Large Seizure by CBP Highlights High Margins of Counterfeiting, and Necessity of Recordation

Co Authored by Michael De Biase 

One of CBP's latest news releases, dated September 27, 2013, noted that more than 16,000 counterfeit Hermes handbags were seized by Customs and Border Protection (“CBP”) because Hermes took the extra step of recording their intellectual property with CBP.   Not surprisingly, when you analyze the difference between the alleged value of the counterfeit products (reported to CBP) as compared to the suggested retail price of the genuine goods, you have a grave difference. In this case, $295,665 (value of counterfeit goods) compared to $210,785,475 (value of genuine goods).  That’s over $210 million worth of potential profits for the counterfeiters, at the expense of Hermes – a crime in every sense. Because Hermes recorded its intellectual property with CBP, CBP seized this infringing merchandise, and will also have the ability to issue a penalty for the MSRP of the merchandise. Yes, that means a penalty in the amount of $210,785,475 will be coming to the counterfeiters!

Most often, counterfeiters target large luxury brands whose goodwill and name recognition has a certain element of exclusivity.  While some may not sympathize with profitable companies, what they fail to realize is that counterfeiting hurts in a variety of other ways. Counterfeiting hurts consumers who buy products under the false impression that they are genuine, companies whose goodwill is tarnished by the inferior quality of the counterfeit products bearing their brands, and it hurts those who worked hard to build something of substantial value.  In this case, Hermes lost out on, potentially, more than $210 million dollars in revenue.  That is not only felt by Hermes the corporation, it hurts the retail stores and the malls they’re in, the shipping companies, the raw materials developers, and the families of the employees for all of these parties.

Luckily for importers and consumers, CBP recognizes the importance of intellectual property protection and provides assistance in stopping the infringing products at our borders.  CBP’s Intellectual Property Rights Recordation (“IPRR”) system allows holders of registered trademarks and copyrights to record their registration with CBP, so that CBP can police the borders for infringing goods.  Once recorded, it is entered into a online search system named IPRS. According to the news released mentioned above regarding catching counterfeiting Hermes at the border, once intellectual property is recorded with CBP,

CBP officers are trained to identify and interdict counterfeit goods, and this is a great example of how their training and expertise are employed every day in our ports of entry,” said CBP Director of Field Operations in Los Angeles Todd C. Owen

Considering the incentives for counterfeiters along with the potential losses for intellectual property rights holders, companies that import merchandise must consider recordation a necessity. Importantly, when you record your marks, you must go to an expert in this area - as this is your opportunity to train CBP on the methods of policing your mark - and only trained experts can work on this proficiently so you have the best results with CBP, like Hermes did. To learn more about the top four benefits of recording your intellectual property, review this article.

To get started on recording your intellectual property, or if you have any questions on how to best have CBP police your recorded trademarks and copyrights, please contact me.