Better Import Broker Protections Needed in IP Rights Disclosure Rules, Says American Free Trade Association

CBP's interim rule on disclosure of information to intellectual property (IP) rights holders should give importers additional protections to deal with the realities of "the parallel import market," said the American Free Trade Association (AFTA) in comments to the CBP. CBP asked for comments on an interim rule for disclosing information appearing on merchandise to help CBP in determining whether the merchandise bears a counterfeit mark. "The need for balance is clear; where the goods prove to be genuine, the mark owners receiving the information who are not involved [in] the transaction may very well be competitors of those who are," said AFTA.

Concerns for the interim rule include:

• AFTA said CBP should limit the circumstances where CBP will propose to provide unredacted samples. Without a better defined threshold for proposing to share unredacted samples with mark owners, CBP "will assume that unredacted sample disclosures are needed or likely to be needed in virtually all situations," said AFTA. Suggested modifications to the rule include:
  • Mark owners shouldn't be given unredacted samples if they haven't shown a redacted sample isn't sufficient.
  • Importers should be allowed to have products laboratory tested to avoid disclosure of unredacted product samples.
  • Unredacted samples should be limited to products or categories in which there's a demonstrated need to inspect such samples.
  • The definition of a counterfeit trademark should be uniform across all U.S. ports.
• AFTA said the rule should provide examples of the types of information an importer must provide to convince CBP doesn't need to provide an unredacted sample. There's no indication about what material CBP would consider sufficient to prevent disclosure of an unredacted sample. There's also no distinction in the rule between codes that would help determine authenticity, it said. Some tracking codes make jeopardize supply chain information, while other codes don't compromise an importer's operations, said AFTA.
• The interim rule should define the conditions under which the mark owner may receive and use unredacted samples. Importers lack protection, such as:
  • There's no obligation for the mark owner to assist CBP, no protection for the importer if the mark owner doesn't respond quickly and no mechanism to prevent intentional product exclusion.
  • Importers have no protection against wrongful seizures. There may be times when mark owner consider detention of imports to gain a competitive advantage by insisting the goods are counterfeit even if they aren't.
  • There's no protection against disclosure of unredacted products samples to owners of trademarks that have been federally registered, but not recorded with CBP.
• The rule should include procedures for accelerating the sharing of unredacted samples. The current rule gives importers seven days to prove that detained goods aren't counterfeit, but there's no provision for expedited entry if importers immediately consent to disclosure of unredacted samples.

Comments were due June 25 and are (here).

(See ITT's Online Archives 12042320 for summary of the proposed changes. See ITT's Online Archives 12062605 for summary of other comments.)