How to Handle the Import of Imitation and Counterfeit Goods
LEGAL EASE ... Forging and the Law
The Department of Homeland Security (DHS) reports that more than 11 million maritime containers arrived at American seaports during the DHS 2015 fiscal year. Another 10 million containers crossed land borders via truck, while an additional 3 million containers arrived via train. Another 250 million packages shipped through the air also entered the U.S. These high numbers make it a daunting task for government officials to stop the importation of imitation and counterfeit goods, which cost American companies up to $250 billion annually and are directly responsible for the loss of 750,000 U.S. jobs.
Imitation and counterfeit goods attempt to piggyback on the goodwill that has been built over time by your company. Counterfeiters can do this in several different ways – one of which is simply copying forgings and/or forging methods. In some instances, your products and processes may enjoy federal protection through patents, trademarks or trade dress. In those cases, counterfeiters may be copying the structure claimed by a patented forging or forging machine; copying the manufacturing method claimed in a patent; or copying a trademark or trade dress to convince customers that the counterfeited good is actually your forged product.
There are several strategies for forges to stop imitation and counterfeit goods from entering American markets. If you believe that your patented forging or process is being infringed upon, it is most helpful to have an issued patent covering the particular product or process that is being counterfeited. Similarly, a registered trademark will help your company prevent others from copying your logos, company names and brand names that you use to market your forgings.
Taking the case of counterfeited trademarks, the trademark owner may record the trademark with U.S. Customs and Border Protection (CBP). CBP then has the power to detain and/or seize goods that bear a counterfeit or confusingly similar trademark and certain gray-market products.
The counterfeit goods can then be seized by authorities, after which they are forfeited by the importer and disposed of. Imported goods with a confusingly similar trademark can also be detained, and the importer is given 30 days to remove the trademark. If this does not occur, the goods are subject to forfeiture. The trademark owner will also gain information on the parties involved in the importation, which can aid the pursuit of future legal action.
In the case of infringing patented goods and processes, a patent owner can file a case with the International Trade Commission (ITC), which protects U.S. businesses from unfair importation practices other than “dumping” and unlawful subsidies. U.S. statutes require the patent owner to establish: that the goods are being imported, sold or sold for importation; and that they infringe an in-force patent. The ITC then conducts an adjudicative investigation before an administrative law judge. If the judge finds that a violation has been proven, then they may issue an order directing the CBP to exclude the infringing products from entering the U.S. The ITC usually completes its investigations within the same one-year period that the case is registered.
Another benefit of the described ITC actions is the elimination of a need to establish jurisdiction over the alleged infringers. In fact, ITC exclusion orders often reach products imported by foreign firms that were never named as parties and never had notice of the ITC investigation. It is worthy to note that filing a case with the ITC is also a viable option for the owners of trademarks that are being infringed by imported goods. Legal protection for patents and trademarks is continually harmonized around the world. As such, many other nations, such as Canada, are implementing laws and regulations similar to those described here.
The DHS reports that in fiscal year 2015, $1.3 billion worth (Manufacturer’s Suggested Retail Price) of goods were seized at American borders, and more than 350 convictions were handed down. During that same fiscal year, the originating countries for these seizures included China, which originated nearly 50% of the seized goods. No other country accounted for more than 5%.