Open Communication With CBP Crucial in Fight Against Counterfeiting, Say Industry Officials

The problem of counterfeiting has rapidly increased in importance over the last decade, said government officials. “It’s ever-changing, ever adapting to the pressures that are put upon it trying to correct it,” said Troy Riley, executive director-commercial targeting enforcement at CBP’s Office of Field Operations. “Gone are the days when, 10 years ago, what we had primarily was luxury goods on a street corner sold through flea markets,” said Lev Kubiak, director of Immigration and Customs Enforcement’s National Intellectual Property Coordination Center. The issue of counterfeit luxury goods is still there and still has a “significant impact” on the U.S. economy, but counterfeiters have begun taking their talents elsewhere.

“They’re counterfeiting anything,” said Dee Jay Smith, brand protection manager at Procter & Gamble. “Our old Gillette CEO used to say that if you don’t have a counterfeiting problem you have a marketing problem.” For Smith, the issue with counterfeiting is that the manufacturer doesn’t take the time to ensure quality, he said. “They take the time on packaging to try and confuse you.”

The main tool companies have to keep counterfeit goods out of the U.S. is openness and communication with the government, said Lynn Brennan, assistant port director at Savannah. “Certainly we don’t know the industry as well as you do,” she said. “That’s why the partnership is so important, and of course the exchange of information.” Brennan says she’s often asked who industry should reach out to in order to air their concerns. But the important thing isn’t to get to the right place, but reaching out in the first place, she said. “The important piece is that we make that communication, we make that connection. We will put you in the right center, we will start the right dialogue,” she said. “But the important thing is that we begin to talk, and we start the dialogue, and we keep that dialogue meaningful, and we really look at what our risks are together,” said Brennan.

Procter & Gamble has recently begun a major overhaul in its intellectual property rights protection practices that in part addresses openness with partners in government, said Smith. Years ago, Smith went to Washington to talk with CBP officials about how Procter & Gamble’s IPR regime could be improved. He met with senior government officials, including from the IPR Center, and asked three questions: what does best in class look like; what does worst in class look like; and where did his company fit in. “I learned a lot by just asking those three questions, and finding out what’s important to a U.S. Customs officer, and what is an important to an [ICE] officer.” Smith then turned to companies that don’t compete with Procter & Gamble, and found out what they did to protect their IPR. Smith also connected with the International AntiConterfeiting Coalition (IACC), which sets up training with customs officers around the world.

“This we our experience as a company, and I’ll give you the result: the very next year, our seizures at U.S. Customs were seven times -- 700 percent -- what they were the year before,” said Smith. He said they’ve steadily grown every year since. The point is to connect with the ports, he said. “When I started my round of training … I cannot tell you the number of officers that came up to me and said, ‘I didn’t know you had a counterfeiting problem I was just letting that stuff through,’ because nobody was out there telling them,” said Smith.

Another strategy Smith has used is a system of information sharing with CBP to ensure they have the right information. Although many within Procter & Gamble were initially wary of sharing information with outside parties, the company has come up with a tiered system of access. CBP gets the least restrictions of all. For example, Procter & Gamble shares its chemical specifications with CBP labs so they can detect counterfeit shampoos.

Brokers can also play a major role in helping their clients protect their IPR, said Mary Jo Muoio of OHL Trade Services. Muoio, a former president of the National Customs Brokers & Forwarders Association of America, says brokers should take their clients on trips to the port whenever a client wants to import into a new port of entry. The trips are intended to make CBP “understand what your product is all about, what your business is like. Talk to them about your brand protection,” said Muoio. “I think that’s a very important conversation,” she said.

Muoio thinks the Centers of Excellence and Expertise will also help open communications between CBP and importers of branded merchandise. For example, one of Muoio’s clients, a department store, saw CBP exams of its entries skyrocket, and realized that CBP was targeting misdeclared wire hangers. The department store imported apparel, but didn’t use wire hangers. Muoio put in a call to CBP headquarters, and found a way to assuage CBP’s fears. “It saved the importer a tremendous amount of money, and I think helped CBP utilize their resources to their maximum,” she said. The CEEs will provide a clearer path for this type of communication, said Muoio. “Sometimes, if the broker happens to handle the bulk of the importer’s work, they do have that bird’s-eye view and the total picture of what’s going on,” she said. The CEEs may give CBP the chance to get to the same vantage point, she said. “I think that people who are properly declaring their merchandise are going to perhaps see fewer exams when it’s not needed,” said Muoio.