Lawyers are calling an interim rule of U.S. Customs and Border Protection that allows the agency to share information about potentially counterfeit imports with trademark holders “a good start.”
The April 24 publication of an interim rule in the Federal Register allows the agency to share information protected by the Trade Secrets Act that appears on the merchandise or its retail packaging. The interim rule, titled “Disclosure of Information for Certain Intellectual Property Rights Enforced at the Border,” allows Customs to share product serial numbers, universal product codes and stock keeping unit numbers with trademark owners so the rights owners can help the agency identify counterfeit goods.
The interim rule notes that the “Trade Secrets Act bars the unauthorized disclosure by government officials of any information received in the course of their employment or official duties when such information … concerns or relates to the trade secrets, processes, operations, style of work or apparatus, or to the identity, confidential statistical data, amount or source of any income, profits, losses or expenditures of any person, firm, partnership, corporation or association. … The protection afforded by the Trade Secrets Act, however, must be balanced against the important and legitimate interests of government.”
The National Defense Authorization Act of 2012, which was passed last December, authorizes the information sharing.
Customs is seeking comments on the interim rule by June 25.
The interim final rule protects importers and trademark owners, Customs spokesman Ian Phillips said. It gives importers seven business days from when goods are detained to present evidence about the authenticity of the merchandise, Phillips said. If the importer does not give adequate evidence within that timeframe, Customs can send a sample to the trademark holder for help in determining whether the goods are legitimate or counterfeit, he said.
“The interim final rule enables [Customs] to provide more effective [intellectual property rights] enforcement, including against counterfeit fashion apparel, while providing safeguards for legitimate importers,” Phillips said.
Mark Schonfeld, a partner at Boston-based Burns & Levinson, whose practice includes trademark law, said the interim rule is “a very positive first step” toward greater cooperation between Customs and the intellectual property community. … It’s a good start with trademarks and maybe it could move on to copyrights as well.”
Before the interim rule went into effect, Customs interpreted the Trade Secrets Act as barring it from disclosing images of or information about seized products or releasing samples to trademark holders, Schonfeld said.
In the past, Customs notices about a detained shipment with products that may infringe on a trademark have sometimes raised more questions than answers, he said. “It has been quite difficult to get samples, more information about the importer or the source [of the product], how large the shipment is or the like.”
Julia Huston, who chairs the trademark, copyright practice and unfair competition practice at Boston’s Foley Hoag, said the interim rule is “a very significant development, and one that will really help prevent counterfeiting.”
“Right now it could take the [Customs] agents a long time and a lot of work to determine what is infringing and what is not,” Huston said. “This will allow for a more streamlined process and more likely a more accurate determination.”
Since most trademark owners use their attorneys to file trademarks with Customs, the agency would contact those lawyers about suspect counterfeit goods, Huston said. But she said that one potential problem with the interim regulation is that it doesn’t address so-called gray market goods, also known as parallel imports, which are goods intended for sale in another country but imported into the United States by middlemen.
Such goods often are manufactured with different characteristics or features than a company’s goods for the U.S. market, but they’re not counterfeit, Huston said. During the seven-day window, an importer could demonstrate to Customs that the goods don’t have a counterfeit mark. “This provision could be interpreted to allow parallel importers to do an end run around the disclosure requirement by characterizing their marks as genuine rather than counterfeit even though they are not authorized by the U.S. trademark owner,” Huston said. “This would be an unfortunate result for U.S. trademark owners and the public alike.”
Sheri Qualters is a reporter for The National Law Journal, a Legal affiliate based in New York.