Category: Counterfeit

San Juan CBP officers seize counterfeit electronics

Posted by Jason P. Wapiennik on September 16, 2014

Many fail to grasp the importance of CBP seizures of counterfeit merchandise, and many fail to grasp they are liable for purchases made on the Internet that involve the importation of goods into the United States customs territory. It causes the trademark holder harm, confuses the purchasers, steals money from consumers who overpay for fakes, and destroy a reputation for brand quality. Some counterfeits, like electronics with a fake testing laboratory certifications, or those missing legally required safety features, are simply dangerous.

The story that follows perfectly demonstrates the reasons why customs seizes counterfeits and often penalizes people who import them, my comments are in [brackets] (original story HERE):

The Internet has made it easy to find and purchase items from almost anywhere in the world [NOTE: Something we talked about in Customs Liability for Internet Purchases – CLICK HERE]. With a high demand for well-known brands, many online vendors sell counterfeit products online, infringing on various trademark holder’s rights and revenues.

US Customs and Border Protection (CBP) San Juan Field Operations officers and import specialists seized this past weekend various courier consignments that contained counterfeit speakers, car beepers [??], iPhone parts, cell phone front screens, USB cables and writs-watches [seizure of counterfeit iPhone and Apple parts is a popular past-time of CBP].

Various consignments inspected by CBP officers at the San Juan Air Cargo facility, revealed products that infringed the intellectual property rights of Dr. Dre beats, Pandora, Samsung, BMW, Belkin and Disney trademarks. The products were shipped from vendors in China and Hong Kong. “The trade in these illegitimate goods is associated with smuggling and other criminal activities, and often funds criminal enterprises”, stated Area Port Director Juan Hurtado. “Protecting intellectual property rights (IPR) remains a CBP priority trade issue.”

Consumers seek and purchase particular brands of products, believing that such brands have an intrinsic guarantee of their quality. Without a brand to protect, counterfeiters just seek to produce superficial quality products and take advantage of the loyalty that consumers have for a branded product. Poor quality products end up destroying the reputation of the copied brand, when it becomes impossible to distinguish the real product from a counterfeit.

The last paragraph raises an interested question that I haven’t found a client willing to argue before customs yet: what happens when the products aren’t counterfeits, but are gray market goods that the trademark holder does not want imported into the United States? In other words, what happens when people inside the factory where genuine goods are made take some product out the backdoor and sell it online, and it gets imported into the United States? That’s an interesting question indeed….

Like we have explained previously, anytime your imports violate the law you face a hefty penalty for a CBP counterfeit seizure. We can help you if you are facing penalties from CBP for importing counterfeit trademarked merchandise. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely (some history of our success is HERE).

Call our office at (734) 855-4999 to speak to a customs lawyer, or CONTACT US HERE. We are able to assist petitions for customs penalties and seizures around the country, including Detroit, Chicago, Atlanta, New York, Los Angeles, Orlando and many other places. Consult a customs lawyer who is well acquainted with the laws enforced by the customs service and who can judge the legality of the transaction, by even getting a prospective ruling from customs in advance.

Please read these CBP counterfeit seizure articles:

Customs Counterfeit Seizure of Tablet Computers

Posted by Jason P. Wapiennik on September 9, 2014

As part of our ongoing efforts to analyze news in light of the customs laws and keep importers informed of the rights and obligations, we provide the below about a customs counterfeit seizure (original here) for alleged fake tablet computers with illegal counterfeit marks.

Many fail to grasp the importance of customs seizing counterfeit merchandise. In the picture below which is from the original customs news release had the caption “A tablet computer with counterfeit marks for SD.” Well, I guess… “Tarjeta SD” does translate to “SD Card” but I think the seizure for SD violative marks may have rested on more than just this word appearing inside the operating system. Or it may not have. Anyway, on to the story, with our further analysis below:

LAREDO, Texas – The Import Specialist Enforcement Team [“ISET”] at U.S. Customs and Border Protection’s Laredo Port of Entry recently seized a commercial shipment of counterfeit electronic tablets valued at $1.1 million for allegedly infringing on the Amazon, Google, Micro SD and SD registered and recorded U.S. trademarks.

In the recently finalized enforcement action, a CBP import specialist at World Trade Bridge selected a shipment of polymer lithium operated screens, electronic tablets, for a secondary examination. During the examination, CBP import specialists observed that the electronic tablets bore the Amazon, Google, Micro SD and SD trademarks, all of which are trademark recorded with CBP. A legal review by CBP Headquarters Intellectual Property Rights Branch indicated the imported tablets bore potentially counterfeit marks. A license administrator for SD confirmed that the use of their trademark was unauthorized. CBP’s ISET determined on August 14 that the shipment of 11,540 electronic tablets lacked legal authorization from SD-3C LLC, Google Inc., and Amazon Technologies Inc., and that the tablets were counterfeit and subject to seizure. CBP subsequently seized the tablets, which carried a manufacturer’s suggested retail price, had the trademarks been genuine, of $1.1 million.

“This is a significant seizure of tablets found to be infringing on three separate trademarks recorded with CBP,” said Joseph Misenhelter, CBP port director, Laredo Port of Entry. “Seizures like these ensure that valuable intellectual property is protected from harm from would-be knockoff products and help restore the integrity of America’s economy.”

Like we have explained previously, this importer stands to face a hefty penalty — around $1 million — for this customs counterfeit seizure. We can help you if you are facing penalties from customs for importing counterfeit trademarked merchandise. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely (some history of our success is HERE).

Please read these customs counterfeit seizure articles:

Customs Seizure & Penalty for Counterfeits and Uncertified Engines

Posted by Jason P. Wapiennik on August 21, 2014

Importing is a tricky business that presents a trap for the novice. You may think you can import merchandise that can be used to make a few quick dollars on because of a high profit margin. The story below falls into that category.

This person attempted to import 300 Wii controllers, 400 USB convertors, and 200 small motorcycle engines. If successful, there was some money to be made. But the problem was the Wii controllers and USB converters were counterfeit, and the 200 small motorcycle engines lacked an important EPA certification.

The consequences? Customs seized the counterfeits and the small motorcycle engines are an importation contrary to law because of the failure to have certification by the EPA.

PORTAL, N.D. — U.S. Customs and Border Protection (CBP) officers recently targeted a rail container at the port of Portal, North Dakota. In February 2014, CBP officers inspected the rail container and discovered merchandise that violated multiple laws and regulations. The merchandise consisted of approximately 300 counterfeit Wii remote controllers, 400 counterfeit USB converters and 200 small motorcycle engines that were not certified by the U.S. Environmental Protection Agency (EPA).

CBP determined that the trademark was counterfeit on the Wii remote controllers and USB converters. As a result, CBP seized those items. The counterfeit merchandise had a manufacturer’s suggested retail price of $20,800. In addition, CBP seized the small engines that were found not to be certified, as required by the EPA. The manufacturer’s suggested retail price for the engines was $16,400.

“CBP continues to play a key role in Intellectual Property Rights enforcement,” said Brent Beeter, the Port Director in Portal. “CBP continues to stay focused on combating the illegitimate trade in counterfeit products.”

Stopping the flow of illicit goods is a Priority Trade Issue for CBP. The importation of counterfeit merchandise can damage the U.S. economy, and threaten the health and safety of the American people.

With the growth of foreign trade, unscrupulous companies have profited billions of dollars from the sale of counterfeit and pirated goods. To combat the illicit trade of merchandise violating laws relating to intellectual property rights (IPR), trademark and copyright holders may register with CBP through an online system. Such registration assists CBP officers and import specialists in identifying violative merchandise.

CBP’s IPR enforcement strategy is multi-layered and includes seizing violative merchandise at our borders, pushing the border “outward” through audits of suspect importers, cooperating with our international trading partners, and collaborating with industry and governmental agencies to enhance these efforts.

Many fail to grasp the importance of customs seizing counterfeit or uncertified merchandise. The reason might be a failure see the harm that it causes to the owner of the trademark, by confusing their purchasers and destroying a reputation for quality, or just not caring about the consequences in quest for making themselves some money. To those and others, I say: Consult a customs attorney who is well acquainted with the laws enforced by the customs service and who can judge the legality of the transaction, even getting advice from customs in advance.

You might be facing penalties from customs for importing counterfeit trademarked merchandise or for importations contrary to law. We can help. You can pay the penalty or, as we recommend, file a petition for mitigation to ask for a reduction in the penalty. Once the notice of penalty is sent, the recipient has either 30 days to pay the penalty or file a detailed petition arguing the legal bases for further mitigation (reduction) or cancellation of the penalty. We recommended preparing and filing a petition, with the assistance of legal counsel, which argues persuasively for the substantial mitigation, or when the facts and law warrant it, cancellation of the penalty in full. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely (some history of our success is HERE).

If you have had merchandise seized by customs because they allege it is counterfeit and contains trademark violations and/or have a received a notice of penalty for importing alleged counterfeits or for making an importation contrary to law, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist petitions for customs penalties and seizures around the country, including Detroit, Chicago, Atlanta, New York, Los Angeles, Orlando and many other places. Please read these other articles:

Customs Seizure & Penalties for Fake & Faulty Hairdryers

Posted by Jason P. Wapiennik on August 19, 2014

Many fail to grasp the importance of customs seizing counterfeit merchandise. The reason might be a failure see the harm that it causes to the owner of the trademark, by confusing their purchasers and destroying a reputation for quality. Another reason might be because they never got scammed into buying a product at full price… only to find out it is a worthless counterfeit. But sometimes counterfeits are dangerous. Like electronics with a fake testing laboratory certifications, or those missing legally required safety features. The story that follows perfectly demonstrates the reasons why customs seizes counterfeits and often penalizes people who import them (original HERE):

HOUSTON – U.S. Customs and Border Protection officers have seized nearly 5,000 hair dryers as the required Ground-Fault Circuit Interrupters that

Images from Seizure

protect consumers from electrical shock or electrocution hazards were missing. The hair dryers, which originated from China, have a Manufacturer’s Suggested Retail Price of almost $330,000. “This seizure is the latest example of the vigilance and attention to detail our officers pay to protect consumers from imported goods

Image for Seizure

that pose a dangerous risk,” said CBP Houston Area Port Director Dave Fluty. During an examination of the shipment, officers found the dryers missing the immersion protection plug and bearing a suspect trademark logo. Officers coordinated with Consumer Product Safety Commission and with the CBP Intellectual Property Rights Rights [sic] Branch, Regulations and Rulings, Office of International Trade to verify authenticity. The CBP IPR Branch confirmed the products were counterfeit, and a CPSC evaluation of product samples concluded the required immersion protection plug was missing resulting in the seizure of the entire shipment that contained more than 400 boxes of the faulty articles. According to CPSC, consumers should look for a large, rectangular-shaped plug at the end of the hair dryer cord indicating the presence of a GFCI. The certification mark of a recognized testing laboratory should also be visible on the hair dryer or on the hair dryer’s packaging.

The individual who caused the importation is now liable to customs for penalties for 1) importing counterfeits into the United States under 19 USC 1526 and 2) importations contrary to law under 19 USC 1595a, because there was no GFCI on the hairdryers. It will prove to be a costly mistake. As we have previously explained, the penalties for the trademark violation are equivalent to the MSRP of genuine articles, or in this case almost $330,000; the penalties for importations contrary to law is equivalent to the domestic value of the imported merchandise, which is likely far less than the $330,000 figure and equivalent to, more or less, the price actually paid for the merchandise. I am sure any penalty in this case will be for at least $330,000.

Counterfeit Sunglasses Seized by Customs

Posted by Jason P. Wapiennik on August 14, 2014

Customs made another high value seizure of counterfeit merchandise being imported into the United States with infringing trademarks under 19 USC 1526. Customs seized 377 cartons of “Ron-Bei” sunglasses that they allege infringe the “Ray-Ban” trademark. This would be a good seizure and penalty case for our customs lawyer to defend, because it’s arguable whether the goods are counterfeit. The manufacturer’s suggest retail price, if the counterfeits were genuine, is $1,619.550. That is what the penalty amount will be calculated from.

We previously discussed, in a two article series, the dangers of importing counterfeit trademark merchandise into the United States, how it can result in seizure, monetary penalties, and how the importer can defend it. This story underscores the importance of everything we discussed in those articles: Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 1 and Part 2 (click to read).

Let’s have a look at the story (original HERE):

Counterfeit sunglasses with an estimated manufacturer’s suggested retail price (MSRP) of $1,619,550 seized by U.S. Customs and Border Protection officers at the Port of Savannah.

CBP officers discovered the shipment of sunglasses in a container that was selected for examination. During the inspection, officers discovered that the items bore a similar trademark to the Ray Ban Sunglasses logo. The items contained logos and similarities on the hang tags and the sunglasses that infringes Ray Ban’s trademark.

Ray Ban is an international company owned by Luxottica Group S.P.A. Luxottica Group is a manufacturer of eyewear with more than 7,100 optical and sun retail stores in North America, Asia-Pacific, China, South Africa, Latin America and Europe. In addition to a global wholesale network involving 130 different countries, the Group manages leading retail chains in major markets in North America, Asia, China, and Latin America.

CBP protects businesses and consumers every day through an aggressive Intellectual Property Rights enforcement program. CBP targets and seizes imports of counterfeit and pirated goods, and enforces exclusion orders on patent-infringing and other IPR violative goods. Detailed information about recording intellectual property rights and reporting intellectual property infringement to CBP can be found on the CBP website.

Whoever wrote up this news release for customs should get a little money from Ray Ban for the free product pitch in the middle paragraph. Importing counterfeit items into the United States is a very serious matter. First, it is very likely that after seizure the property will be forfeited and destroyed by the U.S. government if, in fact, they are violative of the trademark laws.

Once forfeiture is perfected, the person who caused the importation will probably get a notice of penalty from U.S. Custom & Border Protection in the mail for the equivalent of the value of the products if they were real. The importer will have a chance to respond to customs’ notice of penalty with the Fines, Penalties, and Forfeitures office by filing a petition for mitigation and ask customs to reduce the penalty based on the presence of certain mitigating factors that customs particularly looks for. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely. If the person fails to pay the penalty, the government can bring a lawsuit in federal district court to recover the penalty in the form of a judgment, after which point the government can lien property, garnish bank accounts, and seize property.

If you have had money or merchandise seized by customs because they allege it is counterfeit and contains trademark violations, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist petitions for customs seizures nationwide.

Fake Soccer Clothing Seized by Customs

Posted by Jason P. Wapiennik on July 7, 2014

Recently, Customs made a large seizure of counterfeit soccer club apparel in Puerto Rico. We have previously discussed, in a two article series, about the dangers of importing counterfeit trademark merchandise into the United States, how it can result in seizure, monetary penalties, and what can be done.

With a high demand for the 2014 FIFA World Cup related apparel, some dishonest vendors sought to capitalize on the event’s popularity, infringing on various trademark holder’s rights and revenues. On Tuesday, U.S. Customs and Border Protection (CBP) San Juan Field Operations officers seized a consignment of counterfeit soccer team delegation uniforms. The shipment arriving from Hong Kong to the San Juan Air Cargo facility, contained boxes of soccer t-shirts and shorts that were destined to an address in San Juan, Puerto Rico.

“The trade in these illegitimate goods is associated with smuggling and other criminal activities, and often funds criminal enterprises”, stated Area Port Director Juan Hurtado. “Protecting intellectual property rights (IPR) remains a CBP priority.” Further inspection revealed that the uniforms of the fake Brazilian, Italian and Argentinian national teams violated the IPRs of Puma, Adidas and Nike.

[ . . . ]

During FY 2013, CBP field operations conducted more than 164 seizures related to IPR violations, with a domestic value of approximately $1.9 million. Trade in counterfeit and pirated goods threatens America’s innovation economy, the competitiveness of our businesses, the livelihoods of U.S. workers, the economic security of our country, and in some cases, the health and safety of consumers.

Importing counterfeit items into the United States is a very serious matter. First, it is very likely that after seizure the property will be forfeited and destroyed by the U.S. government if, in fact, they are counterfeit. Once forfeiture is perfected, the person who caused the importation will probably get a notice of penalty from U.S. Custom & Border Protection in the mail for the equivalent of the value of the products if they were real.

The person will have a chance to respond to customs’ notice of penalty with the Fines, Penalties, and Forfeitures office by filing a petition for mitigation and ask customs to reduce the penalty based on the presence of certain mitigating factors that customs particularly looks for. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely. If the person fails to pay the penalty, the government can bring a lawsuit in federal district court to recover the penalty in the form of a judgment, after which point the government can lien property, garnish bank accounts, and seize property.

Customs Counterfeit Seizures; Counterfeit Guitars

Posted by Jason P. Wapiennik on June 10, 2014

Back in May, Customs made a large seizure of counterfeit guitars in Jersey City. We previously discussed, in a two article series, the dangers of importing counterfeit trademark merchandise into the United States; how it can result in seizure, monetary penalties, and how the importer can defend it. It also happens that this story deals with false country of origin marking on imported merchandise.

This story underscores the importance of everything we discussed in those articles: Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 1 and Part 2 and Importing Grey Market Goods (click to read). You should also review the articles we have published on country of origin marking, available Country of Origin Marking Requirements and Customs Country of Origin and Substantial Transformation. The story is below, with my emphasis in bold:

Jersey City, N.J. – U.S. Customs and Border Protection (CBP) officers working at the International and Counterfeit guitars seized in Jersey CityBulk Mail Center in Jersey City, N.J. discovered more than 185 counterfeit guitars with an estimated retail value of more than $1,000,000.

While examining oversize parcels, CBP officers discovered five guitars bearing the Gibson, Les Paul, Paul Reed Smith, and Martin trademarks, as well as the marking “Made in USA.” The officers immediately suspected the guitars of being counterfeit based on the country of origin, poor craftsmanship, and packaging.

CBP has since identified more than 180 counterfeit guitars bearing additional trademarks of Epiphone, Fender, Taylor, and Ernie Ball—all being shipped through the same facility. Officers discovered business cards within the packaging, all referring to the same website. The website indicated these guitars could be purchased from China for about $200 to $500; but the manufacturer’s suggested retail price for authentic guitars range anywhere from $2,000 for basic models to $54,000 for signature models. The guitars were seized by officers and are scheduled for destruction.

“CBP is on the forefront of protecting the American economy and trademark holders. Counterfeit goods pose a serious threat to the consumer and economic loss to American business,” said Robert E. Perez, director of CBP’s New York Field Operations. “Enforcing intellectual property rights (IPR) remains a priority for U.S. Customs and Border Protection.”

CBP protects businesses and consumers every day through an aggressive IPR enforcement program.

Information about internet purchases is available. Additional information on CBP’s IPR enforcement efforts can be found at CBP IPR.

Notice how the false country of origin marking may have raised the suspicions of customs and caused them to investigate the legitimacy of trademark further. Trouble never travels alone. You should read about your liability for customs violations for things you purchase on the Internet.

If you have merchandise seized by customs and either lose your opportunity to get the merchandise back, abandon the merchandise, or ignore the notice of seizure, it may not be the end of trouble for the importer. In general, customs has the authority to fine or penalize anyone who violates the laws enforced by customs. This means that, weeks or months after the property is seized and forfeited, you may get notice of penalty in the mail from customs that demands payment of thousands of dollars in penalties! It could also mean you get a letter from the trademark holder threatening you with further legal action.

Customs Counterfeit Seizure; Soccer Jerseys

Posted by Jason P. Wapiennik on June 6, 2014

One of customs’ trade enforcement priorities is stopping the flow of counterfeit goods into the United States. Recently, customs seized counterfeit soccer club apparel that was imported into the United States with a street value of over 1 million dollars — “street value” here means the value of the merchandise if it was authentic. We have discussed the perils and consequences of importing counterfeit trademark merchandise into the United States in previous articles, namely Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 1 and Part 2 and Importing Grey Market Goods (click to read).

The whole story is HERE, but let’s take a look at it below with my emphasis in bold:

SAVANNAH, Ga. – Soccer, known internationally as football, is the world’s most popular sport today. So it’s no wonder that some vendors will do anything to capitalize on this popularity, even if that includes resorting to theft; theft of a trademark holder’s rights and revenues.

It’s U.S. Customs and Border Protection’s (CBP) mission to tackle counterfeit imports, and officers and import specialists in Savannah, Ga., scored a seizure of soccer apparel, April 11, which exceeded $1 million in manufacturer’s suggested retail price (MSRP).

Shipment arrived from China March 12. It contained 390 cartons of soccer t-shirts, socks, shorts and other merchandise.

“Trade in counterfeit and pirated goods threatens America’s innovation economy, the competitiveness of our businesses, the livelihoods of U.S. workers, the economic security of our country, and in some cases, the health and safety of consumers,” said Reginald Manning, CBP Director of Field Operations in Atlanta. “Together with our enforcement partners, Customs and Border Protection continues to guard the nation’s borders against counterfeit products.”

The shipment arrived from China March 12. It contained 390 cartons of soccer t-shirts, socks, shorts and other merchandise that was destined to an address in Chamblee, Ga.

CBP import specialists placed an inspection hold on the shipment and had the container trucked the following day to CBP’s central examination station. That’s when CBP discovered several t-shirts bearing patches of professional soccer clubs and detained the shipment for trademark verification.

The apparel, which has an MSRP of $1,016,399, represented Arsenal, Barcelona, Celtic, Chelsea, Mexican Federation, Paris Saint-Germain, and Real Madrid football clubs.

CBP requested that the importer’s broker submit authorization letters from the respective trademark holders to import their branded items, but on March 27, the broker reported that the importer did not have authorization.

Over the next week, representatives from Arsenal, Celtic, and Chelsea football clubs reported to CBP that samples of the merchandise bearing their brand was indeed counterfeit. CBP then officially seized the shipment.

View or download still photos of the seized merchandise.

Protecting intellectual property rights (IPR) remains a CBP priority trade issue.

CBP protects businesses and consumers every day through an aggressive IPR enforcement program. CBP targets and seizes imports of counterfeit and pirated goods, and enforces exclusion orders on patent-infringing and other IPR violative goods.

The People’s Republic of China, where this shipment was manufactured, remains the primary source economy for counterfeit and pirated goods seized by CBP and its primary IPR partner, Immigration and Customs Enforcement (ICE), with a total value of $1.1 billion. That number represents 68% of all IPR seizures by MSRP in FY 2013.

In addition to China, CBP and Immigration and Customs Enforcement (ICE), seized counterfeit merchandise from 73 additional economies during FY 2013, including Hong Kong, India, Korea, Singapore, and Vietnam.

The most interesting part of this article to readers of this blog should be the the customs brokers was asked for proof of authorization from the trademark holders to import trademarked merchandise into the United States, but was unable to do so. Basically, customs was asking the broker to prove the items were not counterfeit – or that the trademark holders would not object to them being imported into the United States. Not likely to happen, that. If you can obtain the consent of the trademark holder, you’re much more likely to be able to import them to the US.

In Part 2 of this series, we discuss when and how customs can assess a monetary penalty after the counterfeit property is seized and forfeited.

Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 2

Posted by Jason P. Wapiennik on May 26, 2014 with 1 Comment

Importing counterfeit merchandise into into the United States is not only illegal, but is something that U.S. Customs & Border Protection takes very seriously. Intercepting counterfeits is considered it to be a priority trade enforcement issue. For truly counterfeit imported merchandise, there are few opportunities to get the seizure remitted (to get the merchandise back from customs), and so it is forfeited (becomes property of the government). We discussed this Part I of Importing Counterfeit Trademarks – Customs Seizures & Penalties. But, forfeiture is often just the beginning of the story, because customs can and does penalize people for importing counterfeit merchandise.

When does customs issue a notice of penalty for importing counterfeits?

As matter of policy, customs issues a penalty when 3 criteria are met:

The counterfeit mark is registered with the Patent and Trademark Office
The counterfeit mark recorded with U.S. Customs & Border Protection
The importer has no consent from the trademark holder to import the counterfeits

In all other situations, customs has the authority to issue a penalty, but may or may not, even if the merchandise is seized. It depends on the individual circumstances of the case.

What is a notice of penalty and who is liable?

The notice of penalty is sent from the Fines, Penalties & Forfeiture’s Office of U.S. Custom & Border Protection through the U.S. mail, usually certified. The notice of penalty is typically a 1 to 2 page document, that states what law or laws or regulations were allegedly violated, and based on the violation, it demands payment of a certain dollar amount.

The importer and anyone who causes, directs, or assists the importation (financially or otherwise) is liable to get the notice of penalty.

How is the penalty amount determined?

The penalty dollar amount is usually based on the maximum amount that customs can levy under the law for counterfeit violations; they are are not based on the price actually paid for the goods, but on the manufacturer’s suggested retail price (“MSRP”) of the goods if they were genuine:

1st Offense: the penalty is equal to up to the MSRP of genuine goods
2nd (or more) Offense: the penalty is equal to twice the MSRP of genuine goods

For example, if you are importing counterfeit jeans that cost $5 each, but which have a MSRP for genuine jeans of $95, customs customs uses the $95 price in its calculation. In this example, if 100 pairs of jeans were imported, the penalty for a 1st offense is up to $9,500 (not $500). For a 2nd offense, the penalty is up to $19,000 (not $500 or $1,00).

Does customs ever reduce a penalty?

You can pay the penalty or, as we recommend, file a petition for mitigation to ask for a reduction in the penalty. Once the notice of penalty is sent, the recipient has either 30 days to pay the penalty or file a detailed petition arguing the legal bases for further mitigation (reduction) or cancellation of the penalty. We recommended preparing and filing a petition, with the assistance of legal counsel, which argues persuasively for the substantial mitigation, or when the facts and law warrant it, cancellation of the penalty in full. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely (some history of our success is HERE).

A failure to pay the penalty, or the mitigated penalty, will result in the referral of the matter for collection through the U.S. attorney. Customs may sue the importer or the person providing assistance in federal court and get a judgment against them. This allows the government to lien property, garnish assets and bank accounts, and seize property to satisfy the judgment.

Obviously, the best course of action is to file a petition, get a reduced penalty, and pay it.

Is there a way to reduce the penalty from customs?

Keep Calm Petition Meme Yes, if a properly argued petition with factual and legal support is presented to customs, it is possible for a penalty reduction of anywhere from 10% to 30% for a first or second offense. There would have to mitigating and no aggravating factors to achieve that result.

A standard disposition with aggravating factors, or for a third offense, may still garner a reduction of 50% to 80%, if a properly argued petition with factual and legal support is presented to customs.

It is possible, and our law firm has been able to obtain complete cancellation of the penalty even in cases where there are still grounds for a technical violation of the law (some history of our success is HERE). Of course, results will vary from case to case, and no result could be guaranteed. Customs has maintains a list of mitigating factors and aggravating factors that it looks for, and which should part of the argument and analysis of any petition that is filed for them; without a careful and thoughtful analysis of those factors that customs looks for, you may end up pay more than necessary.

If you have had your merchandise seized or have received a notice of penalty from customs, call our office at (734) 855-4999 to speak to a customs lawyer about the possibility of getting your penalty reduced, or e-mail us through our contact page. We are able to assist petitions and in penalty cases by customs nationwide.

Counterfeit DVD Seizure by Philly Customs

Posted by Jason P. Wapiennik on May 23, 2014

Customs recently seized some counterfeit merchandise being imported through the port of Philadelphia. Yesterday, we began the first part of our series on what happens when a person or business imports counterfeit merchandise into the United States (please read the article, but I’ll give you a hint: it’s not good). As this customs news release points out, the reasons why customs seizes counterfeit merchandise is often more than just to protect the U.S. trademark holder, but because counterfeit products are often of lower quality and could cause serious harm to the consumers who use them. Read the article below with my own notes written in bold for a play-by-play of how the process of this seizure of counterfeit merchandise plays out.

PHILADELPHIA – The unofficial start to summer arrives in about two weeks, and as is customary, people are feverishly working on sculpting and toning their summer physique. Unfortunately, disreputable organizations know this too, and they prey on that motivation to sell under priced and potentially dangerous counterfeit exercise equipment and technology.

U.S. Customs and Border Protection (CBP) officers in Philadelphia recently seized 36 boxes of counterfeit BeachBody Focus T25 DVDs, and 12 boxes of counterfeit BeachBody P90X3 DVDs, worth an estimated $5,800 MSRP. [NOTE: As we will see in Part 2 of our series on counterfeit trademark customs seizures, MSRP is important when it comes to calculating the penalty the customs will issue to the importer].

The counterfeit DVDs arrived from Hong Kong in two separate shipments and were destined for two addresses in Philadelphia. CBP officers examined the shipments and detained them April 1 to determine their authenticity with the trademark holder, BeachBody. [NOTE: Customs contacts the trademark holder prior to formally detaining the merchandise to determine if the product is truly a counterfeit.]
Philadelphia CBP seized two parcels of BeachBody exercise DVS April 25, 2014.CBP simultaneously worked with the importer and broker to obtain specific authorization from the trademark holder permitting it to import BeachBody products. Neither was able to provide an authorization letter from BeachBody. [NOTE: If the importer has the consent of the trademark holder to import counterfeit merchandise, or if it can obtain permission from the trademark holder prior to forfeiture, it’s possible to get the counterfeits released from seizure].

BeachBody confirmed that the products were counterfeit. CBP seized both shipments April 25 for a violation of 19 USC 1526, Merchandise Bearing and American Trademark. [NOTE: The importer will receive a notice of seizure by mail, with the opportunity to respond by, among other things, filing a petition for remission].

“U.S. Customs and Border Protection urges consumers to be especially vigilant against purchasing suspected counterfeit technology products that may have a hidden, embedded virus that can steal your personal information, wipe your hard drive clean, or destroy your electronic devices,” said Susan Stranieri, CBP Port Director for the Area Port of Philadelphia. “If the price seems too good to be true, it likely is a counterfeit or pirated item, and is a potentially dangerous product.”

The counterfeit DVDs will be destroyed.

Protecting intellectual property rights (IPR) remains a CBP priority trade issue.

CBP protects businesses and consumers every day through an aggressive IPR enforcement program. CBP targets and seizes imports of counterfeit and pirated goods, and enforces exclusion orders on patent-infringing and other IPR violative goods.

The People’s Republic of China, where these DVDs were manufactured, remains the primary source economy for counterfeit and pirated goods seized by CBP and its primary IPR partner, Immigration and Customs Enforcement (ICE). In Fiscal Year 2013, 68 percent of all IPR seizures were for goods manufactured in China. The MSRP of those counterfeit goods was valued at approximately $1.1 billion.

In addition to China, CBP and ICE seized counterfeit merchandise from 73 additional economies during FY 2013, including Hong Kong, India, Korea, Singapore, and Vietnam.

To view counterfeit seizure statistics from 2013, visit CBP’s 2013 IPR enforcement results and CBP’s IPR enforcement for more information on this priority trade enforcement issue.

Inspecting international parcels for dangerous and illicit products remains a CBP enforcement priority.

CBP routinely conducts random inspections operations on passengers and air cargo searching for narcotics, currency, weapons and other prohibited or illicit products.

If you have had money or merchandise seized by customs because they allege it is counterfeit and contains trademark violations, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist petitions for customs seizures nationwide.