Category: Penalties

592 Penalties Liability; Smugglers Circumvent Duties

Posted by Jason P. Wapiennik on August 27, 2014

A recent story about the criminal conviction of 5 people for smuggling aluminum extrusions and circumventing anti-dumping and countervailing duty orders illustrates the point that importing into the United States requires due diligence. 592 penalties, and others, await those who importers who do not due their due diligence. Importing is not some casual business for the novice entrepreneur looking to make a fast buck.

I am sharing and commenting on this story to pose the question: what if you got wrapped up in this (criminal) charade unintentionally? Imagine you were buying what you thought were Malaysian origin aluminum extrusions from a supplier in Malaysia that were, in reality, Chinese origin aluminum extrusions. That means rather than only being responsible for the normal duty applicable to the merchandise, they are subject to an additional duty of 374% ad valorem. What happens to you — the innocent importer?

You receive a duty demand or supplemental duty bill for the unpaid anti-dumping or countervailing duties. Maybe also an investigation or pre-penalty notice for potential violations of section 592 penalties, alleging 592 penalties for negligence or gross negligence in importing into the United States. Even though you did not know about it. The law does not require that you know the 592 Penalties - Keep Calm and Contact Your Customs Attorney true country of origin to be responsible for duties owed because of the true country of origin.

In short, failure to perform due diligence and verify your supply chain and the true country of origin of the aluminum extrusions would leave you in an awful financial situation. It pays to investigate your supply chain, asks questions of your suppliers, verify all parts of the import transactions, and when in doubt, hire a customs lawyer. Because in customs law, you can often held responsible for the mistakes of others.

On to the story below (original HERE):

SAN JUAN, Puerto Rico — Five defendants plead guilty Monday in Federal District court, to charges of conspiracy to smuggle aluminum extrusions into the United States, with the intent to avoid paying antidumping and countervailing duties.

[Five people] and PRP Trading Corporation, plead guilty before US District Court Judge Francisco Besosa, after reaching a plea agreement with Assistant US Attorney Scott Anderson. A sentencing hearing is scheduled for December 17, 2014.

The defendants were indicted by a grand jury after an investigation [ ]. According to the indictment, the defendants knowingly and willfully . . . conspired . . . to smuggle . . . merchandise imported from China . . . by passing false and fraudulent invoices and documents through the San Juan CBP customhouse with the intent to defraud the United States in lawful antidumping and countervailing (ADD/CVD) duties accruing upon said merchandise.

The object of the conspiracy was that [the] owners and/or principals of Sultana Screens & Aluminum Sales, PRP Trading, and Aluwest Industries, with the assistance of William Tang Piu Wong, would purchase aluminum from China, transship the aluminum to Malaysia, repackage the aluminum and create false invoices to make it appear as though the aluminum originated in Malaysia, and then import the aluminum into Puerto Rico in order to avoid payment of the antidumping and countervailing duties (ADD/CVD).

You can read the rest HERE. Usually people smuggle drugs, money, gold, jewelry, and other things we consider valuable. Aluminum extrusions are not in that category. But, the smuggling here dealt with avoiding paying extra duties. That gets the product in cheaper than competition. But how much duty savings is your freedom, or non-liability for 592 penalties worth?

If you need help conducting due diligence, or face duty or penalty liability with customs you should contact our office by e-mail or call (734) 855-4999. We are experienced in defending customs 592 penalties, disclosing potential violations through prior disclosures, responding to notices of penalties, and preparing detailed and well argued petitions for mitigation of penalties or liquidated damages. You can also make use of our other articles, such as:

Customs 592 penalties 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.

Customs Wood Packaging Material Violations In The News Again

Posted by Jason P. Wapiennik on July 24, 2014

Wood Packaging Material violations and penalties should be something you don’t hear about in the news anymore. But WPM violations and the penalties that come with them, still rear their head everyone once in a while. We authored an article on everything you need to know about Regulated Wood Packaging Material violations and penalties, which discussed the elements of a violation, possible resolutions for the importer who is facing re-export of WPM, and notice of penalty for importations contrary to law for WPM violations.

The reason this should be something that don’t hear about anymore is because the restrictions on WPM have been in place since 2005… the trade community was given ample time to comply. Yet still, almost 10 years

later, customs released a C-TPAT alert for non-compliant wood packaging material violations. The whole alert is HERE, but I quote some parts below:

The purpose of this C-TPAT Alert is to inform all C-TPAT Partners, particularly its sea carriers, of recent interceptions of non-compliant wood packing material (WPM) used in flat rack cargo carried by ocean vessels traversing the Mediterranean.

WPM is defined as wood or wood products (excluding paper products) used in supporting, protecting, or carrying a commodity. Some examples of WPM include: bins, cases, cratings, reels, load boards, boxes, containers, pallets, skids, dunnage and crates. Snails and other pests may infest non-compliant wood packing material. These pests are regulated under the Federal Plant Protection Act. Snail

infestations of WPM is just an example of a threat that targets the world’s agriculture and the Nation’ food supply. With the ever increasing amount of trade, the threat to U.S. crops and livestock is real.

The commodities with the highest incidence of WPM pests include: manifested WPM; machinery (including auto parts); metal products; and stone products (including tile).
Other high risk commodities include electronics and electronic components, finished wood articles, plant products and foodstuffs.

Please read our article including everything you need to know about WPM violations by CLICKING HERE.

If you have been informed that you wood packaging material is in violation of the law and needs to be re-exported, immediately call or e-mail office at (734) 855-4999 and we can prepare an application to separate violative wood packaging material so that, if it is granted, you do not have to undergo the time and expense of re-exporting the merchandise you are trying to import.

If you have received a notice of penalty or liquidated damages and are being told you must pay as a result of the violation, immediately call or e-mail our office at (734) 855-4999 and we can prepare a petition for mitigation of the penalty amount.

Never pay full price in a penalty proceeding!

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.

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.

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.

Detroit Customs Seizes Imported Machine Gun

Posted by Jason P. Wapiennik on June 2, 2014

Customs in Detroit recently seized a firearm, as detailed in a local and interesting news release. In this case the firearm was a .50 caliber machine gun. The original story is available here, but it is reproduced in full below. The only information we have available is that which is in the news release, which is a bit foggy on the details, but nevertheless it appears this was primarily a problem with insufficient and incorrect/misleadings documents presented to customs at the time of entry into the United States. The driver of the commercial cargo van only presented a manifest and a “generic email” the described the shipments as machine gun parts when, allegedly, it was an “assembled” U.S. origin machine gun (picture below, appears disassembled but more than just “parts” as described by the manifest).

Ultimately, Customs seized the gun apparently not because it was prohibited from entry, but because the importer “failed to satisfy federal importation procedures [regarding] documentation, manifest, bill of lading, entry type, proper invoice, tariff classification and proper disclosure of intent.” The story below:

DETROIT- U.S. Customs and Border Protection (CBP) at the Fort Street Cargo Facility in Detroit seized a .50-caliber machine gun during a cargo inspection. .50 Cal Machine Gun Seized at Fort Street Cargo Facility
On May 13, a commercial cargo van arrived at the cargo facility with only a copy of an electronic manifest and no invoice to describe the cargo. The only information about the shipment provided by the driver was the manifest, listing the shipment as Cal Machine gun parts and a generic email. The shipment was in fact, an assembled .50 caliber machine gun manufactured by an Ohio company.

After consultation with Homeland Security Investigations, Immigration and Customs Enforcement and agents from Alcohol, Tobacco and Firearms (ATF), CBP officers seized the machine gun as the shipment failed to satisfy federal importation procedures in regards to documentation, manifest, bill of lading, entry type, proper invoicing, tariff classification and proper disclosure of intent.

“Both CBP and the importing community have a shared responsibility to maximize compliance with laws and regulations. CBP encourages importers to be familiar with applicable laws and regulations, especially when there are specific requirements related to a particular commodity,” said Rod Blanchard, CBP Port Director in Detroit.

A monetary penalty was assessed against the importer and the weapon was returned to Canada.

Importers and travelers should visit www.atf.gov for importation information for firearms.

Based on the story, it seems that all of these problems could have been avoided if the importer had done their customs law homework and either consulted with or hired a customs broker prior to attempting to import the machine gun into the United States. Here is where the story gets a little more confused; although it seems customs seized the machine gun, it also seems that the seizure was shortly remitted and allowed to be shipped back to Canada.

The bad news is that the importer was already assessed a penalty (also, if true, that’s a fast turn around for a penalty from customs — it can sometimes take months). Great Lakes Customs Law handles penalty mitigation proceedings (some history of our success is HERE) and, if not already done, this importer should seriously consider trying to get the penalty mitigated if the amount is high. I do wonder what the penalty amount and basis is for this particular alleged violation because I could foresee a variety of them including importations contrary to law, falsity of manifest, failure to declare, and a few others.

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.

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.

Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 1

Posted by Jason P. Wapiennik on May 21, 2014

Often, people and businesses can knowingly or unknowingly import counterfeit trademark merchandise into the United States. The majority of these types of importations we encounter for clients are Internet purchases from China, such as purses, videos/DVDs, guitars, clothing, electronics and accessories, but they can really be any type of product and from any country. Sometimes people know the merchandise is counterfeit but other times they do not have any suspicion, or in some circumstances truly know that what they are importing is not counterfeit. Even if ignorant about the merchandise being counterfeit, if it really is counterfeit then the property is still subject to seizure and forfeiture by U.S. Customs and Border Protection.

What is a counterfeit or trademark violation?

Counterfeit merchandise is merchandise that “bears a trade-mark owned by [someone in] the United States, and registered in the . . . [Patent and Trademark Office].” The counterfeit mark can be on the “merchandise, or the label, sign, print, package, wrapper, or receptacle” itself. 19 USC 1526(a). A counterfeit mark is a spurious trademark that is identical to, or substantially indistinguishable from, a registered trademark. 19 CFR 133.21(a). If you do not have permission of the trademark owner to import the merchandise, it’s illegal to import it.

Because the counterfeit merchandise is illegal, it is subject to seizure and forfeiture by U.S. Customs & Border Protection under most circumstances (usually it must also be recorded with CBP per 19 CFR 133.21(b)). 19 USC 1526(b) and (e). This means that customs can take the suspected counterfeit merchandise and destroy it, or if they can obliterate the counterfeit marks and get the consent of the trademark owner, then customs can give it to charity, give it to a government agency for its own use, or sell it at public auction.

Is it possible to get the seized merchandise released?

Before customs can destroy the counterfeit/trademark violations, give it away, or sell it, they must first give the importer a chance to respond. Since October 2015, at the time of detention or even after seizure, the importer has a right to request samples of seized merchandise from CBP. After merchandise is seized, Customs through its Fines, Penalties and Forfeitures (FP&F) office, will send a “notice of seizure” of the counterfeit merchandise to the importer of record. The importer then has several options, among those are the ability to file a petition for remission of forfeiture with FP&F. In this petition, the importer has opportunity to demonstrate that there are no counterfeit/trademark violations involved with the import of the merchandise.

Alternatively, the importer could argue in the petition for remission to customs that some exception to seizure and forfeiture applies. If the importer can prove that the goods are not counterfeit, then the seizure would be remitted and the merchandise released to the custody of the importer. A similar result is possible in certain other circumstances, like if they are permitted genuine, gray market goods, or are for personal use and accompanying a traveler entering the U.S., or if the trademark owner consents to the importation and the counterfeit marks are destroyed.

My merchandise was seized and forfeited as counterfeit. Am I in any other trouble?

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.

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.

Seattle Customs Seizures for Currency and Trademark Violations

Posted by Jason P. Wapiennik on February 25, 2014 with 1 Comment

Have you had your merchandise or currency seized in Seattle? You’re not alone. The annual fiscal year summaries have been released by the Port of Seattle, with the following statistics:

Seattle – U.S. Customs and Border Protection (CBP), announces that more than 26.4 million travelers were screened for entry into the United States during fiscal year (FY) 2013 (October 1, 2012 through September 30, 2013) by the 1,364 officers and 122 agriculture specialists assigned to the Seattle Field Office (SFO). Among those travelers, CBP discovered $2.8 million in unreported currency, interdicted more than 767 pounds of illegal drugs, made 1,147 arrests, and seized more than 113,000 prohibited plant and animal products.

If you have had your money seized by customs, read visit our page that is devoted to understanding currency seizures to help you understand the process.

But, the news release deals not only with customs money seizures, either, but also with customs seized merchandise imported for violation of intellectual property rights, too. We have previously written articles on trademark infringement gray market goods and trademark infringement, which can help you understand the process more.

CBP continues to protect consumers by seizing prohibited, unlawful, or undeclared goods destined for the United States. [ . . . ] In Seattle, CBP officers and import specialists seized a shipment of handbags in November 2012 containing 644 items, including counterfeit Louis Vuitton, Coach, and Versace purses with a manufacturer’s suggested retail value of nearly $100,000. [ . . . ]

Protecting consumers from hazardous products is another way CBP stands guard over the flow of commerce. CBP officers partnered with Consumer Product Safety Commission investigators in Seattle to seize various shipments of foreign-made children’s products containing excessive levels of lead; the unsafe imports included wearing apparel and necklaces, reindeer ornaments activity kits, magic coin tricks, and dart ball game sets. Another hazardous product targeted are toys intended for use by children under 3 years of age; two shipments totaling 4,000 cartons of plastic bath toys were seized as they posed a potential choking or ingestion hazard to America’s children.

If you have had money or merchandise seized by customs call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. Once your merchandise is seized, Customs may issue a penalty for the violation of law itself. If you have received a notice of penalty from U.S. Customs call our office immediately to discuss the possibility of filing a petition to reduce the penalty amount.

We are able to assist petitions and in seizures by customs nationwide.