22 January 2013Trademarks

US seizes counterfeit goods worth $1.26 billion in 2012

US customs and border officials seized counterfeit goods worth around $1.26 billion last year, according to a report published by Customs and Border Protection (CBP) last week.

The manufacturers’ suggested retail price (MSRP) of goods seized in 2012 – the money goods would sell for if they were genuine – increased by $150 million from 2011. The number of seizures carried out decreased from 24,792 to 22,848 but 697 websites involved in trafficking counterfeit goods were also shut down.

“As online commerce continues to expand, we are seeing more international criminal organizations exploiting cyberspace to further their criminal enterprises. Internet websites are increasingly the front end or entry point for consumers, businesses and criminal organizations to the international supply chain,” said Lev Kubiak, director of the US Intellectual Property Rights (IPR) Center, in a statement announcing the statistics.

China and Hong Kong remain the top sources of counterfeit and pirate goods, with China accounting for 72 percent of goods seized and Hong Kong accounting for 12 percent.

Apparel and accessories were the most commonly seized commodities, followed by electronics, optical media, handbags and wallets, and watches and jewellery. Handbags and wallets were the most valuable, with an MSRP of $511.2 million – an increase of 142 percent from last year and 40 percent of the total value of seizures.

The report is based on the results of joint efforts by CPB and Immigration and Customs Enforcement (ICE)’s Homeland Securities Investigation HSI.

Ralph Cathcart, a partner at Ladas & Parry LLP in New York who has worked extensively with US customs, said the statistics show authorities are using increasingly sophisticated methods to tackle counterfeiting.

“They used to just turn up at ports and seize goods - now, they are seizing websites and domain names, and are taking a much more aggressive and intelligent approach,” he said.

Susan Kayser, a partner at Jones Day in Washington, agreed. "CBP has been sharing more information with brand owners in order to identify potentially infringing products, and ICE's actions have shut down commercial websites illegally selling and distributing counterfeit goods for multiple brands. Those are important efforts that need to continue."

To effectively tackle online counterfeiting, Kayser said authorities must continue to work closely with brand owners "through a proper judicial process that establishes evidence of counterfeiting prior to seizure, so that neither the government nor brand owners are thought to be over reaching."

But Cathcart does not believe there will be a significant decline in counterfeit production until there is greater co-operation from Chinese authorities.“China is the elephant in the room and we need the Chinese government to take infringement and counterfeiting seriously. Until that happens, we will not see a dramatic decline in goods seized.”

Cathcart also said budget cuts under the next presidential term could affect US customs agencies’ ability to police ports and carry out cyber investigations, but added: “It’s well known that counterfeiting funds terrorism and is not just a matter of IP infringement, so I don’t think the cuts will be dramatic."

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