Homeland Security records largest counterfeit seizure ever – $500 million.

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A little bit of background – Homeland Security Investigations (HSI) is a component of U.S. Immigration and Customs Enforcement (ICE). ICE is a federal agency under the Department of Homeland Security (DHS) and responsible for enforcing over 400 federal statutes within the United States.

Last Thursday (August 16th, 2018) was the culmination of a six year investigation into the importation and sale of fake luxury goods – ending with HSI officials reported seizing enough counterfeit luxury bags and belts to fill 22 shipping containers and the arrest of 33 people, all of Chinese descent.

HSI reported the seized goods included popular luxury brands “including Gucci, Tory Burch, Hermes, Coach, Burberry, Michael Kors and Louis Vuitton” along with knockoff Chanel perfume.

With an estimated loss in retail value of nearly $500 million, this seizure is the largest counterfeit seizure in history, besting the 2012 seizure of $325 million worth of fake goods.

If you have had problems with CBP seizing goods due to alleged counterfeit or trademark violations, call experienced trade and customs attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

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.

$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.

Importing Refurbished Cell Phones and Customs Seizures.

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Today’s blog post is in response to our firm seeing an increase in the number of importers having their Samsung or Apple phones seized by Customs.

Typically, our client is a company in the United States that purchases used Apple iPhones or Samsung Galaxy phones from the US. The used phones vary anywhere from A to C stock and may have broken screens, defective home buttons, scratched, dented or damaged housing or cracked camera lens. Some phones are store demos with burn-in on the screens, customer returns or old, new stock. The phones are packaged and then sent to China for repair and refurbishing. The fixed phones are then sent back to the US for sale through wholesalers and distributors.

However, as the phones are shipped back to the company in the US, U.S. Customs and Border Protection (CBP) detains shipments to review whether or not the cell phones violate any intellectual property rights (IPR).

CBP will first detain the phones and has 30-days to speak to the trademark or IPR holder to determine the authenticity of the trademark or IPR. The trademark could be the “Samsung” logo, the “Apple” logo or even the “iPhone” trademark printed in text on the back of the phones. More often than not, the shipped phones change from being “detained” to being “seized”.

The majority of the seizures are due to trademarks found on the rear housing of the phones. As most importers cannot provide authorization by the trademark or IPR holder the right to use the mark, CBP considers the importer phones to be counterfeit and are then subsequently seized.

If you have had your refurbished iPhone or Samsung phone seized by Customs, call experienced cell phone seizure attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com. There are certain time limitations after a seizure has occurred so contact David Hsu today.

Baltimore CBP Seizes $1 Million in Counterfeit Stainless Steel Sinks.

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On Wednesday, January 17th, U.S. Customs and Border Protection (CBP) in Baltimore seized over 2,900 stainless sinks for displaying a counterfeit UPC shield design on the 17th.

CBP initially detained the shipment for anti-dumping and countervailing duties enforcement and during their examination found the UPC shield logo. In addition to looking for shipments subject to ADD/CVD duties, CBP also enforces the intellectual property rights of trademark holders, among others.

CBP and Intellectual Property Rights (IPR) specialists sent the UPC shield logo to the registered trademark holder, the International Association of Plumbing and Mechanical Officials, the registered trademark holder, who determined the use of the logo to be unauthorized.

As the marks were unauthorized, CBP seized the entire shipment for containing markings without trademark holder’s authorization (19 CFR 133.21).

The full release can be found here: https://www.cbp.gov/newsroom/local-media-release/baltimore-cbp-seizes-1m-counterfeit-stainless-steel-sinks

If you or anyone you know has had any property seized by customs for suspected intellectual property rights violations, please contact your trade and customs law attorney, David Hsu at 832.896.6288 or dhsu@givensjohnston.com.

Office of the United States Trade Representative (USTR) issues their 2017 Out-of-Cycle Review of Notorious Markets.

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On January 11, 2018, the USTR released their report on “notorious markets”. As the name suggests, the USTR issues annual reviews of cities, places or shopping areas (both physical and online) that are believed to be involved in large commercial-scale copyright piracy and trademark counterfeiting. In addition to financial losses, the USTR says copyright piracy and counterfeit goods undermine advantages to innovation, creativity of US workers while also posing risks to consumer health and safety.

The notorious market list (NML) maintained by the USTR highlights physical and online marketplaces that “reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy and counterfeiting”. The list includes 18 physical markets and over 20 online marketplaces. The USTR does note that the NML list does not make findings of legal violations nor reflects the US analysis of the IP protection and enforcement climate in the countries in which the listed markets are found.

The report focus this year is on “illicit streaming devices” that includes streaming, on-demand, and over-the-top media service providers or other piracy applications that allow users to stream content, download or otherwise access information. Such streaming devices include Amazon fire TV sticks that are “jailbroken” or have the “Kodi” application installed. Other lesser known manufacturers also sell and market such stream devices using keywords such as: mini tv, tv box, stream, kodi, internet media player, tv browser, android tv, or variations thereof. The USTR estimates pirated content viewed on these streaming devices cost up to $840 million in lost revenue in the US and over $4-5 billion a year to the entertainment industry.

The USTR report spends the remaining 35 pages of the report highlighting various websites and physical brick-and-morter markets worldwide that may contribute to the sale and distribution of counterfeit and intellectual property infringing products.

If you have had your imported goods seized by Customs due to suspected intellectual property and trademark violations, call David Hsu at 832.896.6288 or email dhsu@givensjohnston.com. Certain time limitations do apply and you need legal representation.