Zepol Intellectual Property Rights Handbook for US Importers

An Expert's View about Sourcing in the United States

Posted on: 1 Jun 2010

Zepol has created a handbook on intellectual property protection in cooperation with trade law firm Neville Peterson LLP. Work with U.S. Customs to protect your companies IP rights.

Global intelligence that moves your business. Intellectual Property Rights Handbook: A Guide for Importers and Exporters www.zepol.com Table of Contents About our Intellectual Property Rights Report for Importers and Exporters: ......................................................................... 3 Protecting Trademarks with CBP ............................................ 5 CBP Protection of Trade Names ............................................ 21 CBP Protection of Copyrights ............................................... 25 Patents: CBP Enforcement of Section 337 Orders .................... 32 Customs Anti-Counterfeiting Activity ..................................... 44 Defending Customs Seizures and Penalties in IPR Cases .......... 50 About Neville Peterson LLP .................................................. 59 Contact Neville Peterson LLP ................................................ 61 About Zepol ...................................................................... 62 For Zepol Subscription Information: ...................................... 63 www.zepol.com Page 2 About our Intellectual Property Rights Handbook for Importers and Exporters: As the most innovative and advanced U.S. trade information provider to the international trade community, Zepol has created this handbook of intellectual property rights for importers, suppliers, transportation companies, and other parties interested in international trade in cooperation with Neville Peterson, LLP. The handbook provides a better understanding of what importers can do to protect their intellectual property. Intellectual property ? including trademarks, trade names, service marks, patents, copyrights, and maskworks ? is a driving force in global commerce. A clever new invention, creative software app, or manufacturing method can become the basis for establishment of multibillion-dollar industries. Smart design and branding can breathe new life into tired product sectors and generate enormous sales. In an Information Age economy, intellectual property is king. Creators and owners of intellectual property (IP) zealously invoke the protections of United States law to safeguard their inventions. Patents, trademarks and copyrights are registered, advertised, and enforced. Licensees pay billions of dollars for the right to practice technologies, or apply brand names to their goods. Infringers and counterfeiters are pursued in the civil courts and, in some cases, punished with criminal sanctions. However, the world beyond United States borders can be a dark and dangerous place for American IP owners. Infringers, knockoff artists and software pirates abound. Counterfeiters create bogus ? and often dangerous ? versions of well-known goods. And many foreign countries have less intellectual property protection than afforded under United States law; in places, officials and court systems turn a blind (or blinking) eye to blatant counterfeiting and piracy. What can be done about infringement from offshore? Quite a lot, actually. Congress has given United States Customs and Border Protection important www.zepol.com Page 3 and broad-reaching responsibilities and powers concerning the enforcement of United States intellectual property rights (IPR) ? including the power to exclude infringing goods from entry into the United States, and the right to seize, forfeit and destroy counterfeit goods. Customs? powers can be put to the service of IP owners at little or no cost, and can be superior, in some ways, to conventional IP litigation in the Federal courts. Even where private litigation is pursued, Customs-enforced remedies should be a significant part of any corporate IP protection program. This report describes the various Customs-administered IP remedies, and explains how American rights holders can most effectively use them. www.zepol.com Page 4 Protecting Trademarks with CBP Trademark Recordation: ?The $190 Injunction? Both the Lanham Ac 1t ? the United States basic trademark statute ? and the Tariff Act of 19302 authorize CBP to exclude from entry into the United States articles which infringe trademarks registered in the United States ? provided the trademark owner ?records? its mark with CBP for import protection. The recordation process involves the payment of a fee of $190 for each trademark class for which protection is sought ? leading some to refer to the recordation process as ?the $190 injunction.? The name derives from the fact that Customs? exclusion of infringing goods is equivalent, in many ways, to the protection that a trademark owner would receive if it pursued the more difficult and expensive option of seeking and obtaining a preliminary injunction in Federal court, prohibiting importation and sale of infringing goods. For many companies, the process of obtaining trademark protection is not considered complete until the mark has been recorded with Customs for import protection. 1 See 15 U.S.C. §1120 et seq. 2 Section 526(a) of the Tariff Act of 1930, as amended [19 U.S.C. §1526(a)] provides: 1526. Merchandise bearing American trade-mark (a) Importation prohibited Except as provided in subsection (d) of this section, it shall be unlawful to import into the United States any merchandise of foreign manufacture if such merchandise, or the label, sign, print, package, wrapper, or receptacle, bears a trademark owned by a citizen of, or by a corporation or association created or organized within, the United States, and registered in the Patent and Trademark Office by a person domiciled in the United States, under the provisions of sections 81 to 109 of title 15, and if a copy of the certificate of registration of such trademark is filed with the Secretary of the Treasury, in the manner provided in section 106 of said title 15, unless written consent of the owner of such trademark is produced at the time of making entry. www.zepol.com Page 5 Recording the Mark ? A Simple Process How does an IP owner record its trademark with Customs for import protection? It?s a simple procedure. Section 133.21 of the Customs Regulations [19 U.S.C. §133.21] requires the IP owner to submit an application for recordation of a mark ? usually in the form of a letter. A mark registered on the Principal Register of the United States Patent and Trademark Office (USPTO)3 can be recorded with CBP. The application to record must contain the elements in the following table: Information Required in Regulatory Authority Application to Record Trademark with CBP Must be addressed to: 19 C.F.R. §133.2(a) Intellectual Property Rights (IPR) & Restricted Merchandise Branch, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue, NW., Washington, DC 20229 Name 19 C.F.R. §133.2(b) Complete business address Citizenship of the trademark owner or owners (if a partnership, the citizenship of each partner; if an association or corporation the State, country, or other political jurisdiction within which it was organized, incorporated, or created) The places of manufacture of goods 19 C.F.R. §133.2( c) bearing the recorded trademark (i.e., legitimate goods); 3 Trademarks on the USPTO?s Supplemental Register *i.e., number marks used to designate models of a good] may not be recorded with Customs. www.zepol.com Page 6 The name and principal business 19 C.F.R. §133.2(c) address of each foreign person or business entity authorized or licensed to use the trademark and a statement as to the use authorized Identity of any parent or subsidiary 19 C.F.R. §133.2(d) company or other foreign company under common ownership or control which uses the trademark abroad. ?Common ownership? requires a 50% or greater ownership of the entity; ?Common control? requires common control over policy and is not necessarily synonymous with common ownership. A status copy of the certificate of 19 C.F.R. §133.3(a)(1) registration certified by the U.S. Patent and Trademark Office showing title to be presently in the name of the applicant Five (5) copies of the certificate of 19 C.F.R. §133.3(a)(2) registration, reproduced on approximately 8-1/2" x 10-1/2" paper Registration fee of $190 for each 19 C.F.R. §133.3(b) class of merchandise for which Customs enforcement is requested (as shown on face of the trademark certificate) www.zepol.com Page 7 CBP publishes monthly a list of trademark and trade name recordations [see sample listing at Exhibit A]. Recordation and Enforcement of ?Service Marks? Customs also records and enforces ?service marks?. A service mark is a mark which is applied to a good to indicate that the good meets some standard or is in some way approved. Usually, the issuer of a service mark is a service provider, who does not itself produce a trademarked good. www.zepol.com Page 8 Examples of service marks include the Underwriters? Laboratories (UL) service and registration marks, applied to electrical products, and certification marks issued by trade associations and private standards- setting agencies, such as the Juvenile Product Manufacturers Association (JPMA). The courts have held that service marks, like conventional trademarks, can be recorded with CBP for import enforcement purposes, and enforced at the border by Customs inspectors and agents.4 In enforcing recorded service marks, CBP officers often look beyond the mark itself, and look to the terms of the licensing agreements which authorized users of the mark itself have signed. For example, if a company is authorized to apply the UL mark to radios made in one factory, but applies the mark to radios made in a different factory not approved by UL, CBP will seize the radios as infringing or even counte 5rfeit. Similarly, if a licensing agreement calls for a particular inspection to be performed, and this is not done, CBP may exclude the goods as infringing or counterfeit. This type of enforcement is somewhat controversial, since critics argue that CBP is not really enforcing the trademark or service mark per se, but undertaking enforcement of contractual provisions better left to private litigation. However, the courts have as yet given no indication that they will limit CBP?s ability to seize and forfeit goods bearing a service mark based on violations of contractual undertakings which support the issuance of the marks. 4 See, e.g., United States v. 10,510 Packaged Computer Towers, 152 F. Supp. 2d 1159 (N.D.Cal. 2001); United States v. 4500 Audek Model 5601 AM/FM Clock Radios, 220 F.3d 529 (7th Cir. 2000). 5 United States v. 4500 Audek Model 5601 AM/FM Clock Radios, 220 F.3d 529 (7th Cir. 2000). www.zepol.com Page 9 Customs Enforcement ? What Will the Agency Do? What type of protection does the trademark owner get from recording its mark with Customs for import protection? Quite a lot actually. First, Customs will generally exclude from entry any goods bearing the marks if they are not imported by the recordant, or a person authorized by the recordant. In some cases, as discussed below, this exclusion may even apply to genuine ?gray market? goods manufactured by the trademark owner or under its authority. Customs will also exclude from entry goods bearing marks which are ?confusingly similar? to the recorded mark. This allows Customs to make determinations of infringement, and to take action accordingly. For example, a watch bearing the name ?ROLET? might be deemed infringing of the registered mark for ?ROLEX? watches, and excluded from entry. In making determinations of infringement, Customs is expected to make a comparison of the language appearing on the imported goods under consideration with the mark as it actually appears on genuine goods ? not just the mark as it appears on the USPTO registration or the CBP recordation 6. 6 See Ross Cosmetics Distribution Centers, Inc. v. United States, 17 CIT 966 (1993); Montres Rolex v. Snyder, 718 F.2d 524, 527-28 (2d Cir.1983) cert. denied 465 U.S. 1100 (1984). www.zepol.com Page 10 Goods excluded as ?infringing? are not automatically subject to seizure and forfeiture. Arguably, the importer should be free to export the goods back to their source, or to some other market outside of CBP?s jurisdiction. However, in many cases, CBP will attempt to seize and forfeit these goods, relying upon discretionary authority set out in Section 596 of the Tariff Ac 7t. In some cases, the factual and legal predicate for such seizures and forfeitures is questionable at best. However, IPR owners often benefit from Customs? actions, which in private litigation often could not be secured by means of an injunction. Where goods are deemed to bear counterfeit versions of trademarks (whether or not registered with CBP), Customs is obligated not only to 7 Customs frequently relies on 19 U.S.C. §1595a( c), which provides in pertinent part: 1595a. Forfeitures and other penalties. (c) Merchandise introduced contrary to law Merchandise which is introduced or attempted to be introduced into the United States contrary to law shall be treated as follows: (1) The merchandise shall be seized and forfeited if it - (A) is stolen, smuggled, or clandestinely imported or introduced; (B) is a controlled substance, as defined in the Controlled Substances Act (21 U.S.C. 801 et seq.), and is not imported in accordance with applicable law; (C) is a contraband article, as defined in section 80302 of title 49; or (D) is a plastic explosive, as defined in section 841(q) of title 18, which does not contain a detection agent, as defined in section 841(p) of such title. (2) The merchandise may be seized and forfeited if - (C) it is merchandise or packaging in which copyright, trademark, or trade name protection violations are involved (including, but not limited to, violations of section 1124,1125, or 1127 of title 15, section 506 or 509 of title 17, or section 2318 or 2320 of title 18); (D) it is trade dress merchandise involved in the violation of a court order citing section 1125 of title 15; It is important to note that the statute distinguishes cases where CBP ?shall? seize and forfeit merchandise from cases where the agency has discretion, i.e., ?may? seize and forfeit merchandise, but is not obligated to do so. Intellectual property rights violations other than counterfeiting do not require seizure and forfeiture. www.zepol.com Page 11 exclude the goods, but to seize and forfeit same. Seizure authority is contained both in civil statutes, viz. Section 526(e) of the Tariff Ac 8t, but also in the Federal Criminal Code 9. Obviously, with thousands of marks recorded for import protection, CBP officers ? who administer not only the Customs laws, but laws for more than 60 other Federal agencies ? cannot be expected to detect and stop every infringing product. For this reason, it is important that IPR holders who want Customs to aggressively enforce their marks work closely with the agency to help train Customs agents in detecting infringing goods, and provide specific investigative tips regarding sources of infringing merchandise. CBP has established a specialized IPR website, which contains publicly-available information concerning marks recorded for import protection. The intranet portion of the website contains confidential enforcement information for use by CBP inspectors at ports of entry nationwide. 8 19 U.S.C. §1526(e) provides: (e) Merchandise bearing counterfeit mark; seizure and forfeiture; disposition of seized goods Any such merchandise bearing a counterfeit mark (within the meaning of section 1127 of title 15) imported into the United States in violation of the provisions of section 1124 of title 15, shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws. Upon seizure of such merchandise, the Secretary shall notify the owner of the trademark, and shall, after forfeiture, destroy the merchandise. Alternatively, if the merchandise is not unsafe or a hazard to health, and the Secretary has the consent of the trademark owner, the Secretary may obliterate the trademark where feasible and dispose of the goods seized - (1) by delivery to such Federal, State, and local government agencies as in the opinion of the Secretary have a need for such merchandise, (2) by gift to such eleemosynary institutions as in the opinion of the Secretary have a need for such merchandise, or (3) more than 90 days after the date of forfeiture, by sale by the Customs Service at public auction under such regulations as the Secretary prescribes, except that before making any such sale the Secretary shall determine that no Federal, State, or local government agency or eleemosynary institution has established a need for such merchandise under paragraph (1) or (2). 9 18 U.S.C. §2320(b) provides criminal penalties for persons who intentionally traffic in counterfeit merchandise, and contains a separate seizure and forfeiture authority relating to such merchandise. The courts have held that CBP may exercise this authority to seize counterfeit goods, even if criminal charges are not brought. See Ross Cosmetics Distribution Centers v. United States, 17 CIT 996 (1993). www.zepol.com Page 12 IPR owners often prepare Powerpoint or similar presentations which depict their goods and infringing versions, and provide them to CBP for dissemination to inspectors via the intranet site. In addition, with CBP?s approval (and sometimes participation), IPR owners may get the chance to conduct some internal training for CBP officers concerning how to spot infringing goods. These presentations can be useful tools for helping to train CBP officials concerning subtle or complex issues of trademark law. We discuss in a separate section how importers can deal with CBP detentions and seizures of goods accused of IPR violations. www.zepol.com Page 13 Access to Samples of Suspected Infringing or Counterfeit Merchandise Assume that CBP officers have detained and seized merchandise at a distant port which is suspected of being counterfeit. Is it truly counterfeit? Is it genuine ?gray market? merchandise? Merely infringing? Obviously, the answer to this question will determine how the shipment will be handled and disposed of. Where Customs seizes merchandise, it provides the IPR holder with extensive information concerning the merchandise seized 10, so that the IPR holder can advise Customs as to whether the product is genuine, counterfeit, or infringing. 10 Section 133.21 ( c) of the Customs Regulations [19 C.F.R. §133.21( c)] provides: (c) Notice to trademark owner. When merchandise is seized under this section, Customs shall disclose to the owner of the trademark the following information, if available, within 30 days, excluding weekends and holidays, of the date of the notice of seizure: (1) The date of importation; (2) The port of entry; (3) A description of the merchandise; (4) The quantity involved; (5) The name and address of the manufacturer; (6) The country of origin of the merchandise; (7) The name and address of the exporter; and (8) The name and address of the importer. www.zepol.com Page 14 Often, the CBP inspectors will not be in a position to know the answer to this question, but the IPR holder could readily answer it. Alternatively, Customs may have already decided that the good is a ?counterfeit? subject to seizure and forfeiture, but the IPR owner may want to obtain a sample of the goods to use in connection with private litigation against the importer. Customs regulations contain a provision which allow the IPR owner to obtain a sample of the merchandise from the detained shipment. Section 133.21(d) of the Customs Regulations [19 C.F.R. §133.21(d) provides: Samples available to the trademark owner. At any time following seizure of the merchandise, Customs may provide a sample of the suspect merchandise to the owner of the trademark for examination, testing, or other use in pursuit of a related private civil remedy for trademark infringement. To obtain a sample under this section, the trademark/trade name owner must furnish Customs a bond in the form and amount specified by the port director, conditioned to hold the United States, its officers and employees, and the importer or owner of the imported article harmless from any loss or damage resulting from the furnishing of a sample by Customs to the trademark owner. Customs may demand the return of the sample at any time. The owner must return the sample to Customs upon demand or at the conclusion of the examination, testing, or other use in pursuit of a related private civil remedy for trademark infringement. In the event that the sample is damaged, destroyed, or lost while in the possession of the trademark owner, the owner shall, in lieu of return of the sample, certify to Customs that: "The sample described as [insert description] and provided pursuant to 19 CFR 133.21(d) was (damaged/destroyed/lost) during examination, testing, or other use." Recording a mark with CBP for import protection, or availing itself of Customs enforcement of its intellectual property, in no way precludes an IPR owner from pursuing its private remedies against suspected infringers or coun 1terfeiters 1. Obtaining a sample from Customs can be an excellent way to gain information concerning the claims that can be brought against 11 In this regard, it should be borne in mind that, absent a court order directing Customs to act, the agency has discretion in enforcing intellectual property rights. In particular cases, the agency may decline to undertake enforcement and leave the trademark owner to its private remedies. See, e.g., Weil Ceramics & Glass, Inc. v. Dash, 878 F.2d 659, 11 USPQ2d 1001 (3d Cir. 1989). At present, however, Customs has identified IPR enforcement as a priority area for the agency and is devoting substantial resources to detecting, excluding and, where appropriate, seizing and forfeiting infringing and counterfeit goods. www.zepol.com Page 15 infringers. Customs? Exclusion of Genuine ?Gray Market? Goods Under certain circumstances, Customs will exclude genuine ?gray market? versions of goods bearing marks which have been recorded with the agency for import protection. However, to avoid promoting secondary price discrimination, Customs? regulations indicate that the agency will not exclude genuine gray market goods when the U.S. and foreign owner of the trademark are the ?same person? or are under ?common ownership and cont 12rol.? For purposes of this limitation, the term ?common ownership? is defined in the Customs regulations as ?[i]ndividual or aggregate ownership of more than 50 percent of the business entity; and ?common control? means ?effective control in policy and operations and is not necessarily synonymous with common ownership 13?. The United States Supreme Court, in Kmart v. Cart 14ier, upheld the Customs? regulations to the extent that they decline Customs enforcement of trademarks against ?gray market? goods in particular cases where foreign and domestic trademark owners are the same person or subject to common ownership or control. . 12 Section 133.21(d)(1) of the Customs regulations establishes the exception to protection for gray market goods sold abroad by a recordant. It provides: (d) Relief from detention of gray market articles. Gray market goods subject to the restrictions of this section shall be detained for 30 days from the date on which the goods are presented for Customs examination, to permit the importer to establish that any of the following exceptions, as well as the circumstances described above in §133.22(c), are applicable: (1) The trademark or trade name was applied under the authority of a foreign trademark or trade name owner who is the same as the U.S. owner, a parent or subsidiary of the U.S. owner, or a party otherwise subject to common ownership or control with the U.S. owner (in an instance covered by §§133.2(d) and 133.12(d) of this part); 13 See 19 C.F.R. §133.2(d). 14 486 U.S. 281 (1988). www.zepol.com Page 16 ?Lever Rule? Protection: The Exception to the Exception As noted above, while Customs generally will not exclude ?gray market? goods in cases where the U.S. and foreign trademark owner are the ?same person? or under ?common ownership or control?, the law creates an exception for cases where the gray market goods offered for importation into the United States are physically or materially different from goods sold under the mark in the United States. In these cases, the sale of the genuine ?gray market? good in the United States still has the potential to damage the reputation of goods bearing the trademark. This so-called ?Lever rule? exception is based on the decision in Lever Brothers Co. v. United States, 981 F.2d 1330, 25 USPQ2d 1579 (D.C. Cir. 1993). In Lever, Customs declined to exclude certain imports of ?Sunlight? dish detergent from the United Kingdom on the ground that the same person ? Lever Brothers, Inc. ? owned the ?Sunlight? mark in the United States and abroad. However, the Sunlight detergent sold abroad differed from the United States product in that it was not designed to produce a lot of suds during washing. As a result of this physical difference, American consumers who purchased the non-sudsing imported product believed they had received defective goods. Under these circumstances, the Court ruled, Customs could be ordered to exclude the gray market goods. In response to the Lever decision, Customs has amended its regulations to provide that firms which record their marks for import protection may also seek ?Lever rule? protection against genuine goods bearing the mark, which may be ?materially or physically different? than the goods bearing the mark in the United States. Indeed, some recent decisions have watered down the requirement for Lever-rule protection to a simple ?material? difference, which need not be physical. Thus, differences in the packaging of goods, or in the safety warnings accompanying them, may be sufficient to obtain exclusion of gray market product 15. Indeed, a number of recent decisions indicate that a physical difference is not required; it is sufficient if there is a material difference in such intangible qualities as warranty coverage and the like.16 15 See, e.g., Gamut Trading Inc. v. United States Int?l Trade Comm., 200 F.3d 775 (Fed. Cir. 1999). 16 See, e.g., SKF-USA v. United States Int?l Trade Comm., 423 F.3d 1307 (Fed. Cir. 2005); see also Beltronics USA v. Midwest Inventory Distribution Co., 562 F.3d 1067 (10th Cir. 2009); Boudreau Bros v. United States Int?l Trade Comm., 444 F.3d 1317 (Fed. Cir. 2006). www.zepol.com Page 17 If a company recording its mark with CBP for import protection wishes to receive ?Lever rule? protection against imports of genuine but materially different goods bearing the mark, it must make specific application for such protection. This application may be made with the initial application to record the mark, or as a separate application for a mark already recorded. Section 133.2(e) of the Customs Regulations identifies the information which must be submitted to CBP in connection with an application for Customs- administered ?Lever-rule? protection. This information is summarized in the table of the following page. www.zepol.com Page 18 INFORMATION REQUIRED FOR ?LEVER-RULE? PROTECTION APPLICATION Information Required Regulatory Authority (1) The specific composition of both 19 C.F.R. §133.2(e)(1) the authorized and gray market product(s) (including chemical composition) (2) Formulation, product 19 C.F.R. §133.2(e)(2) construction, structure, or composite product components, of both the authorized and gray market product; (3) Performance and/or operational 19 C.F.R. §133.3(e)(3) characteristics of both the authorized and gray market product; (4) Differences resulting from legal 19 C.F.R. §133.3(e)(4) or regulatory requirements, certification, etc.; (5) Other distinguishing and 19 C.F.R. §133.3(e)(5). explicitly defined factors that would likely result in consumer deception or confusion as proscribed under applicable law. While Customs? regulations appear to assume a physical difference in the goods in question, it is unclear whether a simple material difference in conditions such as warranty coverage, performance and the like, might support a claim for Customs-administered Lever-rule protection. Presumably, it would be sufficient under factors (4) and (5), above. It is also unclear whether a Customs application is the exclusive way to obtain Lever- rule protection, or whether the agency may simply be sued in court to seek an injunction compelling such enforcement. When Customs receives a request for Lever-rule protection, it publishes notice of the application in the Customs Bulletin and solicits public comment. www.zepol.com Page 19 One question on which comments are typically solicited is whether there are measures other than exclusion which could address the concerns of consumer confusion. In some cases, the use of disclaimer labels, for instance, has been ruled an effective remedy. www.zepol.com Page 20 CBP Protection of Trade Names The Customs Regulations provide a similar protection mechanism for ?trade names? ? names or styles used to identify a class of products which have not been reduced to a formal trademark recorded with the USPTO. Trade Name Recordation ? Another ?$190 Injunction? The process for recordation of a trade name involves names which have been in use for at least six (6) months. It also involves the payment of a $190 fee for the recordation ? another type of ?$190 injunction?. Requirements for Recording a Trade Name An application to record a trade name with CBP for import protection must be sent to Customs? Headquarters Intellectual Property Rights Branch in Washington, D.C. The name or trade style used for at least 6 months to identify a manufacturer or trader may be recorded with the United States Customs Service. Words or designs used as trademarks, whether or not registered in the U.S. Patent and Trademark Office shall not be accepted for recordation as a trade name. Generally, the complete business name will be recorded unless convincing proof establishes that only a part of the complete name is customarily used.17 The regulatory requirements for recording a trade name for import protection is summarized in the following table: Information Required in Regulatory Authority Application to Record Trade name with CBP Must be addressed to: 19 C.F.R. §133.12(a) Intellectual Property Rights (IPR) & Restricted Merchandise Branch, U.S. Customs and Border Protection, 17 See 19 C.F.R. §133.11. www.zepol.com Page 21 1300 Pennsylvania Avenue, NW., Washington, DC 20229 The trade name or style to be 19 C.F.R. §133.12(b) recorded The name and principal business 19 C.F.R. §133.12( c) address of each foreign person or business entity authorized or licensed to use the trade name and a statement as to the use authorized; (d) The identity of any parent or 19 C.F.R. §133.12(d) subsidiary company, or other foreign company under common ownership or control which uses the trade name abroad (see §133.2(d)) A description of the merchandise for 19 C.F.R. §133.12(e) which the trade name is recorded a statement of the owner, partners, 19 C.F.R. §133.13(a) or principal corporate officer, and by statements by at least two other persons not associated with or related to the applicant but having actual knowledge of the facts, stating that to his best knowledge and belief: (1) The applicant has used the trade name in connection with the class or kind of merchandise described in the application for at least 6 months; (2) The trade name is not identical or confusingly similar to any other trade name or registered trademark used in connection with such class or kind of merchandise; and www.zepol.com Page 22 (3) The applicant has the sole and exclusive right to the use of such trade name in connection with the merchandise of that class or kind. Registration feeof $190 for each 19 C.F.R. §133.13(b) class trade name to be recorded www.zepol.com Page 23 n Enforceme t ? What Will Customs Do? Customs will exclude from entry merchandise bearing a recorded trade name which is imported without consent of the trade name recordant. Seizure and forfeiture is also possible in particular cases. As with other types of Customs IPR enforcement, a recordant?s chances of obtaining effective Customs enforcement are improved if it can feed the agency investigative tips concerning potentially infringing goods. Customs publishes applications to record trade names in the Customs Bulletin for public comment. Interested parties may offer comments supporting or opposing the recordation. See 19 C.F.R. §133.14. Protection for a recorded trade name remains in force as long as the trade name is used. The recordation shall be canceled upon request of the recordant or upon evidence of disuse. From time to time, the IPR & Restricted Merchandise Branch may request the trade name owner to advise whether the name is still in use. The failure of a trade name owner to respond to such a request shall be regarded as evidence of disuse. 19 C.F.R. §133.15 www.zepol.com Page 24 CBP Protection of Copyrights Copyright Recordation and Anti-Piracy Measures Claims for copyright which have been registered under the terms of the Copyright Act may be recorded with Customs for import protection. See 19 C.F.R. §133.31(a). Persons eligible to record a copyright with Customs include ?[t]he copyright owner, including any person who has acquired copyright ownership through an exclusive license, assignment, or otherwise, and claims actual or potential injury because of actual or contemplated importations of copies (or phonorecords) of eligible works . . .? 19 C.F.R. §133.31(b). The requirements for an application to record a copyright (including a phonorecord) with Customs for import protection are summarized in the following table: Information Required Regulatory Authority Application addressed to: 19 C.F.R. §133.32 IPR & Restricted Merchandise Branch, U.S. Customs and Border Protection 1300 Pennsylvania Avenue Washington, DC 20229 Name and address of copyright 19 C.F.R. §133.32(a) owner(s) Statement setting forth the 19 C.F.R. §133.32(b) circumstances of actual or potential injury from importation of goods or recordings infringing the copyrights, if actual injury is contemplated The country of manufacture of 19 C.F.R. §133.32(c) genuine copies or phonorecords of the protected work www.zepol.com Page 25 The name and principal address of 19 C.F.R. §133.32(d) any foreign person or business entity authorized or licensed to use the protected work, and a statement as to the exclusive rights authorized The foreign title of the work, if 19 C.F.R. §133.32(e) different from the U.S. title In the case of an application to 19 C.F.R. §133.32(e) record a copyright in a sound recording, a statement setting forth the name(s) of the performing artist(s), and any other identifying names appearing on the surface of reproduction of the sound recording, or its label or container. An "additional certificate" of 19 C.F.R. §133.33(a)(1) copyright registration issued by the U.S. Copyright Office. If the name of the applicant differs from the name of the copyright owner identified in the certificate, the application shall be accompanied by a certified copy of any assignment, exclusive license, or other document recorded in the U.S. Copyright Office showing that the applicant has acquired copyright ownership in the copyright Five photographic or other 19 C.F.R. §133.33(a)(2) likenesses reproduced on paper approximately 8-1/2 inch; by 10- 1/2 inch; in size of any copyrighted work. An application shall be excepted from this requirement if it covers a work such as a book, magazine, periodical, or similar copyrighted matter readily www.zepol.com Page 26 identifiable by title and author or if it covers a sound recording. Five likenesses of a component part of a copyrighted work, together with the name or title, if any, by which the part depicted is identifiable, may accompany an application covering an entire copyrighted work. A fee of $190 for each copyright to 19 C.F.R. §133.32(b). be recorded, check made payable to ?U.S. Customs and Border Protection A recordation becomes effective when received. It remains in force for up to twenty (20) years, or until such time as the recordant ceases to own the copyright. Separate application rules are provided for cases where ownership of a copyright is transferred, and the new owner wishes to continue recordation and enforcement of the copyright. www.zepol.com Page 27 Procedure When Suspected Piratical Copy is Imported. The importation of piratical copies of copyrighted works is a violation of the Customs laws. By contrast, importation of lawfully made copies is permissible. Infringing copies of copyrighted goods are subject to seizure and forfeiture. Whenever Customs seizes goods for suspected violation of copyright, the port director of Customs must, within 30 days of such seizure, notify the copyright owner of the following information: 1. The date of importation; 2. The port of entry; 3. A description of the merchandise; 4. The quantity involved; 5. The name and address of the manufacturer; 6. The country of origin of the merchandise; 7. The name and address of the exporter; and 8. The name and address of the importer. In addition, Customs will make samples of the suspected infringing works available to the copyright recordant. In order to obtain a sample, the copyright owner must provide Customs with a bond and hold harmless agreement. The sample must be returned to Customs upon conclusion of the seizure case, or of any civil action relating to the imported goods. Where records or motion pictures arriving in the United States bear counterfeit labels, Customs officers are directed to consider making a report to the United States attorney, for the possible initiation of criminal proceedings. See 19 C.F.R. §133.42. Where imported works are suspected of being infringing/piratical copies of copyrighted works, the Port Director of Customs must advise the importer that it is considering detention and exclusion of the goods. The importer may then, if it wishes, file a declaration that the goods are not infringing. If the importer files a declaration that goods are not infringing, the Port Director of Customs will provide the copyright owner with information concerning the imported merchandise. 19 C.F.R. §133.43(a), as follows: www.zepol.com Page 28 1. The date of importation; 2. The port of entry; 3. A description of the merchandise; 4. The quantity involved; 5. The country of origin of the merchandise; and 6. Notice that the imported article will be released to the importer unless, within 30 days from the date of the notice, the copyright owner files with the port director: (i) A written demand for the exclusion from entry of the detained imported article; and (ii) A bond, in the form and amount specified by the port director, conditioned to hold the importer or owner of the imported article harmless from any loss or damage resulting from Customs detention in the event the Commissioner or his designee determines that the article is not an infringing copy prohibited importation under section 602 of the Copyright Act of 1976 (17 U.S.C. 602). See 19 C.F.R. §133.43(b). If the copyright owner thereafter files the required bond, Customs will then conduct an administrative proceeding to address the question of whether the imported copies are infringing or piratical copies. The importer and the copyright owner are obligated to exchange information regarding the imported goods and the claims of infringement, and have the right to submit briefs to Customs18 addressing the question of infringement. 18 Thus, Section 133.43(d)(1) provides in pertinent part that: 1) Demand and bond; exchange of briefs. If the copyright owner files a written demand for exclusion of the suspected infringing copies together with a proper bond, the port director shall promptly notify the importer and copyright owner that, during a specified time limited to not more than 30 days, they may submit any evidence, legal briefs or other pertinent material to substantiate the claim or denial of infringement. The burden of proof shall be upon the party claiming that the article is in fact an infringing copy. (i) Exchange of briefs. Before timely submitting the additional evidence, legal briefs, or other pertinent material to Customs, pursuant to paragraph (c)(1) of this section, in regard to the disputed claim of infringement, the importer and the copyright owner shall first provide each other with a copy of all such information, including the importer's denial of infringement and the copyright owner's demand for exclusion. The subsequent submission of this information to Customs shall be accompanied by a written statement confirming that a copy has already been provided to the opposing party. The port director shall notify the importer and the copyright owner that they shall www.zepol.com Page 29 have additional time, not to exceed 30 days, in which to provide a response to the arguments submitted by the opposing party, and that rebuttal arguments, timely submitted, shall be fully considered in the decision-making process. During this rebuttal period and before timely submitting the rebuttal arguments to Customs, the importer and the copyright owner shall first provide each other with a copy of all such material. The submission of this rebuttal material to Customs shall be accompanied by a written statement confirming that a copy has been provided to the opposing party. The port director shall not accept any additional material from the parties to substantiate the claim or denial of infringement after the final 30-day rebuttal period expires. (ii) Decision. Upon receipt of rebuttal arguments, or 30 days after notification if no rebuttal arguments are submitted, the port director shall forward the entire file, together with a sample of each style that is considered possibly infringing, to CBP Headquarters, (Attention: Border Security and Trade Compliance Division, Regulations and Rulings, Office of International Trade), for decision on the disputed claim of infringement. The final decision on the disputed claim of infringement shall be forwarded to the port director who shall send a copy thereof to the copyright owner as well as to the importer. www.zepol.com Page 30 Within 30 days after the briefs are submitted, Customs will transmit the matter to the Customs Headquarters IPR branch, for a determination of infringement. In order to secure Customs? detention of the goods, the copyright owner must file a statement that the goods are infringing or piratical, and a bond to hold Customs harmless from liability for the seizure. Thus, by posting a bond, the copyright owner has the power to detain an import shipment of goods suspected of infringing the copyright. However, if its claim is not sustained, the full amount of the bond is then paid over to the importer of the suspected merchandise. In contrast to trademark exclusions, where the importer has little direct recourse to the IPR owner, the Customs procedure for copyright enforcement requires the IP owner to assume risk, and to make its case that a copy is piratical. www.zepol.com Page 31 Patents: CBP Enforcement of Section 337 Orders A. Section 337 of the Tariff Act of 1930 Section 337 of the Tariff Act of 1930 authorizes the United States International Trade Commission (ITC), an independent government agency, to investigate allegations that goods imported into the United States are being traded by unfair competition or unfair acts. Although Section 337 can conceivably be invoked against a wide range of practices, most commonly the statute is used against imported goods alleged to infringe patents or other intellectual property rights owned by United States firms. Section 337 investigations are typically commenced following the filing of a complaint with the ITC19. Upon initiating a Section 337 investigation, the ITC 19 Section 337 [19 U.S.C. §1337] provides: (b) Investigation of violations by Commission (1) The Commission shall investigate any alleged violation of this section on complaint under oath or upon its initiative. Upon commencing any such investigation, the Commission shall publish notice thereof in the Federal Register. The Commission shall conclude any such investigation and make its determination under this section at the earliest practicable time after the date of publication of notice of such investigation. To promote expeditious adjudication, the Commission shall, within 45 days after an investigation is initiated, establish a target date for its final determination. (2) During the course of each investigation under this section, the Commission shall consult with, and seek advice and information from, the Department of Health and Human Services, the Department of Justice, the Federal Trade Commission, and such other departments and agencies as it considers appropriate. (3) Whenever, in the course of an investigation under this section, the Commission has reason to believe, based on information before it, that a matter, in whole or in part, may come within the purview of part II of subtitle IV of this chapter, it shall promptly notify the Secretary of Commerce so that such action may be taken as is otherwise authorized by such part II. If the Commission has reason to believe that the matter before it (A) is based solely on alleged acts and effects which are within the purview of section 1671 or 1673 of this title, or (B) relates to an alleged copyright infringement with respect to which action is prohibited by section 1008 of title 17, the Commission shall terminate, or not institute, any investigation into the matter. If the Commission has reason to believe the matter before it is based in part on alleged acts and effects which are within the purview of section 1671 or 1673 of this title, and in part on alleged acts and www.zepol.com Page 32 appoints an Administrative Law Judge (ALJ) to investigate the Complaint and issue findings and recommendations thereon 20. What follows is an intensive trial before the ALJ, typically conducted on an expedited basis, with extensive pretrial discovery and a trial-type hearing 21. effects which may, independently from or in conjunction with those within the purview of such section, establish a basis for relief under this section, then it may institute or continue an investigation into the matter. If the Commission notifies the Secretary or the administering authority (as defined in section 1677(1) of this title) with respect to a matter under this paragraph, the Commission may suspend its investigation during the time the matter is before the Secretary or administering authority for final decision. Any final decision by the administering authority under section 1671 or 1673 of this title with respect to the matter within such section 1671 or 1673 of this title of which the Commission has notified the Secretary or administering authority shall be conclusive upon the Commission with respect to the issue of less-than-fair-value sales or subsidization and the matters necessary for such decision. 20 See 19 C.F.R. §§211.9 - 211.11. 21 See Generally 19 C.F.R. Part 210. For an excellent exposition of Section 337 procedures, see also Herrington and Thompson, Intellectual Property Rights and United States International Trade Laws (Oceana Press, 2002) www.zepol.com Page 33 Following trial (or, in exceptional cases, following summary determination), the ALJ will issue an ?Initial Determination? (ID), setting forth proposed findings of fact and conclusions of law, and making a recommendation concerning what remedy, if any, the ITC should impose 22. The ITC is then given the opportunity to review the ID 23. The Commission may elect not to 22 Section 210.42(a) of the ITC?s regulations provides in pertinent part: § 210.42 Initial determinations. (a)(1)(I) On issues concerning violation of section 337. Unless otherwise ordered by the Commission, the administrative law judge shall certify the record to the Commission and shall file an initial determination on whether there is a violation of section 337 of the Tariff Act of 1930 no later than 3 months before the target date set pursuant to § 210.51(a) if the target date is 15 months or less from the date of institution, and no later than 4 months before the target date if the target date is more than 15 months from the date of institution. (ii) Recommended determination on issues concerning permanent relief and bonding. Unless the Commission orders otherwise, within 14 days after issuance of the initial determination on violation of section 337 of the Tariff Act of 1930, the administrative law judge shall issue a recommended determination containing findings of fact and recommendations concerning_ (A) The appropriate remedy in the event that the Commission finds a violation of section 337, and (B) The amount of the bond to be posted by the respondents during Presidential review of Commission action under section 337(j) of the Tariff Act. The regulation also provides in pertinent part that: (d) Contents. The initial determination shall include: an opinion stating findings (with specific page references to principal supporting items of evidence in the record) and conclusions and the reasons or bases therefor necessary for the disposition of all material issues of fact, law, or discretion presented in the record; and a statement that, pursuant to § 210.42(h), the initial determination shall become the determination of the Commission unless a party files a petition for review of the initial determination pursuant to § 210.43(a) or the Commission, pursuant to § 210.44, orders on its own motion a review of the initial determination or certain issues therein. 23 The ITC?s regulations provide: § 210.44 Commission review on its own motion of initial determinations on matters other than temporary relief. Within the time provided in § 210.43(d)(1), the Commission on its own initiative may order review of an initial determination, or certain issues in the initial determination, when at least one of the participating Commissioners votes for ordering review. A self-initiated Commission review of an initial determination will be ordered if it appears that an error or abuse of the kind www.zepol.com Page 34 review the ID (effectively adopting the ID as its own decision), may modify or alter the ID, or may remand the matter to the ALJ for further proceedings. All of these Section 337 investigation activities take place in a highly- compressed time period. Generally, only between 12 and 14 months elapse from the initiation of an investigation to its conclusion, and the issuance of a final determination. In this respect, Section 337 investigations are nearly twice as quick as conventional patent litigation involving the same issues 24. described in § 210.43(b)(1) is present or the initial determination raises a policy matter which the Commission thinks is necessary or appropriate to address. § 210.45 Review of initial determinations on matters other than temporary relief. (a) Briefs and oral argument. In the event the Commission orders review of an initial determination pertaining to issues other than temporary relief, the parties may be requested to file briefs on the issues under review at a time and of a size and nature specified in the notice of review. The parties, within the time provided for filing the review briefs, may submit a written request for a hearing to present oral argument before the Commission, which the Commission in its discretion may grant or deny. The Commission shall grant the request when at least one of the participating Commissioners votes in favor of granting the request. (b) Scope of review. Only the issues set forth in the notice of review, and all subsidiary issues therein, will be considered by the Commission. ( c) Determination on review. On review, the Commission may affirm, reverse, modify, set aside or remand for further proceedings, in whole or in part, the initial determination of the administrative law judge. The Commission also may make any findings or conclusions that in its judgment are proper based on the record in the proceeding. If the Commission's determination on review terminates the investigation in its entirety, a notice will be published in the Federal Register. 24 While Section 337 actions do not provide a forum for a patent owner to seek monetary damages for infringement, they provide a way in which final injunctive relief may be obtained more quickly than in conventional patent litigation in the Federal courts. However, intellectual property rights (IPR) owners can maintain separate suits for damages resulting from infringement proven in Section 337 proceedings. IPR owners also find Section 337 proceedings to be advantageous from a competitive perspective, since respondents cannot counterclaim for restraint of trade. www.zepol.com Page 35 Domestic and foreign respondents have the option, but not the obligation, to appear and participate in the Section 337 investigation. Named respondents who do not participate run the risk that a default finding of infringement will be entered against them 25. Where the ITC finds that imports have been traded by unfair means, in violation of Section 337, there are two primary types of relief it can order - Exclusion Orders and Cease and Desist Orders. 25 See 19 C.F.R. §§210. 16, 210.17. Section 337(g) of the Tariff Act specifies certain circumstances where a party will be found in default, and specifies the consequences of such default. In cases where the complainant is not seeking a general exclusion order as relief, a default may be entered against a named respondent if (1) the respondent fails to respond to or appear to answer a complaint and notice of investigation, after service thereof, (2) the respondent fails to show good cause why it should not be held in default, and (3) the complainant seeks relief limited solely to that person. Under those circumstances, the Commission, considering the facts pleaded in the complaint to be true, may issue a cease and desist order against the defaulting respondent, unless it determines, based on certain public interest factors, that no default should be entered. 19 U.S.C. §1337(g)(1). Where a general exclusion order is sought, and no respondent appears, the ITC may not issue such an order unless (1) a violation of Section 337 is proven by substantial, reliable and probative evidence, and (2) the requirements of 19 U.S.C. §1337(d)(2), relating to issuance of general exclusion orders are met. In addition to these ?statutory? forms of default, the Commission may also draw adverse inference and issue adverse findings against respondents who fail to take particular actions. 19 C.F.R. § 210.17. www.zepol.com Page 36 Exclusion Orders prohibit the importation of goods which infringe a given patent or other intellectual property righ 26t. They are of two kinds. General Exclusion Orders (GEOs) prohibit the importation of infringing goods by all persons, without regard of the identity of the manufacturer or importer. They thus cover all known importers, as well as any importer of infringing goods which might appear in the future. Limited Exclusion Orders (LEOs) prohibit the importation of infringing merchandise produced, exported or imported by certain named entities. Section 337(d) expresses a preference for the issuance of Limited Exclusion Orders, unless the ITC determines that a General Exclusion Order is necessary eliminate the unfair practice. A General Exclusion Order is an in rem sanction, focusing on the merchandise rather than on the persons involved with the merchandise. In addition to, or in lieu of, an Exclusion Order, the ITC may issue a Cease and Desist Order, an in personam remedy addressed to domestic parties (who are subject to the ITC?s jurisdiction) and which have been determined 27 to have infringed an intellectual property right. 26 Section 337(d) [19 U.S.C. §1337] provides: (d) Exclusion of articles from entry (1) If the Commission determines, as a result of an investigation under this section, that there is a violation of this section, it shall direct that the articles concerned, imported by any person violating the provision of this section, be excluded from entry into the United States, unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry. The Commission shall notify the Secretary of the Treasury of its action under this subsection directing such exclusion from entry, and upon receipt of such notice, the Secretary shall, through the proper officers refuse such entry. (2) The authority of the Commission to order an exclusion from entry of articles shall be limited to persons determined by the Commission to be violating this section unless the Commission determines that - (A) a general exclusion from entry of articles is necessary to prevent circumvention of an exclusion order limited to products of named persons; or (B) there is a pattern of violation of this section and it is difficult to identify the source of infringing products. 27 Cease and Desist Orders are provided for in 19 U.S.C. §1337(f), as follows: (f) Cease and desist orders; civil penalty for violation of orders www.zepol.com Page 37 (1) In addition to, or in lieu of, taking action under subsection (d) or (e) of this section, the Commission may issue and cause to be served on any person violating this section, or believed to be violating this section, as the case may be, an order directing such person to cease and desist from engaging in the unfair methods or acts involved, unless after considering the effect of such order upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such order should not be issued. The Commission may at any time, upon such notice and in such manner as it deems proper, modify or revoke any such order, and, in the case of a revocation, may take action under subsection (d) or (e) of this section, as the case may be. If a temporary cease and desist order is issued in addition to, or in lieu of, an exclusion order under subsection (e) of this section, the Commission may require the complainant to post a bond, in an amount determined by the Commission to be sufficient to protect the respondent from any injury, as a prerequisite to the issuance of an order under this subsection. If the Commission later determines that the respondent has not violated the provisions of this section, the bond may be forfeited to the respondent. The Commission shall prescribe the terms and conditions under which the bonds may be forfeited under this paragraph. (2) Any person who violates an order issued by the Commission under paragraph (1) after it has become final shall forfeit and pay to the United States a civil penalty for each day on which an importation of articles, or their sale, occurs in violation of the order of not more than the greater of $100,000 or twice the domestic value of the articles entered or sold on such day in violation of the order. Such penalty shall accrue to the United States and may be recovered for the United States in a civil action brought by the Commission in the Federal District Court for the District of Columbia or for the district in which the violation occurs. In such actions, the United States district courts may issue mandatory injunctions incorporating the relief sought by the Commission as they deem appropriate in the enforcement of such final orders of the Commission. www.zepol.com Page 38 A Cease and Desist Order directs one or more named violators to cease and desist from the manufacture, importation, sale, or offer for sale, of articles deemed to infringe the patents or other intellectual property rights involved in the investigation. Violations of Cease and Desist Orders may be punished by the ITC through the imposition of a civil penalty in an amount not to exceed $100,000 for each day 28 the Order is violated. B. CBP Enforcement of Section 337 Exclusion Orders Section 337(d) of the Tariff Act provides that, upon issuing an Exclusion Order, the ITC must provide notice of that order to the Secretary of the T 9reasury 2, who must then arrange to have the order enforced by appropriate officers. Historically, the Secretary has empowered CBP officers [now including offers of the Immigration and Customs Enforcement (ICE) Bureau of the Department of Homeland Security], to enforce General and Limited Exclusion Orders. Section 337 enforcement activities are coordinated by CBP?s? Intellectual Property Rights (IPR) Branch, based in Customs Headquarters in Washington D.C. 28 19 U.S.C. §1337(f)(2); see also 19 C.F.R. §210.75 (dealing with Commission enforcement of cease and desist orders). 29 While United States Customs and Border Protection has been merged into the Department of Homeland Security, Customs? former parent, the Treasury Department, retains responsibility for various Customs revenue and enforcement functions. www.zepol.com Page 39 Customs? IPR bran
Posted: 01 June 2010

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