Customs and International Trade Law Blog : International Trade Lawyer & Attorney : Becker & Poliakoff Law Firm : Customs Law, Border Protection

Every few weeks, I get a call from an international flight attendant who wants my help to deal with a huge fine issued by U.S. Customs and Border Protection. The typical scenario is that while the nice international flight attendant is traveling overseas, she purchases some counterfeit, luxury brand handbags, wallets, watches or jewelry for friends, family, or co-workers back in the States.  Flight crews are rarely stopped and searched by U.S. Customs upon return to the United States, so the risk is low. Unfortunately, some do get stopped, and the Customs officer seizes the counterfeit items.  That is just the beginning of the nightmare.

Some weeks after Customs seizes the counterfeit items, the flight attendant will receive a formal written Seizure Notice stating what was seized, why it was seized, and providing an opportunity for him or her to file a Petition. Since the flight attendant typically only spent a few hundred dollars, and the stuff is clearly counterfeit, most people don't bother to file a Petition, and the merchandise is automatically forfeited to U.S. Customs.

What the flight attendants need to know is that after the merchandise is forfeited, Customs will send a second letter assessing a fine pursuant to 19 U.S.C. 1526(f). The fine is equal to the Manufacturer's Suggested Retail Price (MSPR) as if those counterfeit items were real. So, instead of a fine of a few hundred dollars for a few, counterfeit Rolex or Chanel watches, the fine might total $100,000, as regular readers know from my August 10, 2010 blog post "U.S. Customs Inflates Seizure Statistics".

Now, the flight attendant (or your regular international passenger with the same problem) realizes that he or she needs to get a customs attorney ASAP to file a proper Petition to get the fine reduced or canceled.  If only the flight attendant had read my January 24, 2010 blog post, "Yes, You May Legally Import Counterfeit Merchandise into the United States," there would have been no seizure, and hence, no fine. 

Anyway, I am always available to help a flight attendant in distress with U.S. Customs. Who knows, maybe the flight attendant will return the favor someday with some extra peanuts or, better yet, a complimentary upgrade to first class.  :))

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I welcome your responses. Please click on the "COMMENTS" box below.

Peter Quinter, Partner, Customs and International Trade Department

pquinter@becker-poliakoff.com or (954) 270-1864

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U.S. Customs and Border Protection is one of the leading Federal agencies responsible for stopping counterfeit products from entering the United States. U.S. Customs does a good job seizing counterfeit products at ports around the country on a daily basis.   These counterfeit products vary from sunglasses to handbags to pharmaceuticals to footwear.  But U.S. Customs' press releases always use an unrealistic, inflated number when describing the value of the seized merchandise.

For example, last week in San Francisco, U.S. Customs allegedly seized $100 million counterfeit Gucci, Dooney & Bourke, and various other illegally trademarked merchandise from the Fisherman's Wharf area.  It was originally reported in the San Francisco Chronicle, then appeared on the Associated Press wire to the Chicago Tribune, the Washington Post, and other newspapers around the country.  The Chronicle stated in part:

On Tuesday, they announced the seizure of more than 200,000 counterfeit retail items valued at $100 million - if they were genuine, that is - during what they called the largest-ever bust of retail counterfeiters on the West Coast.

Note the words, "if they were genuine, that is." U.S. Customs uses the Manufacturer's Suggested Retail Price (MSRP), which nobody pays, in reporting the value of the seized merchandise to the press.  So, for example, a blatantly counterfeit Louis Vuitton handbag that would have been sold to a customer at Fisherman's Wharf for $50 may be reported by U.S. Customs to be valued at $1,000, a multiple of 20 times the selling price.

Customs does a good job at identifying, intercepting, and seizing counterfeit merchandise - something it refers to as a "priority trade issue."  Know, however,  that the value U.S. Customs places on the seized counterfeit merchandise is almost always much higher than you and I would pay, even for the real thing.

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Any questions or comments, e-mail me at pquinter@becker-poliakoff.com, or complete the form below.

Peter Quinter, Partner in Charge, Customs and International Trade Department

Telephone (954) 270-1864

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	Using Trademarks in Digital Advertising & Online Marketing

Join us for a Webinar on June 9   Digital advertising is one of the most cost-effective ways to develop brand recognition and create goodwill on a worldwide basis. From Google Adwords to blogging to pop-up advertising, companies have many marketing options available to them.  However, these options are fraught with risk.  Trademark infringement, unfair trade practices, and secondary liability are just a few of the areas that await the unwary when it comes to digital advertising and online marketing. In this webinar, we will explore recent cases in the area of keyword purchasing and use, as well as the latest decisions impacting blogging and pop-up advertising strategies, and related marketing paradigms. We will also discuss best practices for registering and protecting your company's trademarks, and answer questions from participants (time permitting). Space is limited, so register now! Presented by:  Bradley Gross, Esq. Bradley Gross is a partner in the law firm of Becker & Poliakoff, P.A., and directs the Firm's Business Technology Law Group. Positioned at the crossroads of technology and intellectual property law, Brad's practice is devoted to protecting his client's IP, and structuring transactions and creating business solutions in cutting-edge areas of intellectual property, technology and online media law.   Title:   Using Trademarks in Digital Advertising & Online Marketing   Date:   Wednesday, June 9, 2010   Time:   11:00 AM - 12:00 PM EDT   After registering you will receive a confirmation email containing information about joining the Webinar.   System Requirements PC-based attendees Required: Windows® 7, Vista, XP, 2003 Server or 2000   Macintosh®-based attendees Required: Mac OS® X 10.4.11 (Tiger®) or newer   Space is limited. Reserve your Webinar seat now at: https://www1.gotomeeting.com/register/741288225

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My friends tell me one of their favorite activities in China is to buy counterfeit items such as Gucci handbags or Montblanc pens. My friends do worry about U.S. Customs and Border Protection (U.S. Customs) officers looking through their luggage upon arrival at an airport in the United States, seizing the counterfeit items, and fining them.  The truth is that U.S. Customs allows the importation of counterfeit merchandise, but closely follow the rules as I explain them to you now.

First, know that it is generally illegal to import counterfeit merchandise into the United States.  The word "counterfeit" is defined in the Lanham Act at 15 U.S.C. 1124, and the U.S. Customs applicable law allowing for the seizure of counterfeit merchandise is 19 U.S.C. 1526.  That law gives your friendly U.S. Customs officers who are waiting for you at the airport the authority to look through your luggage, and seize counterfeit merchandise from you.  The U.S. Customs regulations at 19 CFR Part 133 give more specific guidelines to travelers interested in this topic. 

What the readers of this blog, and even many U.S. Customs officers, do not know is that it is perfectly legal for a person who visits China, or any other foreign country, to buy counterfeit merchandise there, including one counterfeit Gucci bag and one counterfeit Montblanc pen, declare it on the U.S. Customs declaration form, pass through U.S. Customs, and enjoy using the counterfeit items in the United States.   Of course, you generally get what you pay for, so the $2,000 Gucci bag that you purchased in China for $80 may not be such a bargain, but it can be a lot of fun to shop at a Chinese flea market, and compare the purchased products to the genuine items at your local U.S.-based retail store, or so I am told. 

According to Customs Directive No. 2310-011A dated January 24, 2000, "Customs officers shall permit any person arriving in the United States to import one article, which must accompany the person, bearing a counterfeit, confusingly similar, or restricted gray market trademark, provided that the article is for personal use and not for sale."  Moreover, the Directive states that "Customs officers shall permit the arriving person to retain one article of each type accompanying the person." 

Now, don't go crazy trying to bring too much counterfeit stuff into the United States at once. There are many restrictions.  You can only bring counterfeit stuff in every 30 days, it must "accompany" you which means no FedEx, UPS, or DHL packages, and it is only applicable to "one article of each type" which means, for example, if you attempt to bring in two counterfeit Gucci bags, they both will be seized by U.S. Customs. And "personal use" means for you the traveler only; no counterfeit gifts for your friends and family. 

Finally, please don't waste the U.S. Customs officer's time attempting to explain to him that the fancy watches you purchased are marked "Rolexx" so they are not counterfeiting the Rolex trademark because of the different spelling, or that you did not know that importing counterfeit merchandise was illegal, because now you have read this blog post from "Mr. Customs".  

Just in case you do bring in one too many counterfeit products, there is an administrative process to challenge all seizures made by U.S. Customs, as I described in a previous blog post.

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How often do you think U.S. Customs and Border Protection (CBP) officials have heard an importer say, “. . . but I didn’t tell the manufacturer to put that trademark on there”? Ignorance may be bliss, but CBP will not accept that excuse as an acceptable reason to allow counterfeit merchandise to enter into the United States, or even allow it to move in-transit through the United States. This, however, is the often heard explanation when an importer does not do its due diligence.

There are a few steps every importer should take prior to doing business with a new manufacturer or importing into the United States a new product.

A reputable manufacturer should, and ultimately will, provide a sample. Inspect the sample thoroughly. If it is an electronic item, you may want to go as far as taking it apart to make sure that the inner workings do not contain any trademarks or logos or copyrights which either you did not request or the manufacturer is not licensed to produce. If your sample is different than the merchandise shipped, then you can at least say to CBP, “This is not what I ordered. I have a sample of what I was supposed to receive," and the correspondence with the manufacturer to support your claim. Even if you do not  get your merchandise back from CBP, it is important to understand that you may use your due diligence as a mitigating factor if and when you are fined by CBP.  Fines are routinely issued by CBP pursuant to 19 U.S.C. 1526(e) and equal the Manufactured Suggested Retail Price (MSRP).  Companies which or persons who get such fines may get them reduced by filing a Petition.  Knowing the factors that CBP considers when reviewing the Petition is critical.

Licensing agreements (on paper) can be falsely produced by anyone with a computer and printer. Just because a manufacturer shows you what appears to be a license while attending a reputable tradeshow, does not mean it’s valid.

Just keep the following in mind. Ask for a copy of the licensing agreement, and don’t take a manufacturer’s word that they have a license, verify. Obtain references or work with reputable manufacturers. Don’t think that you’re just getting a great deal, because if it’s too good to be true, then it probably is!  Many trademark and copyright owners maintain websites which list the approved companies authorized to manufacture products with the protected trademarks or copyrights.

And lastly, don’t think that you won’t get caught. Remember, it’s CBP’s job is to protect both you and the economy.  Counterfeits are not limited to cheap handbags at the flea market, but auto parts and aircraft parts,  and many more items that you would not want to be substituted (think medicines).

If a hold, detention, or worse yet, a seizure by CBP occurs at any port in the United States, an importer should promptly contact a customs attorney to file a Petition to attempt to persuade CBP to release the seized merchandise.  Common trademark and copyright counterfeiting is for Bluetooth, Microsoft, Intel, Apple, Underwriter's Laboratories (UL), and Tetris.  Petitions should contain specific information and attach certain types of documentation to convince CBP that it made an error in the initial seizure.  The Customs and International Trade Department attorneys of Becker & Poliakoff are very knowledgeable and experienced in these matters, and may assist companies with the process.   

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