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

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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Every day, U.S. Customs and Border Protection officers at the airports, seaports, and other border crossings, stop, examine, detain, and seize merchandise from both travelers and commercial cargo importers and exporters.  The process of getting back your property can be a harrowing one fraught with bureaucratic delays.  There is, fortunately, a set of rules that U.S. Customs must follow, and knowing those rules will give you an advantage.

Customs officers may examine cargo to look for illegal drugs, counterfeit merchandise, merchandise from a country with which the U.S. has an embargo, food or medical devices not approved by the FDA, or motorcycles not approved by the EPA, just to name a few examples. 

While the cargo is being held by U.S. Customs, it is transferred to a Centralized Examination Station (CES) where the cargo is separated and intensively examined by Customs officers.  U.S. Customs has 35 days from the date of arrival of the cargo in the United States to detain the merchandise for examination.  See 19 CFR 151.16.  During that period of time, it is the obligation of U.S. Customs to advise the importer, its customs broker, and/or customs attorney with an explanation for the detention.  A written Detention Notice stating the specific reason for the detention should be issued by the U.S. Customs officer.

After 35 days, the Customs Regulations require that the cargo must be seized or released.   Unfortunately, this is too often ignored.  The problem is that U.S. Customs must rely upon other Federal agencies to give it advice whether a violation has occurred. For example, if a shipment of  motorcycles is imported from China, but Customs suspects that they may not satisfy the Environmental Protection Administration (EPA) safety requirements, digital photographs and paperwork must be sent to EPA officials in Washington, D.C. for review and recommendation.  The communication is not directly from the front line U.S. Customs officer to the EPA attorney.  Instead, it will go through the chain of command which typically involves 5 sets of eyes and hands going up the chain and then down the chain.  35 days pass quickly with so many people handing off to each other.  Hence, despite the 35 day requirement, a determination to release or seize may not be made for 60 or more days after being detained by Customs.  Getting frustrated with or repeatedly calling a particular U.S. Customs officer may not be helpful as s/he may also be waiting for an answer from someone else.  Knowing who to call and when is the key to successfully getting cargo released.

The customs attorney hired to assist the importer needs to know the internal procedures of U.S. Customs as well as the laws and regulations it enforces to identify who and when to speak to a Customs officer or other U.S. Government official.  Getting involved early in the detention process is one of the best ways to assist Customs in identifying whether or not there is a violation, and avoiding a seizure or other negative action by U.S. Customs.   For example, if the product is a suspected counterfeit, showing an Import Specialist the license from Bluetooth or Apple could avoid a lengthy, expensive, and totally unnecessary seizure process with U.S. Customs.   Getting a Licensing Officer from the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce in Washington, D.C. to speak directly with the U.S. Customs officer on the Anti-Terrorism Trade Enforcement Team (AT-TET) to clarify any suspected discrepancy in the terms of the export license could avoid an unnecessary seizure.

If a violation does occur, the merchandise will be seized by U.S. Customs. The merchandise is then transported by U.S. Customs from the CES to a Seized Property warehouse.  The merchandise will remain in the warehouse until it is authorized to be released by Customs, and the warehouse is paid its storage fees.

Once the merchandise is seized, the file is forwarded by the U.S. Customs officer to the Fines, Penalties, and Forfeitures Office (FP&F).  The FP&F paralegal reviews the file and prepares a formal, written Seizure Notice. The Seizure Notice is mailed to the alleged violator.  My standard operating procedure is to notify FP&F of my representation of an importer or exporter whose goods have been seized by Customs so that the Seizure Notice is forwarded to me directly. The Seizure Notice will identify what and where the cargo was seized, as well as the legal basis for the seizure. See 19 CFR 162.31(b). 

Once a Seizure Notice is received, the "violator" is provided 30 days to file a Petition with Customs.  The Petition is the means by which the owner of the cargo may seek to persuade U.S. Customs to release the seized shipment.  The Petition may argue that a violation did not really occur, or that there was a violation, however, there were mitigating factors in favor of releasing the cargo.  The Petition should follow the guidelines set forth by U.S. Customs in 19 CFR Part 171.  U.S. Customs also published a very helpful handbook about seizure case processing.

Eventually, U.S. Customs will either grant and release the seized merchandise, or deny the Petition and not release the seized merchandise.  A Supplemental Petition or Offer in Compromise may then be submitted to U.S. Customs.

In summary, the administrative petition process with U.S. Customs can be a long one, however, there are a few key points to keep in mind:

1) Be as careful as possible to be sure imported merchandise complies with all relevant laws and regulations applicable to the particular product;

2) If U.S. Customs detains your products, contact a knowledgeable customs attorney or customs broker to actively demonstrate that there is no violation;  and

3) If U.S. Customs seizes your products, make sure your customs attorney knows the policies, procedures, and practices of U.S. Customs to pursue the release of the merchandise.

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When the International Olympic Committee selected Rio de Janeiro, Brazil, over Chicago, to host the Summer Olympics in 2016, I was surprised and disappointed.  When the media started to report that one of the factors that led the Committee members not to vote in favor of the United States was our security policy toward international visitors, I was intrigued. When I read that Secretary of State Hillary Clinton had previously promised the Committee that the White House would set up a special office to oversee a host of federal agencies to make sure the customs and immigration process would be streamlined so athletes and other visitors would have no trouble getting to the games, then I realized something was seriously wrong.

A New York Times October 2, 2009 article entitled "Chicago's Loss: Is Passport Control to Blame?" stated the case well.  The CEO of the lobbying group U.S. Travel Association also stated on October 2, 2009 that we "need to change impressions of what the experience of travel to the U.S. is like for international visitors."  And he said that the very day after personally meeting with United States Department of Homeland Security Secretary Janet Napolitano.  

I wondered about the impressions that foreign visitors have of clearing the international arrival areas of our nation's airports, including being processed by the U.S. Customs and Border Protection (U.S. Customs).  The results were disturbing.

I randomly spoke to people I knew overseas who were frequent and experienced international travelers. They were Brazilians, Argentinians, Mexicans, Germans, Australians, and Colombians whom I asked for an honest assessment of their U.S. international entry experiences.  Many persons spoke of being selected for questioning by U.S. Customs personnel upon arrival in the United States, usually at an international airport such as New York's JFK, Los Angeles (LAX), or Miami International Airport (MIA).  Many had their baggage examined by CBP officers.   Although unpleasant, most persons did not seem to mind much even though they stated that the border security of the United States was a relatively poor experience compared to other countries.  Virtually everyone I spoke with had a story about a friend or colleague of theirs who was detained and questioned by CBP officers in the United States.  The result was suspicion, and even some hostility, toward the United States regarding its perceived unwelcoming attitude to business persons and vacationers coming to the United States.  Many of those person interviewed mentioned President Bush as the person to blame for their negative perspective.

Clearly, something needed to be done.  Fortunately, sometimes out of something bad comes something good. Within a week of the Olympics going to Rio instead of Chicago, the U.S. House of Representatives passed H.R. 1035, the "Travel Promotion Act of 2009,"  co-sponsored by U.S. Representatives William Delahunt (D-MA) and Roy Blunt (R-MO). The Act would create a public-private partnership to promote the United States as a premier travel destination, and better explain U.S. security policies to our overseas guests. The U.S. Senate already passed identical legislation also entitled the Travel Promotion Act of 2009  (S. 1023) earlier in September, so the Act should eventually become law. As stated explicitly in the Act, the primary purposes of the new organization would be "to identify, counter, and correct misperceptions regarding United States entry policies around the world."

Why does the United States need such an agency? What did we do wrong after 9/11 to have created such a bad impression around the world? In President Bush's National Strategy for Homeland Security issued October 5, 2007, he stated: 

"We have made our borders more secure and developed an effective system of layered defense by strengthening the screening of people and goods overseas and by tracking and disrupting the international travel of terrorists."

Whether "more secure" and "effective" is arguable, however, there certainly had been more aggressive screening of people both prior to their boarding aircraft overseas and upon arrival in the United States during President Bush's "War on Terror".

U.S. Customs has attempted to educate the international traveler by having useful information on its website entitled "Admission into the United States" and even a flow chart of the CBP Inspection Process.  From my own personal contacts, although certainly not any kind of scientifically proven study, I agree with the U.S. Travel Association that we lost the Olympics, in part, because of a perception (real or imagined) that our entry process is just not up to international standards of hospitality. 

While balancing the concepts of border security and facilitating trade is now an ongoing debate, I remain optimistic that the U.S. Congress, President Obama, and DHS Secretary Napolitano have already started to move the country in the right direction in re-evaluating our trade and border security policies and practices. For example, the phrase "War on Terror" is no longer in vogue.  I have personally recently heard both the U.S. Customs' Director of Field Operations for South Florida, Harold Woodward, and U.S. Customs'  Area Port Director for Tampa, Gary McClelland, talk about a renewed relationship with the international trade community to facilitate trade and travel.                                                                                                                                                                

My recommendations are:

(1) If an international traveler is selected, stopped, and questioned by CBP, preferably do it in the person's native language;

(2) With CBP's Treasury Enforcement Communications System (TECS) that includes the Department of Justice's National Crime Information Center (NCIC), the National Law Enforcement Telecommunications Systems (NLETS), U.S. Customs' Automated Targeting System (ATS), Border Crossing Information (BCI), and Advance Passenger Information System (APIS), all of which is provided in advance of the arrival of the airplane in the United States, questioning of passengers should be brief;

(3) anyone detained by CBP should have explained to him or her exactly why the person is being detained, and should be informed how to remedy any false or inaccurate information that may be in a U.S. Customs database; and

(4) invigorate the DHS's Office of Civil Rights and Civil Liberties to directly investigate and then remedy any shortcomings it identifies in the international arrivals process.

Finally, after a long international flight from somewhere such as China, it really is nice to hear a uniformed U.S. Customs officer say "Welcome to the United States."

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Ever since the tragic events of 9/11, the sole focus of U.S. Customs and Border Protection has been anti-terrorism.   This is true, despite the rhetoric in more recent years that U.S. Customs serves the equally vital goals of anti-terrorism and facilitating the flow of legitimate trade and travel.  The former priorities of collecting customs duties and fees, facilitating international trade, preventing illegal trade practices, and interdicting drugs and other contraband was shoved to the side in the name of protecting our homeland from terrorists.

Fortunately, the United States Congress, through the Senate Finance Committee led by Sen. Max Baucus (D-Montana), on August 6, 2009, introduced a bill entitled "The Customs Facilitation and Trade Enforcement Reauthorization Act of 2009." Senator Baucus said that U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) have not been focusing sufficient resources on their trade missions, “and this bill would direct them to do so.”

If the bill becomes law, and it should, because of both Democratic and Republic support,  it would refocus U.S. Customs on regulating international trade, a mission U.S. Customs has performed very well for over 200 years.   In summary, among other things, the law would:

1) Replace the Office of  Trade Relations with a new Trade Advocate, who would be the primary liaison between the public and U.S. Customs;

2) Create a Principal Deputy Commissioner, appointed by the President of the United States;

3) Consolidate the current Office of International Trade and the Office of International Affairs into a single Office of International Trade;

4) Make health and safety issues a top priority;

5) Make protection of intellectual property rights a top priority;

        a) allow trademark and copyright owners to simultaneously electronically register a trademark with the U.S. Patent and Trademark Office or a copyright with the U.S. Copyright Office and also record it with U.S. Customs;

        b) create a new National Intellectual Property Rights Center within the U.S. Immigration and Customs Enforcement Agency; and

6) create enhanced benefits for importers, customs brokers, ocean carriers, and other participants in the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT).

This legislation is long overdue, and I hope it will be supported by the international trade and transportation community of the United States.  For those who want to read all 400 sections of the bill, it is S. 1631.

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The U.S. Court of Appeals for the Federal Circuit just issued an important decision that will help all customs brokers who are facing a broker penalty action pursuant to 19 U.S.C. 1641 and 19 CFR Part 111.  The Court held that U.S. Customs and Border Protection (CBP) must consider all ten factors specifically identified at 19 CFR 111.1 when determining whether or not to mitigate a penalty issued by CBP against a customs broker for failing to excercise "responsible supervision and control."  CBP had argued to the Court that it only needed to consider those factors it thought were relevant.  The Court disagreed with CBP, and reversed the decision of the U.S. Court of International Trade. The Court stated:

"Because Customs did not consider all ten factors listed in 19 CFR 111.1, its determination that UPS violated 19 U.S.C. 1641 was improper. Accordingly, we vacate that portion of he Court of International Trade's judgment and remand for further proceedings."

So, even though the Court determined that UPS was wrong in its tariff classification of imported merchandise, and even though UPS paid CBP $15,000 in penalties for failing to exercise responsible supervision and control, it remains to be seen whether CBP will assess another $75,000 in penalties against UPS.   My guess is that CBP will pursue the remaining penalties against UPS which were also for alleged misclassification of the same merchandise on different entries.  The Court required CBP to at least consider all ten factors, but also explicitly stated that CBP has the discretion to weigh each of the factors as it deems appropriate in determining whether to mitigate a penalty against a customs broker.

If CBP does pursue the penalties, no doubt UPS will challenge them, especially because another remaining legal question will be whether the CBP regulation at 19 CFR 111.91 which limits penalties to a maximum of $30,000 will apply.  That is another issue of importance to all licensed customs brokers. If interested, please read the complete Federal Circuit decision.

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Exporting motor vehicles from the United States to foreign destinations is a common occurrence at many ports around the country, including South Florida’s ports. Whether exporting vehicles for business or personal use, it is important to know the procedures that U.S. Customs (“CBP”) expects you to follow. Not paying attention to the “rules of the road” can result in the seizure of your vehicle(s), and the imposition of hefty penalties.

If you are in the business of exporting cars, or plan to export a car to a foreign country for personal use, it is important to know two different sets of rules. Part 192 of Title 19 of the Code of Federal Regulations (“CFR”) contains the rules for exporting used vehicles. Used vehicles include any vehicle where legal title has been transferred by a manufacturer, distributor, or dealer to the person buying the car. These regulations explain the basic requirements for how to export cars, including the documentation that must be presented to CBP, such as a Power of Attorney, where a company or individual is shipping a motor vehicle on behalf of someone else. The regulations also describe how much it will cost in penalties if a person fails to submit the right documentation, or no documentation at all. The penalties can be severe - up to $10,000 where CBP determines the car was stolen, or the vehicle identification number (“VIN”) has been tampered with.

The second set of rules that you need to know are the port-specific requirements imposed by CBP. This can be tricky because the rules at different ports are not always the same. CBP's Miami Seaport Vehicle Export Section has published a helpful Information Bulletin to assist exporters. The Bulletin describes where, when and how an individual must present documentation for exporting a vehicle from the Port of Miami. The Bulletin also contains a list of the most likely reasons that CBP will reject the export documentation, and prohibit a person from exporting a vehicle.

Anybody who desires to export a motor vehicle should know these rules and follow them carefully. The rejection of documentation by CBP can cause unnecessary delays and additional transactional costs, including storage fees. Failing to follow the rules of the road can even result in seizure of the vehicle(s) by the Government, and the assessment of significant penalties against the exporter.

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