USTR finalizes “List 2” of Section 301 duties on Chinese goods – tariffs begin on August 23rd.

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The Office of the United States Trade Representative (USTR) released a bulletin today finalizing “List 2” of the tariffs of Chinese products known as “Section 301” duties.

List 2 goods will be subject to an additional 25% tariff on goods from China starting August 23rd. Out of the 284 proposed tariff lines, only 5 tariff lines were removed by the USTR.

List 2 covers approximately $16 billion worth of imports from China. The Section 301 duties are the US response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.

List 1 went into effect on July 6th and covered about $34 billion of imports from China.

There is no word on when List 3 will be finalized but based on 1 and 2, I believe sometime in December 2018.

If you are importing a good subject to the 301 duties, contact experienced trade attorney, David Hsu for a free legal consultation on what our firm can do for you: dhsu@givensjohnston.com or 832.896.6288.

Customs broker and freight forwarder found liable for “use of a counterfeit mark in commerce”.

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A New Jersey U.S. District Court found a customs broker and freight forwarder liable for trademark infringements on Nike trademarks. The customs broker was ordered to pay $240,000 in damages and the freight forwarder will pay a yet undetermined amount.

The court held the broker and forwarder liable because they determined the arrangement of transportation and creation of documents related to the importation of the shipments constituted “use in commerce” of the Nike trademarks under the Lanham Act even though forwarder argued it had no physical control or knowledge of the shipments. Unfortunately for the broker and forwarder, the Lanham Act is a “strict liability statute” and does not consider intent or lack of intent in whether someone is liable. Speeding violations are the most common type of “strict liability statute” in that the act of speeding is the violation and it is not required to have the intent to speed. In this instance, the “use of a counterfeit mark in commerce” is the violation – with intent only a factor when determining the damages.

According to the case, (Nike, Inc. v. Eastern Ports Custom Brokers, Inc., et al., D.N.J. 2:11-cv-4390, July 19, 2018), the forwarder created the bill of lading, made arrangements for the cargo, and gave the broker a POA to act on behalf of the importer. The court ultimately found the broker and forwarder “played an active role in arranging for transportation” of the footwear and took “responsibility for the goods and making representations regarding the nature of the goods”. These actions were enough of an “use in commerce” under the Lanham Act and therefore liable for the trademark infringement.

One interesting note is the forwarder lost the case because they were in default after their lawyer withdrew in 2013. Default means a party to a lawsuit was properly served and noticed, but failed to make an appearance at any of the required hearings. For example, all parties are required to provide notice of trial dates and hearing dates. Proper notices were most likely sent by Nike to the forwarder – however, on the day of trial, no one made an appearance on behalf of the forwarder and as such lost the case for because they were in default. The forwarder, being in default, did not make an appearance and had no way to present any evidence to support their position.

Definitely an interesting case and the first time I’ve heard of a forwarder and broker liable for trademark infringement.

If you have any questions about this case and are would like to know how this ruling may impact your business as a broker or forwarder, contact experienced trade attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

CBP seizes hundreds of fake World Cup soccer jerseys.

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U.S. Customs and Border Protection (CBP) officials in El Paso seized four shipments shipped from China containing counterfeit Mexican national team soccer jerseys. The estimated retail value of these jerseys, if authentic, totals $66,390.

Prior to this seizure, CBP also seized 4 other shipments with Mexico, Germany and Brazil team jerseys totaling $47,340.

The CBP media release claims counterfeit goods harm the competitiveness of legitimate businesses and the items may be of poor quality and contain health and safety hazards to consumers. El Paso has made close to 400 seizures of goods for intellectual property rights violations with a seized MSRP of more than $3.8 million.

If you or someone you know has had their shipments seized by Customs, contact experienced trade attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

The Office of the United States Trade Representatives releases special 301 report on Intellectual Property Rights.

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On April 27th, The Office of the United States Trade Representative (USTR) today released their 2018 Special 301 report listing trading partners that do not “adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights”.

The Report singles out several US trading partners to address IP-related issues and places certain countries on a “Watch List” and “Priority Watch List”.

As you may be aware, Section 301 of the U.S. Trade Act of 1974 authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts US commerce. Section 301 actions are unique in that they do not require authorization from the World Trade Organization (TWO) to take enforcement action.

The US Government estimates the Intellectual Property industries directly and indirectly support 30% of all employment in the United States (or about 45.5 million American jobs).

Some highlights of the 2018 Special 301 Report include:

1. The following 12 countries are on the “Priority Watch List” – Algeria, Argentina, Canada, Chile, China, Colombia, India, Indonesia, Kuwait, Russia, Ukraine, and Venezuela.

2. China is included on the “Priority Watch List” for the 14th year in a row and claims China’s technology transfer practices, trade secret theft, counterfeit manufacturing etc.

3. India is also included on the “Priority Watch List” for “longstanding challenges in its IP framework and lack of sufficient measurable improvements, particularly with respect to patents, copyrights, trade secrets, and enforcement, as well as for new issues that have negatively affected U.S. right holders over the past year.”

4. Canada was surprisingly indicated on the “Priority Watch List” instead of their usual “Watch List” status. The USTR cited Customs inability to inspect or detained counterfeit or pirated good shipped through Canada and IP protections for pharmaceuticals among others.

The full Spectial 301 Report can be read here.

If you have any questions about this report, feel free to contact David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

US proposes tariffs impacting $50 billion worth of Chinese imports.

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The current administration announced tariffs on an additional 1,300 technological and transport products from China. Imports of these 1,300 goods are worth an an estimated $50 billion and could be subject to an additional 25-percent tariff.

The list posted on US Trade Representative’s (USTR) office covers nonconsumer products, ranging from chemicals to electronic components and excludes some common consumer products such as cellphones and laptops assembled in China. However, the list also includes consumer products such as flat-panel televisions, LED’s, motorcycles and electric cars.

Part of the justification for tariffs is an effort by the administration to cut the trade surplus – in which China has a $375 biillion trade surplus on goods from the US in 2017. Throughout his campaign, President Trump promised reducing the trade surplus by $100 billion during his presidency.

After the proposals were announced, the USTR has a public comment period from now until May 11th. A hearing will follow on May 15th. During this comment period, companies and consumers will be able to ask the government to remove or add certain products to the list.

If you have any question about these potential tariffs or want to know more about how to get your good off the list, contact trade and customs attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

U.S. Customs and Border Protection Seize Over 6 Million Counterfeit Cigarettes.

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In mid March of 2018, U.S. Customs and Border Protection (CBP) officers along with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) commercial fraud agents seized six million counterfeit cigarettes during a warehouse inspection.

The estimated retail price is $1.1 million. CBP import specialists with the Agriculture and Prepared Products Center of Excellence and Expertise (CEE) in Miami reviewed 600 boxes of counterfeit cigarettes and found multiple trade name protection and trafficking counterfeit goods violations.

CBP cites many dangers to these counterfeit cigarettes – first criminal organizations profit from the sale of counterfeit goods and second, counterfeit cigarettes pose a greater public health risk. CBP also indicates that trademark owners are also hurt and the government also is deprived of tax revenue.

If you or someone you know has had counterfeit cigarettes or any other goods seized by Customs for suspected IP violations or trademark violations – contact experienced Customs attorney David Hsu. Customs holds importers liable for both civil penalties and criminal prosecution. Call 832-896-6288 or e-mail dhsu@givensjohnston.com for immediate assistance.

Trump Announces Tariffs on at Least $50 billion in Chinese Goods.

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On March 22nd, President Donald Trump signed a memorandum instructing the U.S. Trade Representative to prepare a list of goods imported from China that will be subject to tariffs.

The tariffs are in response to China’s policies of forced technology transfers, forced joint ventures, intellectual property theft and technology licensing restrictions for U.S. companies doing business in China.

Check back here for the list when it is published. It is is estimated the list will include approximately 1,300 tariff lines and the public will have 30 days to submit comments.

If you have any questions how this may affect your imports, call experienced trade and customs attorney David Hsu at 832-896-6288 or email dhsu@givensjohnston.com.

Customs and Border Protection’s 2018 E-Commerce Strategy.

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According to a U.S. Customs and Border Protection (CBP) media release on March 8th, 2018 – CBP released their new strategy to deal with the increase in volume of e-commerce packages into the United States.

The media release is wordy and you are already to go back to Facebook – so here’s a quick cliff notes version of the media release:

1. More people are using the internet to buy direct from China, leading to more small packages entering the US.

2. The large increase in volume of small packages (commonly indicated as “e-packet delivery”) means there is a greater likelihood of things entering the country that should not enter.

3. CBP is worried about a greater entry of items that violate intellectual property rights (fake watches, counterfeit purfume, fake iphones, etc) will make it into the US.

Some highlights of the CBP e-commerce strategy:

1. Educate people to be aware of customs regulations. Not sure how easy it will be to make people aware of customs regulations when people can’t even follow traffic regulations!

2. Partnership with foreign governments

3. Improve data collection from CBP targeting systems and field personnel.

4. The media release includes a lot of buzzwords: “more agile, dynamic workforce that utilizes state-of-art techniques and technology to better target high-risk shipments, improving data collection from CBP targeting systems, and leveraging enforcement partnerships.”

My thoughts:

Personally, I do not believe methods 1-4 will be able to adequately address the increased flow of these small packages from China. I believe CBP has other methods that they are not publicizing, and rightly so. Notifying the public how CBP searches for items that violate IPR, are counterfeit or not allowed for entry into the US would be counter-intuitive and could only lead to foreign manufacturers creating work arounds.

If you are a manufacturer overseas and ship many small package items to the US and want to know how this can effect your business, call experienced trade and customs attorney, David Hsu, 832.896.6288 or email at dhsu@givensjohnston.com

$233,000 Worth of Counterfeit Watches Seized by Customs.

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According to a U.S. Customs and Border Protection (CBP) media release on March 1st; CBP officers in Philadelphia seized 54 counterfeit designer brand watches.

CBP officers examined the parcel on January 23rd that was shipped from Hong Kong. The packing list indicated the shipment as containing “watch samples” and upon further inspection, CBP found watches bearing name brands such as Armani, Hublot, Omega,
Rado, Rolex and others. If authentic, the MSRP for the watches totaled $233,209.

As you may or may not know, CBP is tasked with enforcing the intellectual property laws of companies who register their brand with Customs. In this instance, CBP officers with the Consumer Products and Mass Merchandising Centers for Excellence and Expertise (CEE) inspected the watches, worked with the trademark holders and confirmed the watches were counterfeit.

Some of the tell-tale signs of counterfeit watches include but are not limited to: poor quality packaging of the watch, watch construction (weight, dial movement) and the origin of shipment (from Hong Kong).

CBP frequently seizes counterfeit goods and on a typical day in 2017, CBP seized $3.3 million worth of products for intellectual property rights violations.

If you or someone you know has had your import seized due to counterfeit or trademark violations, contact experienced Customs attorney, David Hsu. Customs can penalize importers civil and criminal penalties, and time there are certain time limitations – call  832.896.6288 or email at dhsu@givensjohnston.com today.

CBP seizes fake perfume valued over $31 million.

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In the past few months, U.S. Customs and Border Protection (CBP) officers and import specialists in the seaport at Los Angeles have seized over 475,000 bottles of imported perfume bearing counterfeit trademarks. While the cost of the counterfeit perfumes may be low, if genuine, CBP estimates the MSRP of the seized perfumes to retail over $31 million.

CBP’s fiscal year starts October 1, 2017 and since then, CBP officials in Los Angeles have seized 11 shipments with suspected counterfeit marks along with confusingly similar fragrances. As you are aware, CBP enforces the trademarks for companies registered with CBP. The seizues included violations of trademarks belonging to over 34 perfume brands.

According to the CBP news release, the “counterfeit brands included Giorgio Armani, Burberry, Calvin Klein, Chanel, Coach, Dior, Dolce & Gabbana, Gucci, Guess, Hugo Boss, Lacoste, Michael Kors, Ralph Lauren, Versace, Victoria Secret, and Perry Ellis among others.”

As a general rule, if you purchase perfume at prices “too good to be true”, it is likely the item is counterfeit. The news release indicates the counterfeit perfumes were packaged in boxes and colors resembling the genuine items with fake country of origin markings (“Made in France”) even though the port of origin was China.

CBP is especially vigilent in seizing suspected counterfeit perfumes as these items are placed on the skin and absorbed by the body – counterfeit perfumes may be composed of chemicals harmful to the body and may be made and sold without any product testing.

In FY 2016, CBP seized over $1.4 billion worth of counterfeit goods – if you have had your imports seized and want to speak to an experienced attorney, call David Hsu at 832-896-6288 or email at dhsu@givensjohnston.com for immediate assistance.