CBP Discusses Recent IPR Enforcement Activities and Future Plans

Highlights of these discussions include:

Current System Has Inefficient Targeting and Unnecessary Inspections

CBP’s goal is to focus its IPR enforcement resources more effectively on high risk imports while facilitating the entry of shipments at low risk for intellectual property rights (IPR) violations. The key to CBP being able to effectively segment high risk from low risk shipments is improvement of its targeting capabilities. CBP notes that the current lack of advance information on legitimate trademarked and copyrighted goods leads to targeting inefficiency and unnecessary inspections.

In addition, CBP’s IPR processes and computer systems have not kept pace with technological advances and currently there is no incentive for a rights holder to provide information to CBP or to validate shipments of legitimate goods in a fashion that would support efficient targeting programs.

CBP outlined two approaches that could enhance IPR targeting:

Trusted partnership expansion. Expansion of trusted partnership programs, including the vetting of supply chains for IPR compliance, could help increase enforcement and facilitate trade by enabling CBP to focus its limited resources on high risk trade. (The current supply chain programs, the Importer Self Assessment program (ISA) and Customs-Trade Partnership Against Terrorism (C-TPAT) do not currently have IPR components. CBP has previously discussed adding an IPR component to ISA (i.e., ISA-IPR), but that idea was met with some trade opposition.)

(See ITT’s Online Archives or 07/27/10 news, 10072718, for most recent BP summary on a possible ISA-IPR.)

Distribution chain management. Another approach discussed by CBP was distribution chain management, a system where a right holder would provide authentication tool (possibly an electronic “key”) to authorized manufacturers who would then pass the tool through the supply chain and ultimately to CBP. CBP states that it is possible that shipments authenticated in this matter would be considered low risk and could be released without inspection.

Several IPR Legislative Proposals are Undergoing OMB Interagency Review

According to CBP officials, several legislative proposals are currently undergoing the Office of Management and Budget (OMB) legislative clearance and coordination process³, including:

• Samples - to give CBP the authority to share unredacted samples (or photos of samples) with rights holders to help CBP make an authentication determination.
• ITC exclusion order actions - to allow CBP to share information on its enforcement of Section 337 International Trade Commission (ITC) exclusion order actions (e.g., seizures, forfeitures, denial of entry, etc.) with rights holders
• Exporter penalties - to give CBP the authority to penalize exporters of infringing goods (CBP currently has the authority to seize exported goods that are infringing, but does not have express authority for a penalty.)
• Circumvention devices - to share information on circumvention devices with rights holders.

(These and other legislative recommendations were included in a March 2011 IPEC White Paper consisting of 20 legislative recommendations to Congress for improving the ability of CBP and other agencies to enforce IPR rights and impose penalties. See ITT’s Online Archives or 03/16/11 news, 11031635, for BP summary of the White Paper.)

CBP Still Plans Pilot for IPR Voluntary Disclosure Initiative

CBP is still attempting to implement a voluntary disclosure pilot program for importers who unknowingly import counterfeit goods and are not aware that CBP or ICE has commenced an investigation into the particular import they are attempting to disclose. Under such a program, the importer would disclose the information on the counterfeit import it accidentally discovers in exchange for a mitigated penalty (probably to zero) and an obligation to destroy the counterfeit goods.

(See ITT’s Online Archives or 10/04/10 news, 10100413, for BP summary of CBP’s previous discussion of plans to conduct a one-year IPR voluntary disclosure pilot.)

Looking for Ways to Streamline Bonding for Circumvention Device Samples

CBP states that if it could obtain legislative authority to share information on circumvention devices with rights holders (see legislative proposals above), CBP would look for ways to streamline bonds for circumvention device samples. CBP states that it would most likely address the issue by including circumvention devices in the IPR continuous bond process it implemented in 2009.

(In 2009, CBP implemented a continuous bond option for IPR samples. See ITT’s Online Archives or 01/27/10 news, 10012710, for BP summary.)

Seeking Input on Strengthening Section 337 Enforcement

As part of an initiative to strengthen Section 337 enforcement, CBP is exploring the concept of establishing an inter partes proceeding for resolution of “design around” issues of 337 patent or ITC litigation. According to CBP, parties are best situated to understand the issues of the “design around” process and help CBP.

CBP states that it would be helpful to know if the trade and patent bar is interested in such a concept.

CBP Uses Various Actions, Initiatives to Combat Counterfeit Pharmaceuticals

A CBP official discussed a variety of initiatives and actions that CBP has taken against counterfeit pharmaceuticals², including (i) conducting an admissibility compliance measurement program for pharmaceuticals in postal and express consignment modes of transportation; and (ii) looking at ways to improve targeting for pharmaceuticals using existing data systems.

CBP will also be working on international enforcement operations, including a proposed Asia Pacific Economic Cooperation (APEC) joint enforcement operation for pharmaceuticals in the mail and express consignment areas. A report on this joint enforcement operation is expected to be presented at the APEC Leaders’ Meeting in November 2011.

Working Group to Ensure Counterfeit-Free U.S. Government Procurement

The Administration has established a government-wide procurement working group which will prepare recommendations on how to reduce the risk of the procurement of counterfeit products (especially by agencies like the Defense Department). CBP is considering how to deal with this issue, including how it can recognize a DOD authenticated part and use this information in its targeting and risk analysis to better segment such goods into a trusted segment of importers and how it can respond to DOD notification about a counterfeit part

¹CBP’s April 13-14, 2011 Trade Symposium and the April 12, 2011 meeting of COAC

²Although not discussed in detail at this Trade Symposium session, CBP has been piloting the Center for Excellence and Expertise (CEE) to serve as a central point of contact for inquiries and resolution of issues regarding pharmaceutical imports. See ITT’s Online Archives or 03/18/11 news, 11031809, for recent BP summary of the CEE pilot.

³OMB reviews and clears all agency communications with Congress, including draft bills, to ensure consistency of agency legislative views and proposals with Presidential policy.

Trade Symposium IPR presentation available here