Primer for Trademark and Copyright Protection Through the Office of Customs and Border Protection
Trademarks and copyrights are some of the most important property rights in commerce. Trademarks can be reproduced or changed ever so slightly, and anyone with printing equipment can violate a copyright. There are mechanisms for obtaining worldwide intellectual property rights protection, but for some reason companies, artists, and authors think the federal protections are all they need.
U.S. Customs and Border Protection
The Office of Customs and Border Protection (CBP) is one of the Department of Homeland Security’s largest and most complex components. It has seizure and forfeiture authority for imported articles which violate trademarks, trade names, or copyrights.1 There are criminal sanctions2 for the intentional trafficking or attempts at trafficking in goods bearing counterfeit trademarks. Trademarks and copyrights can be filed with the CBP in order to obtain administrative remedies, which can be quicker and more cost effective. Patents are treated differently and will not be addressed here.
Trademark and Tradename Protection
The importation, with certain exceptions,3 of foreign-made merchandise that bears a registered trademark or trade name owned by a U.S. citizen or corporation recorded with U.S. Customs is prohibited.4 Merchandise imported in violation of the provisions of this section is subject to detention.5 Failure to meet conditions set forth in 19 C.F.R. §133.23(d) can lead to seizure and forfeiture.6
Any merchandise bearing a counterfeit7 mark is also subject to seizure and forfeiture.8 & #x201c;Counterfeit” is defined as a “spurious mark, which is identical with, or substantially indistinguishable from, a registered mark.”9 Whether a mark is “substantially indistinguishable” is a very specialized issue which requires the assistance of an intellectual property attorney. The Customs Service may also impose civil fines when goods are seized and forfeited.10
Also, no article of imported merchandise which copies or simulates a registered trade name or trademark shall be admitted to entry at any customhouse (this covers both domestic and foreign-made articles).11 Importations which use words, terms, or descriptions likely to cause confusion, or to cause mistakes, or to deceive as to the affiliation or sponsorship are also not to be admitted.12
Two Types of Trademark Protection
Articles bearing “confusingly similar” marks may be detained subject to restrictions and related disclosure information.13 When the mark is “confusingly similar,” the articles may be detained subject to further review after the owner of the mark has been given notice. When customs finds a mark to be “substantially indistinguishable,” the articles may be seized and forfeited. Obviously, the owner of the mark should take that opportunity to submit evidence that the articles are “substantially indistinguishable” and that seizure and forfeiture are proper. Any conveyances used in, to aid in, or to facilitate, the importation of any article contrary to law are also subject to seizure and forfeiture.14 Additionally, customs has the authority to issue civil penalties equal to the value of the merchandise.15
Gray Market Goods
“Gray market goods,” or “parallel imports,” are defined generally as foreign-manufactured goods bearing a valid U.S. trademark, which are imported without the consent of the U.S. trademark owner.16 Customs provides limited protection to trademark owners against importations of certain gray market goods.17 It is unlawful to import any merchandise of foreign manufacture if the merchandise bears a U.S. trademark registered in the Patent and Trademark Office, unless written consent of the trademark’s owner is produced at the time of entry. The owner of a registered trademark may record the trademark with the Department of the Treasury and then the Customs Service.18
“Restricted gray market articles” are foreign-made articles bearing a genuine trademark or trade name identical with or substantially indistinguishable from one owned and recorded by a citizen of the United States, corporation, or association created or organized within the United States and imported without the authorization of the U.S. owner. “Restricted gray market goods” (or articles) also include those bearing a genuine trademark or trade name of a foreign owner 1) under the authority of a foreign trademark, or 2) trade name owner other than the U.S. owner, a parent or subsidiary of the U.S. owner, or 3) a party otherwise subject to “common ownership or control” with the U.S. owner.
Important Exceptions to Denial of Entry: Common Ownership or Control
All “restricted gray market goods” imported into the United States are to be denied entry and are subject to detention unless an exception applies. The term “common ownership” means “individual or aggregate ownership of the business entity,” while the term “common control” means “effective control in policy and operations and is not necessarily synonymous with common ownership.”19 So, if an identical or similar mark is applied to imported merchandise by a foreign owner that is subject to common ownership and control with the U.S. owner, CBP will not confer gray market protection to the mark. It is assumed the U.S. common owner or common controller can act to prevent importation or the matter should be addressed through private remedies. This is known as the “affiliate exception” to customs enforcement of restrictions under §42 of the Lanham Act of 194620 ( Trademark Act) against the importation of gray market goods.
Exception to the Exception: Goods Physically and Materially Different
The common ownership or control of “affiliate exception” does not apply to goods that the Customs Service has determined to be physically and materially different from the articles authorized by the U.S. trademark owner for importation or sale in the United States. Goods determined to be physically and materially different, bearing a genuine mark applied under the authority of the U.S. owner — or a party otherwise subject to common ownership or control with the U.S. owner — shall not be detained where the merchandise or its packaging bears a conspicuous and legible label designed to remain on the product until the first point of sale to a retail consumer in the United States stating that: “This product is not a product authorized by the United States trademark owner for importation and is physically and materially different from the authorized product.” The label must be in close proximity to the trademark as it appears in its most prominent location on the article, the retail package, or container. Other information designed to dispel consumer confusion may also be added.
Procedures on Detention of Trademarked Goods Subject to Restrictions
Restricted articles shall be detained for 30 days from the date on which the merchandise is presented for customs examination.21 Bear in mind that most of these products will be in large shipping containers. “Examination” does not mean the customs agents will go through all containers looking for violations. They depend on the recording of an owner’s trademark with the product(s) adequately identified. Thus, the trademark owner must know how the goods would be described on importation documentation. After detention, the importer must be notified of the detention within five days.22 The importer may, during the 30-day period, establish that there is no violation. Extensions of the 30-day time period may be freely granted for good cause shown.
“Reasonable Suspicion” for Detention
Customs policy mandates that suspect trademark-violative goods can only be detained upon a “reasonable suspicion” that the goods bear marks which violate a federally registered trademark. If a customs officer can articulate a basis for having such “reasonable suspicion” at the time of presentation to customs, he may formally detain the goods at that time. When a customs officer is unsure whether to formally detain the goods at the time of presentation to customs, he may detain the goods for a five-day period to determine whether such “reasonable suspicion” exists.23
If customs determines that such “reasonable suspicion” exists, it is to issue a formal letter of detention to the importer before the expiration of the five-day period. Customs may disclose to the owner of the trademark or trade name any information to obtain assistance in determining whether an imported article bears an infringing trademark or trade name and should be detained. Once a notice of detention is issued, customs must disclose to the owner of the trademark or trade name the following information, if available, within 30 days of the date of detention, excluding weekends and holidays: the date of importation, the port of entry, a description of the merchandise, the quantity involved, and the country of origin of the merchandise.
Prior to seizure, customs may provide a sample of the suspect merchandise to the owner of the trademark or trade name for examination or testing to assist in determining whether the article imported bears an infringing trademark or trade name. To obtain a sample under this section, the trademark/trade name owner must request it and furnish customs a bond in the form and amount specified by the port director, conditioned to hold the United States, its officers and employees, and the importer or owner of the imported article harmless from any loss or damage resulting from the furnishing of a sample by customs to the trademark owner. Customs may demand the return of the sample at any time.
In the event that the sample is damaged, destroyed, or lost while in the possession of the trademark or trade name owner, the owner shall certify to customs that: “The sample described as [insert description] and provided pursuant to 19 C.F.R. §133.25(c) was (damaged/destroyed/lost) during examination or testing for trademark infringement.” This certification does not relieve the trademark owner from liability if the articles are not found to be subject to import restrictions.
Demand for Redelivery of Released Merchandise
If it is determined that merchandise that has been released from CBP custody is subject to the restrictions, the port director shall promptly make demand for the redelivery24 of the merchandise under the terms of the bond (CBP Form 301).25 It should not be left to the port director to discover that restricted merchandise was released from CBP custody. The trademark owner must be diligent in monitoring the importation of merchandise that infringes on its trademarks and copyrights and notifying the port director of any suspect activity. If the merchandise is not redelivered to CBP custody, a claim for liquidated damages shall be made.26
Civil Fines for Importation of Counterfeit Trademark Goods
In addition to any other penalty or remedy authorized by law, the CBP may impose a civil fine on any person who directs, assists financially or otherwise, or aids and abets the importation of merchandise for sale or public distribution that bears a counterfeit mark27 that has resulted in a seizure of the merchandise.28 for the first seizure of merchandise, the fine imposed will not be more than the value the merchandise would have had if it were genuine, according to the manufacturer’s suggested retail price in the United States at the time of seizure. On the second and each subsequent seizure under this section, the fine imposed will not be more than twice the value the merchandise would have had if it were genuine, according to the manufacturer’s suggested retail price in the United States at the time of seizure.
Importer’s Remedies: Responding to a Notice of Detention or Seizure
The allegation that a party is attempting to import products that may infringe upon the rights of others can best be defended by providing written proof from the holder that the importer is an authorized importer of the merchandise. Prudent importers should establish a system for routinely requesting and obtaining such authorizations from holders and suppliers. In the event of a detention, the authorization granted to the holder is included in a letter to customs called a “petition,” which explains the circumstances of the importation and the reasons that customs should promptly release it. An importer may also file a CBP form called a “protest.”29
Importance of Identifying Goods on Trademark Application
An importer should also research the trademark in question. A trademark application must contain a statement identifying the goods and/or services with which the mark is used or will be used. The identification of goods and/or services must be specific enough to identify the nature of the goods and/or services. The level of specificity depends on the type of goods and/or services. Even if a customs officer finds a “reasonable suspicion” that the goods bear marks violating a federally registered trademark, there may be no violation if the use or intended use is different from that stated in the trademark application. This illustrates a good reason for counsel to review the trademark application prior to recording with the CBP.
Alternatives to petitioning customs are to abandon the merchandise, or file a claim and cost bond, which forces the local U.S. attorney’s office to file a forfeiture complaint in federal court against the seized merchandise.
Copyrights: Infringing Copies or Phonorecords
Infringing copies or phonorecords are “piratical” articles: that is, copies or phonorecords that are unlawfully made without the authorization of the copyright owner. The importation of infringing copies or phonorecords is prohibited. The port director must seize any imported article that is determined to be an infringing copy or phonorecord. The port director shall also seize imported articles if the importer does not deny they are infringing copies or phonorecords. In either case, the port director shall institute forfeiture proceedings.30
When “piratical” merchandise is seized, customs must disclose to the owner of the copyright31 The date of importation, port of entry, description of the merchandise, quantity involved, name and address of the manufacturer, country of origin, name and address of the exporter, and the name and address of the importer. After seizure of the merchandise, customs may provide a sample of the suspect merchandise to the owner of the copyright for examination, testing, or any other use in pursuit of a related private civil remedy for copyright infringement.
The copyright owner must furnish customs a bond in the form and amount specified by the port director, conditioned to hold the United States, its officers and employees, and the importer or owner of the imported article harmless from any loss or damage resulting from the furnishing of a sample to the copyright owner.32 Customs may demand the return of the sample at any time. The owner must return the sample to customs upon demand. In the event the sample is damaged, destroyed, or lost while in the possession of the copyright owner, the owner shall, in lieu of return of the sample, certify to customs that: “The sample described as [insert description] provided pursuant to 19 C.F.R. §133.42(e) was (damaged/destroyed/lost) during examination, testing, or other use.”
If phonorecords or copies of motion pictures arrive in the U.S. bearing counterfeit labels, customs should consider referring the violation to the Department of Justice for possible criminal prosecution pursuant to the “Piracy and Counterfeiting Amendments Act of 1982” (18 U.S.C. §2318). This law provides a minimum fine of $25,000 or imprisonment for not more than one year, or both. For willful infringement of a copyright for commercial advantage, the maximum penalty is a fine of $250,000 or imprisonment for not more than five years, or both.
Procedure on Suspicion of Infringing Copies
If the port director has any reason to believe that an imported article may be an infringing copy or phonorecord of a recorded copyrighted work, it is to be withheld and the importer notified and advised that he may file a statement denying that the article is in fact an infringing copy, and the detention will result in a material depreciation of its value, or a loss or damage to him. The port director must also advise the importer that absent a denial within 30 days, the article shall be considered an infringing copy or phonorecord.
Notice to Copyright Owner of Denial by Importer
If the importer files a denial, the port director must furnish the copyright owner with — if available within 30 days of the receipt of the importer’s denial, excluding weekends and holidays — the date of importation, port of entry, description of the merchandise, quantity involved, country of origin of the merchandise, and notice that the article will be released unless, within 30 days, the copyright owner files with the port director written demand for the exclusion and a bond as specified by the port director. If the copyright owner files a written demand for exclusion together with the proper bond, the port director must promptly notify the importer and copyright owner that within up to 30 days, they may submit evidence, legal briefs, or other pertinent material to substantiate the claim or denial of infringement. The burden of proof is on the party claiming that the article is in fact an infringing copy — meaning the copyright owner.
Exchange of Briefs
Before submitting the additional evidence, legal briefs, or other pertinent material to customs, the importer and the copyright owner must provide each other with a copy of all such information, including the importer’s denial of infringement and the copyright owner’s demand for exclusion. The submission must contain a written statement confirming that a copy has already been provided to the opposing party. The port director then notifies the parties they have up to 30 days to provide a response to the arguments submitted by the opposing party. No additional material from the parties is to be accepted after the final 30-day rebuttal period expires.
Decision on Infringement
Upon receipt of rebuttal arguments, or 30 days after notification if no rebuttal arguments are submitted, the port director forwards the entire file, together with a sample considered as possibly infringing, to customs headquarters (Attention: International Trade Compliance Division, Office of Regulations and Rulings) for a decision on the disputed claim of infringement. The final decision on the disputed claim of infringement is sent to the port director who shall send a copy to the copyright owner and the importer.
Alternative: Civil Action
As an alternative to this administrative procedure, the copyright owner, whether he or she has recorded the copyright with customs, may seek a court order enjoining importation of the article. To obtain customs enforcement of an injunction, the copyright owner must submit a certified copy of the court order to the Commissioner of Customs, Attention: Office of the Chief Counsel. If the copyright in question is not recorded with customs, the copyright owner must submit the $190 fee.
Tradename and Trademark Protection Approach
Customs uses a two-tiered approach to trademark and tradename protection. The first tier of this approach is customs protection afforded pursuant to the “recordation process.” Under this system, trademark holders, once having duly registered their trademark rights with the U.S. Patent & Trademark Office, may request that customs collect and retain information relative to those rights for a specified time, during which customs shall actively monitor imports in order to prevent the importation of violative articles.
The second tier is the customs’ “application process.” Under this system, trademark holders, having registered their trademark rights with the U.S. Patent & Trademark Office and with U.S. Customs, may provide customs with information relative to the importation of violative goods so that customs can prevent such importation.
How to Record Trademarks with Customs
The applicable regulations for recording trademarks and tradenames are found at 19 C.F.R. §133.1, et seq. To record a trademark or tradename, the applicant will need the U.S. Patent & Trademark registration number and a digital image of the protected mark in “jpg” or “gif” format and individual image files are limited to 2MB. The following documents are required for the application: 1) a certified status copy of the certificate of registration from the U.S. Patent and Trademark Office showing title in the name of the applicant, and 2) five copies of this certificate or of a U.S. Patent and Trademark Office facsimile.
The regulations refer to recording of trademark documentation by mailing forms and documentation. However, CBP has advanced ahead of the regulations and the preferred method for recording is electronically. This is done through the Intellectual Property Rights e-Recordation (IPRR) application found at https://apps.cbp.gov/e-recordations. Here, the applicant chooses either trademark or copyright recordation and fills out the form electronically. Documentation is filed as image files. The application fee of $190 is paid by credit card.
Copyright Protection Recordation
The applicable regulations for copyrighted works are found at 19 C.F.R. §133.33, et seq . The following documents are required: 1) an ‘‘additional certificate’’ of copyright registration issued by the U.S. Copyright Office, and 2) five photographic or other likenesses of any copyrighted work unless it covers a work such as a book, magazine, periodical, or matter identifiable by title and author or is a sound recording. As with trademarks, the preferred method for recording is electronically. This is done through the Intellectual Property Rights e-Recordation (IPRR) application found at https://apps.cbp.gov/e-recordations. The applicant chooses copyright recordation. Documentation is also filed as image files.
In today’s global market economy, trademarks and copyrights must be viewed differently than in the past. Now registered trademarks and copyrights are but the first steps in the process of obtaining protection against imported goods which violate property rights. Otherwise, the owner will lose market share for genuine goods or see the trademark diminish in value because of inferior products bearing the same mark.
1 1 9 U.S.C. §1595a(c)(2)(C).
2 1 8 U.S.C. §2320.
3 1 9 C.F.R. §133.23(d).
4 1 9 U.S.C. §§1526(a) and (b).
5 1 9 C.F.R. §133.25.
6 1 9 C.F.R. §133.23(f).
7 1 5 U.S.C. §1127 defines “counterfeit” as a spurious mark, which is identical with, or substantially indistinguishable from, a registered mark.
8 1 9 U.S.C. §1526(e).
9 1 5 U.S.C. §1127.
10 1 9 U.S.C. §1526(f).
11 1 5 U.S.C. §1124.
12 5 U.S.C. §1125.
13 1 9 C.F.R. §133.22.
14 1 9 U.S.C. §1595a(a).
15 1 9 U.S.C. §1595a(b).
16 K Mart Corp. v. Cartier, 486 U.S. 281, 285 (1988).
17 The regulations implementing the gray market statute, 19 U.S.C. §1526(a), are set forth at 19 C.F.R. §133.23.
18 1 5 U.S.C. §1124.
19 1 9 C.F.R. §133.2(d)(1)-(2).
20 1 5 U.S.C. §1124.
21 1 9 C.F.R. §133.25.
22 The timely issuance of notices has not been one of CBP’s strongest accomplishments.
23 1 9 U.S.C. §1499.
24 1 9 C.F.R. §133.26.
25 CBP Form 301, http://forms.cbp.gov/pdf/CBP_Form_301.pdf.
26 1 9 C.F.R. §141.113(h).
27 1 9 U.S.C. §1526(f); 19 C.F.R. §133.27.
28 1 9 U.S.C. §1526(e).
29 CBP Form 301, http://forms.cbp.gov/pdf/CBP_Form_19.pdf.
30 1 9 C.F.R. §133.42.
31 This assumes the copyright was recorded with customs.
32 CBP Form 301, http://forms.cbp.gov/pdf/CBP_Form_301.pdf.
Clayton J. Joffrion of New Orleans, Louisiana, has been a member of the Florida and Louisiana bars for over 21 years. He received his J.D. from Loyola University in New Orleans and an LL.M. in international law from the University of Miami. His primary focus is on imports, non-tariff barriers to trade, and foreign laws.
This column is submitted on behalf of the Out of State Division, Michael Gary Busenkell, president.