Thursday, October 19, 2017

The UGG Boots Story: How Recording Your Registered Trademark Can Lead to a Jail Sentence


Zheng created an elaborate scheme in order to receive and sell counterfeit UGG boots. From September 2016 through February 2017, Zheng received several shipping containers from an individual overseas, of which at least three containers were filled with counterfeit UGG boots. After the containers reached the Port of Entry, in this instance, Port of Newark, Zheng had individuals working at the port, remove the containers from the port before U.S. Customs and Border Patrol (CBP) could examine them. Once removed, the containers were delivered to other individuals, paid by Zheng to distribute the counterfeit boots in New Jersey and other places.

Lucky for the owners of the UGG brand, Deckers Outdoor Corporation (Deckers), CBP halted Zheng’s operation, in part as a result of Decker recording its registered trademark with CBP on June 7, 2016. After the recordation was processed, CBP began a more intense “guard dog watch” of the UGG brand merchandise at all Ports of Entry throughout the U.S. This meant that Deckers exercised its right to protect its word mark “UGG” at all U.S. borders. The recordation of the protected mark ultimately lead CBP to identifying counterfeit UGG merchandise and holding the culprit, Zheng, accountable for violating 18 U.S.C. § 2320, trafficking in counterfeit goods, because Zheng was never authorized by Deckers to import authentic UGG merchandise.

CBP encourages trademark owners to not only register their trademark with the U.S. Patent and Trademark Office (USPTO), but also to record their trademark with CBP. The cost of recordation is only $190 and provides trademark holders substantial benefits like CBP acting as your own personal trademark infringement policeman at the border. Deckers was able to assist CBP in comparing Zheng’s merchandise bearing the UGG logo with the recorded UGG word mark and determine that Zheng’s merchandise was counterfeit.

There are instances where the use of a protected mark is permissible under the “restricted grey market” exception. However, in this case, Zheng’s merchandise did not fall into a “restricted gray market article” exception. Restricted gray market articles are “foreign-made articles bearing a genuine trademark or trade name identical with or substantially indistinguishable from one owned and recorded by a citizen of the United States or a corporation or association created or organized within the United States and imported without the authorization of the U.S. owner.” These gray market articles may be imported if they fall under one to the exceptions outlined in 19 CFR § 133.23.

Zheng will be sentenced on January 23, 2018, and could face up to ten years in prison and a $2 million dollar fine.

If you have any questions about protecting your intellectual property rights and the CBP recordation process, we at Diaz Trade Law can help you navigate through the process of protecting your merchandise from being detained. Contact us today at info@diaztradelaw.com, or 305-456-3830.

Friday, October 6, 2017

UPDATE: FDA Delays Compliance Dates for the New Nutrition Facts Label Rule

In an earlier article, we detailed some of the new changes that would be implemented with the new Nutrition Facts Label rule. That article also provided the compliance dates for the rule. On September 29,2017, however, the FDA proposed yet another deadline extension for food companies to bring their products’ labeling into compliance with the new Nutrition Facts Label rule. Amid concerns of requiring more time to implement the final rules, raised by trade groups and companies, the FDA decided to further delay the compliance dates. The proposed extension dates are January 1, 2020, for companies with food sales of $10 million or more a year and January 1, 2021, for companies with less than $10 million a year in food sales.

 In a news release issued September 29, 2017, The FDA reiterated its commitment “to making sure that consumers have the facts they need to make informed decisions about their diet and the foods they feed their families.” Furthermore, because this extension is a proposal, the FDA will exercise discretion with respect to the current compliance dates of July 26, 2018, and July 26, 2019.

The FDA is accepting comments on the extension of the compliance dates for thirty (30) days, beginning on October 2, 2017. Comments should be identified with Docket No. FDA-2012-N-1210 for “Food Labeling: Revision of the Nutrition and Supplement Facts Labels; Extension of Compliance Date” or Docket No. FDA-2004-N-0258 for “Food Labeling:  Serving Sizes of Foods That Can Reasonably Be Consumed At One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily Consumed; Serving Size for Breath Mints; and Technical Amendments; Extension of Compliance Dates,” and should be submitted to http://regulations.gov or to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

Because this is the second proposal for extending the deadline for the new Nutrition Facts Label rule, there is speculation that the compliance date will be postponed indefinitely. However, despite the delays, the FDA has stated that companies will still need to comply with the new Nutrition Facts Label rules.

Therefore, we recommend that you begin compliance effective immediately, as many products are perishable within 12 months from the date of packaging. This will avoid future costs of relabeling. Products packaged before the final rule’s effective date without the new labeling requirement are still required to be compliant by the new compliance date to avoid enforcement action by the FDA.


If you have any questions about FDA labeling, we at Diaz Trade Law can review your existing label to ensure that it is compliant with the new Nutrition Facts Label Rule. Contact us today at info@diaztradelaw.com, or 305-456-3830.

Monday, September 25, 2017

Essential Oils Company to Pay $760K for Lacey Act Violations

MONEY

The Justice Department announced YOUNG LIVING ESSENTIAL OILS, L.C., (the Company), headquartered in Lehi, Utah, plead guilty in federal court to federal misdemeanor charges regarding its illegal trafficking of rosewood oil and spikenard oil in violation of the Lacey Act and the Endangered Species Act.

Despite the company voluntarily disclosing its violations and cooperating with government investigators, it entered into a plea agreement, and the Company was sentenced to a fine of $500,000, $135,000 in restitution, a community service payment of $125,000 for the conservation of protected species of plants used in essential oils, and a term of five years’ probation with special conditions. The conditions include the implementation of a corporate compliance plan, audits, and the publication of statements regarding its convictions.
“The importation of illegally harvested wood and timber products harms law-abiding American companies and workers and threatens forest resources around the world,” said Acting Assistant Attorney General Jeffrey H. Wood of the Environment and Natural Resources Division. “Our Division was proud to work alongside the U.S. Attorney’s Office in the District of Utah, the U.S. Department of Agriculture, the U.S. Fish and Wildlife Service, and the Department of Homeland Security to bring this case to a positive conclusion.”

“While the natural resource violations by certain employees of Young Living were intentional and substantial, the Company’s decision to conduct an internal investigation, voluntarily disclose the initial violations to government enforcement authorities, and cooperate throughout the ensuing investigation is to be commended,” said U.S. Attorney John W. Huber for the District of Utah. “This sentence reflects both the seriousness of the offenses and the acceptance of responsibility and cooperation by the Company.”
Violations

From June 2010 to October 2014, several company employees and contractors harvested, transported, and distilled rosewood (Aniba roseaodora or Brazilian rosewood) in Peru and imported some of the resulting oil into the United States, through Ecuador. Peruvian law prohibits the unauthorized harvest and transport of timber, including rosewood. Neither the Company nor its suppliers, employees, or agents had any valid authorization from the Peruvian government. Peru also prohibits the export of species protected under the Convention on International Trade in Endangered Species (CITES), without the required permits. The Company did not obtain any CITES export permits from Peru. Between 2010 and 2014, a few Company employees harvested, transported, and possessed a total of approximately 86 tons of rosewood, all of which was harvested in violation of Peruvian law. The rosewood was intended for distillation and export to the United States and some had already been illegally brought over. The Company lacked an internal compliance program or formal procedures, training, or means to review and resolve problems and identify and stop potential violations. As a result, the Company hired outside counsel to conduct an internal investigation into the violations due to the illegal harvesting and shipping of plants that occurred in Peru and Ecuador. On July 20, 2015, once the internal investigation was complete, the Company made an initial written voluntary disclosure to the Government of various facts indicating their potentially illegal violations.

The investigation revealed that, in addition to the conduct disclosed by the Company, in December 2015, the Company exported spikenard oil harvested in Napal to the United Kingdom, without a CITES permit. The spikenard oil was previously imported from a company in the United Kingdom that had obtained a CITES export permit. The Company found the product to be unsatisfactory and shipped it back to the United Kingdom. On March 23, 2016, a Company employee filed an application for a CITES permit for this shipment after the fact, and without providing the required copy of the permit authorizing its original export from the United Kingdom.

The investigation also revealed that between November 2014 and January 2016, the Company purchased over 1,100 kilograms of rosewood oil from a supplier/importer in the United States without conducting sufficient due diligence to verify lawful sourcing of that oil.

The Government calculates the fair market retail value of the plant products involved in the violations and relevant conduct, including but not limited to product equaling approximately 1,899.75 liters of rosewood oil, to be more than $3.5 million but not more than $9 million.

The investigation was conducted by the Law Enforcement Offices of the U.S. Department of Agriculture, Office of the Inspector General, with assistance of the U.S. Fish and Wildlife Service and the Department of Homeland Security, Investigations. This case is being prosecuted by the Justice Department’s Environment and Natural Resources Division’s Environmental Crimes Section and the District of Utah’s U.S Attorney’s Office.

To learn more about Lacey Act and the Endangered Species Act contact info@diaztradelaw.com today.

Friday, September 1, 2017

CTPAT “Your Supply Chains Strongest Link”

ctpatI just attended the 2017 CTPAT conference in Detroit. After 2 days of CTPAT’ing, here a list of my top 10 takeaways including the changes I see coming to the CTPAT program.
  1. There is a new name. Notice the – is officially gone, no more C-TPAT (despite all of us conditioned to using the -, it is no more. CTPAT it is.
  2. There is a new slogan – CTPAT “Your Supply Chains Strongest Link”.
  3. There is a new woman at the helm. Elizabeth Schmelzinger is the Director of CTPAT.
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The biggest take away is ....

Tuesday, August 29, 2017

Don’t Miss FDA’s Upcoming Webinar on ITACS

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On September 5th, 7th, and 11th the U.S. Food & Drug Administration will hold three identical webinars, which will provide information on the evolution of FDA’s Import Trade Auxiliary Communications System or ITACS system “to ensure that trade users are familiar with and understand the new ITACS Account Management functionality.”
 

Wednesday, August 9, 2017

C-TPAT Conference 2017

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U.S. Customs and Border Protection is proud to announce the 2017 C-TPAT Conference. The conference will be held in the Detroit Metropolitan Area. Two sessions will be offered: August 29 - 30, 2017 and August 30 - 31, 2017.  Both sessions will include a day of workshops and a day of general session.

Tuesday, June 20, 2017

6/22/17 EVENT - The Making of Global Cities: Can Miami Follow a Bold Strategy?

owitThe Organization of Women in International Trade (OWIT South Florida) is hosting an event you don't want to miss: The Making of Global Cities: Can Miami Follow a Bold Strategy?
 

Friday, June 16, 2017

President Trump Outlines New U.S. Policy on Cuba

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We’ve been patiently waiting for today’s announcement since President Trump took office on Friday, January 20, 2017. Some have speculated on whether President Trump’s stance on Cuba would further diplomatic relations following the steps of former President Barack Obama, while the majority have opined that Trump’s next steps could reverse some of the changes made by the former President. The speculation can now be put to the side as today President Trump delivered a speech in Miami (at the Manuel Artime Theater) today, a little over 90 miles away from the island of Cuba, outlining his new policy with the communist island. The announced changes do not take effect until the new OFAC regulations are issued. The forthcoming regulations will be prospective and will not affect existing contracts and licenses.  
Here is a summary of the MAIN changes, and background of why the President has signed an executive order making these changes in support of the Cuban people:

Monday, June 12, 2017

WHAT DO CONTACT LENSES, DENTAL FLOSS, AND PACEMAKERS HAVE IN COMMON?

One might naturally think of a product like a defibrillator as a medical device, but in our business, we find many companies unsure if its products are, in fact, medical devices.
The following is the first of a two part series which you may use as a helpful guide to get you through the medical device maze. First is a description of what medical devices are, and helpful hints so that you may identify if your product is regulated as a medical device. Second is a brief overview of FDA’s regulation of medical devices. The second part of the series will discuss the classes of medical devices, and the FDA registration process.
What is a Medical Device?

Tuesday, May 30, 2017

HELP! CBP Seized My Tobacco Products as Drug Paraphernalia, What Now?

Our office has increasingly received requests for guidance on importation of marijuana paraphernalia products to the U.S. where twenty-six (26) states have legalized the use of marijuana for medical purposes and/or personal consumption such as California, Massachusetts, Maine and Nevada. The purpose of this article is to dispel the confusion as to why paraphernalia products (grinders, storage containers, rolling paper, pipes, vape pens, etc.) are continuously being seized by U.S. Customs and Border Protection (CBP), even when such products may be used by tobacco smokers. It is important to address the realities between federal and state laws regulating drug paraphernalia products so importers can avoid CBP’s enforcement of U.S. Laws.

Why Does CBP Stop Drug Paraphernalia?
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      CBP secures America’s borders at and between ports of entry by stopping inadmissible people and illicit goods. The Tariff Act of 1789 provides one of CBP’s core functions: to act as the leading federal agency in determining the admissibility of goods that may enter the Commerce of the United States. Even though each State has internally legalized marijuana either for medical or recreational purposes, CBP still has the express power to authorize or not any merchandise that comes into the U.S. Thus, CBP can detain and seize “drug paraphernalia” even if you did not intend to use the product that purpose pursuant to 19 U.S.C. § 1595a(c) stating a violation of 21 U.S.C. § 863.

What Constitutes Drug Paraphernalia?

In 2014, a smoke shop owner imported different merchandise from China described as “glass hookahs and parts”. The Central District of California considered these products, which were valued at $82,933.64 as drug paraphernalia and thus detained and seized the merchandise pursuant to 19 U.S.C. § 1595a(c) for violations of 21 U.S.C. § 863. The U.S. sued the shop owner and the Court concluded that “despite…[the] erroneous characterization of the merchandise as ‘hookah pipes’…they are bongs, and are therefore barred from entry into the United States.”

To determine whether the product is drug paraphernalia, the Court will not only consider the Code, but also other relevant factors such as the existence and scope of legitimate uses of the product in the community and expert testimony concerning its use. Under 21 U.S.C. Section 863(e), the following items are used to determine if a product is drug paraphernalia:
(1) instructions, oral or written, provided with the item concerning its use;
(2) descriptive materials accompanying the item which explain or depict its use;
(3) national and local advertising concerning its use;
(4) the manner in which the item is displayed for sale;
(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;
(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;
(7) the existence and scope of legitimate uses of the item in the community; and
(8) expert testimony concerning its use.

There is no requirement that the violator had specific knowledge that the merchandise constituted drug paraphernalia. United States v. 160 Cartons of Glass Water Pipes, Case No. CV 12-8965- BRO (VBKx) (C.D. Cal. Mar.  10, 2014).

What Must You Refrain From Doing?

  •        Sell or offer to sell drug paraphernalia
  •          Mail drug paraphernalia or transport it through interstate commerce
  •          Import or Export drug paraphernalia


REMEMBER: CBP is the federal agency that has control over everything that is imported and exported to/from the U.S. and therefore, they have the power to detain and seize your products when it constitutes drug paraphernalia. This will continue to happen until Congress decides to enact a Federal Law that allows marijuana consumption on a federal level or drug paraphernalia within the U.S.

What Do You Do if CBP Detains and/or Seizes Your Merchandise?

CBP has the power to detain persons or merchandise and make admissibility decisions. If CBP believes merchandise should be detained, it is required to send a Notice of Detention no later than five (5) business days from the day of examination. Often, the Notice of Detention does not specify the circumstances of the detention or is not even issued. It is important during this detention phase to communicate with CBP to discuss why your merchandise should not constitute drug paraphernalia and should be released.

CBP also has the ability to seize your merchandise if it is contrary to law and CBP will send a Seizure Notice, which you will have 30 days to respond, and typically we respond in the form of a Petition. Seizure cases are complicated, it is best to hire an expert who knows the policies, internal procedures and practices of U.S. Customs. Most importantly, getting involved early in the detention process is the best way to tackle this issue.

Want to Know if Your Product Will be Considered Drug Paraphernalia Prior to Importing?

Prior to importing your product, we recommend you review your product with an expert and determine whether to request a Binding Ruling from CBP. In CBP Ruling HQ H150766, an importer inquired on whether its hookah and hookah components constituted drug paraphernalia. The major issue CBP decided was whether the hookahs are “primarily intended” for use with drugs since it is considered a multiple-use item. CBP ruled that hookahs are admissible merchandise into the United States and held that they are not considered drug paraphernalia based on the weight of the evidence addressing the 8 criteria as set forth in 21 U.S.C. § 863, specifically its intended use for tobacco and not drugs.



If you have questions on whether or not your product constitutes drug paraphernalia and are interested in requesting a binding ruling, or if CBP has detained or seized your product, contact our office at info@diaztradelaw.com or (305) 456-3830 for assistance.