized goods?
Deterrence is one of the key platforms of Customs and Border Protection’s Trade Enforcement Operational Approach. We can deter consumers, and more importantly dishonest retailers from purchasing counterfeit and pirated goods that pose potential consumer health and safety threats by continuing to seize those violative products, assessing stiff monetary penalties or pursuing criminal charges against importers and retailers, and by publicizing those enforcement successes.
One example of this deterrence was the hoverboard craze of 2016. CBP seized more than 100,000 hoverboards that were manufactured with counterfeit, substandard batteries that were proven to overheat and ignite. CBP worked with our partners at Homeland Security Investigations and the Consumer Product Safety Commission to publicize those seizures during nationally covered press events to raise awareness to the numerous fires attributed to those substandard batteries. The counterfeit hoverboard market dried up fairly quickly and left a market of safe products that consumers could purchase with confidence.
Locally, CBP in Philadelphia seized more items last year that posed health and safety risks than ever before, including personal care products, pharmaceuticals, and consumer electronics. CBP trade enforcement efforts resulted in the seizure of nearly $40 million in counterfeit goods — an increase of more than 400 percent from the previous year. CBP encourages consumers to protect themselves and their family by avoiding potentially risky items. The rule of thumb to know if you are purchasing authentic or counterfeit products is cost; if the product you are purchasing online is significantly cheaper compared to a similar product purchased at a reputable retailer, then the product is most likely counterfeit.
Record CBP counterfeit seizures demonstrate how CBP is using all of its authorities to combat trade fraud by detecting high-risk activity, deterring non-compliance, and disrupting fraudulent behavior.
GK: The level of counterfeiting activity shows no signs of abating. At the same time, consumers need to do their part to help discourage counterfeiters. Likewise, IP lawyers and their clients should be making sure that they are taking all possible steps to alert CBP to IP violations, to truly partner with them on helping to stop counterfeiting from continuing to be a growth industry.
My thanks to Assistant Port Director Moriarty and his CBP colleagues for the insights and cooperation, and I wish them the best as they continue their important work on behalf of our nation. I am always open to conducting interviews of this type with other IP thought leaders, so feel free to reach out if you have a compelling perspective to offer.
Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.