This post is part of a multipart series designed to help right holders and importers better understand the opportunities and obligations that attach to intellectual property rights (IPR) in the international trade regulatory environment.
The first installment in this series is on trademarks, and is split into two parts. Part 1 explored infringement levels recognized by U.S. Customs and Border Protection (CBP) and their accompanying enforcement regimes. In Part 2, we complete the trademark-trade picture by discussing enforcement relief options and presenting best practice tips for both right holders and importers.
Subsequent installments in the series will examine the protection and compliance strategies that correspond to copyrights and patents under U.S. trade law.
I. Enforcement Relief and Trademarks
Assuming the gravity of a trademark infringement does not rise to the level of a criminal referral, both remission and mitigation/cancelation relief is, on a case-by-case basis, available. The authority for this relief is found at 19 USC 1618 and 19 CFR 171.
A. Remedies Following Seizure
A trademark-based seizure presents an importer with a choice of procedural pathways for proceeding. These include: (i) requesting administrative forfeiture proceedings; (ii) filing a claim and cost bond and requesting referral of the matter to the U.S. Department of Justice (for subsequent judicial action); (iii) submitting an offer in compromise to the port director (with an eye to reaching a settlement); and (iv) filing a petition for administrative relief with the fines, penalties, and forfeitures officer at the port of seizure. Petitions seeking relief from a seizure typically advance claims regarding the distinctive and non-infringing characteristics of the merchandise, the attainment of right holder consent or authorization, the availability of an exemption, and/or the controlling nature of an importer’s interest in the IPR. The fines, penalties, and forfeitures officer’s relief decision will be taken with reference to the parameters set forth in CBP’s published guidelines and is not subject to administrative protest.
B. Mitigation/Cancelation of Penalties
Importers can seek relief from any civil fine issued by CBP subsequent to the perfection of a forfeiture by filing a petition for the mitigation or cancelation of the penalty. In reviewing such petitions, the port-based fines, penalties, and forfeitures officer will, consistent with the aforementioned guidelines, evaluate an importer’s prior violation history in relation to a number of mitigating and aggravating factors.
Mitigating factors include:
- Lack of knowledge regarding the counterfeit nature of the trademark
- Prior good record of the importer
- Lack of importer experience
- Evidence of cooperation
- Evidence of corrective action
- Demonstrated inability to pay
Aggravating factors, by way of contrast, include:
- Occurrence of more than two prior seizures/forfeitures
- Criminal violation associated with the importation
- Submission of falsified documentation or other deceptive practices
Where relief is granted under a petition for remission and/or mitigation, fines, penalties, and forfeitures officers routinely require importers to satisfy all costs incurred in connection with a seizure (demurrage, storage, etc.) and sign off on a hold harmless agreement. Penalty-focused petition decisions are not, in their final form, subject to administrative protest.
II. Best Practice Tips for Managing Trademarks in International Trade
There are several measures right holders and importers can take to, respectively, protect their intellectual property rights and avoid unwanted scrutiny.
A. Right Holders and Trademarks
The most important measure right holders can and should take (outside of registering with the U.S. PTO) is recording their IPR with CBP’s Intellectual Property Rights Recordation system (IPRR). Unlike the USPTO, which will only allow the registration of trademarks, right holders can record both trademarks and trade names with CBP. The process is simple, quick, and inexpensive ($190 per International Class of Goods (IC), per trademark registration). The act of recording has the beneficial effect of putting CBP on alert for inbound products with infringing marks. It also serves as an efficient means of ensuring CBP has up-to-date point of contact information. This can be used to expeditiously communicate with right holders if/when imported merchandise is detained on the basis of CBP having a reasonable suspicion of trademark infringement. In the event the presence of infringing marks on imported merchandise is confirmed, recordation opens the door, as is evident from the table set forth above, to enforcement options not otherwise available to merchandise bearing marks that are not recorded with CBP.
Right holders can enhance the effectiveness of the protection CBP recordation offers by subsequently reaching out to field operations officers at all logistically relevant U.S. ports of entry with an eye to educating them on the distinctive characteristics of recorded trademarks and trade names. Sharing a product information guide or giving a product information webinar in this way enables CBP to better monitor imports and, if appropriate, take action to prevent the entry of violative articles.
Finally, right holders can maximize the protection of their IPR by actively exercising oversight over both the virtual and the brick/mortar marketplaces in which their goods are produced and/or commercialized. If/when this sort of vigilance results in the detection of violative merchandise, right holders will consequently be well-positioned to deploy the administrative and/or judicial tools available for shutting down the infringement (through, for example, the filing of an e-Allegation to CBP, the submission of an IPR theft report to the National Intellectual Property Rights Coordination Center, the initiation of invalidation proceedings, the pursuit of a cease and desist order, etc.).
The foregoing right holder-oriented best trademark practice measures can be summarized as follows:
- Register (or, as the case may be, maintain/renew) trademarks with USPTO
- Record trademarks and trade names with CBP’s IPRR
- Educate CBP field operations officers at all logistically relevant U.S. ports of entry on the distinctive characteristics and attributes of recorded trademarks and trade names
- Proactively monitor marketplaces in which trademark sensitive merchandise is produced and commercialized
- Take timely administrative or judicial action against IPR violations
It is worth noticing that the measures suggested above track, almost exactly, the recommendations we make when it comes to protecting trademarks in China (or other countries for that matter).
B. Importers and Trademarks
There are, similarly, several measures importers can take to avoid unwanted CBP or right holder scrutiny. For example, importers can, prior to engaging in an importation, clear the intellectual property rights associated with the merchandise to be shipped by searching, free of charge, CBP’s Intellectual Property Rights Search system (IPRS). The realization of this step facilitates, on a pre-importation basis, the identification of previously unknown intellectual property rights that have been recorded for protective purposes with CBP, thereby allowing importers to timely secure the consent or authorization of a right holder and, by extension, avoid downstream compliance problems.
Where an importer obtains the consent or authorization to import merchandise bearing the mark of a right holder, the risk of an improper detention/seizure can be minimized by proactively providing advance notification of this fact to CBP officials at all logistically relevant U.S. ports of entry. This action avoids potentially disruptive and costly downstream surprises at the same time it builds trust between importers and CBP. Be sure, though, that you are getting authorization from the right party. For instance, a China supplier might have a license to use a trademark owned by a European company within China, but not in the United States.
The final best practice measure an importer can take for the purpose of minimizing IPR-related compliance risk involves obtaining, also on a pre-importation basis, written assurances from foreign suppliers and producers that the parts and components which go into the merchandise they will export do not infringe the intellectual property rights of third parties.
The foregoing importer-oriented best trademark practice measures can be summarized as follows:
- Clear the intellectual property rights associated with inbound merchandise on CBP’s IPRS system
- Secure all necessary right holder consents or authorizations in advance of entering merchandise
- Provide CBP field operations officers with pre-importation notice of the forthcoming entry of merchandise for which the consent/authorization of a right holder has been previously secured
- Insert provisions into relevant transaction documents, such as purchase orders or manufacturing agreements with suppliers in China (or elsewhere), forbidding the use of parts or components that violate the intellectual property rights of third parties in merchandise produced abroad for subsequent importation into the United States
Navigating trademark issues in the international trade environment can, as this blogpost highlights, be tricky and complex. This is especially the case for small- and medium- sized entities that lack the legal spend resources of larger corporations. Understanding the concepts and following the best practice tips laid out in this blogpost will go a long way to ensuring that right holders protect their hard-earned intangible assets and importers avoid the delay and expense that can be triggered by non-compliance with the trade-related dimensions of U.S. trademark law.