BREAKING NEWS: EXCLUSION PORTAL TO OPEN FOR LIST 4A

                      

USTR announced it will open the exclusion request process for HTS’s on List 4A. List 4A includes products covered by Annex A of the August 20, 2019 notice (84 FR 43304)  that are subject to 15% duty as of September 1, 2019.

 

List 4 has a total of 300 Billion worth of products and includes both lists 4A & 4B. 15% duties for List 4B (products covered by Annex C of the August 20 notice) are effective December 15, 2019, and no exclusion process has yet been discussed for 4B.

Exclusion portal opens October 31, 2019, and closes on January 31, 2020.

Contact us today to get your request in timely!

DTL helps clients strategize how to identify the strongest argument to persuade the government in granting your exclusion request. DTL was active in assisting clients submit exclusion requests for List 3.

TOP 10 MISTAKES MADE BY TRADEMARK OWNERS

In most jurisdictions, the majority of trademark filings are made by small businesses and entrepreneurs or solopreneurs. When starting a business, it is easy to get caught up on getting your business off the ground. Below outlines the TOP 10 mistakes trademark owners can make (and we will teach you how to avoid them and MUCH more in our seminar, ABC’s of Protecting Your Brand, on February 20, 2019).

1. Not Realizing That Protecting Trademarks Could Create Value for Your Business.

Most new businesses should analyze the value of their business from the start. While most businesses operate out of rented/leased space or straight out of the owner’s home and rely on loans to promote their services or financing for product inventory, businesses fall short in adding value to their own brand name. When it’s time to sell or liquidate businesses are left with little or no assets apart from their client lists and intellectual property, if any. Not investing in protecting their trademarks will diminish the value of their business in the future.

On the Brink of a Trade War: Trump’s New Tariff Plan on Chinese Imports

The Trump administration has engaged in a trade showdown with China, targeting more than $50 billion worth of products.  The administration’s actions are the result of investigations under Section 301 of the Trade Act of 1974 (“Section 301”) and Section 232 of the Trade Expansion Act of 1962 (“Section 232”). 

Section 301 

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

At the end of September 2017, Shi Wei Zheng, 42, plead guilty to one count of trafficking in counterfeit goods. During a five-month period, Zheng trafficked over 15,000 pairs of counterfeit UGG boots, with a total estimated retail value of over $2.5 million.

31,560 Shipments Were Seized by CBP in 2016 for ONE Reason

Last year, on a typical day the U.S. Customs and Border Protections (CBP) seized about $3.8 million worth of products because of Intellectual Property Rights (IPR) Violations. CBP reported that the total number of IPR seizures has increased nine (9) percent since last year, from 28,865 in 2015 to 31,560 in 2016. With the manufacturer’s suggested retail price (MSRP) exceeding $1.3 trillion.

What is Causing the Increase in Seizures?

·       Recordation of Trademark And Copyright With The CBP

o   In addition to registration of IPR with the U.S. Patent and Trademark Office (USPTO for trademarks), or the U.S. Copyright Office (for copyrights), owners can record said trademark or copyright with CBP. This additional step grants CBP additional enforcement power in both seizing counterfeit and piratical goods as well as thereafter issuing penalties for the MSRP value of the goods. In previous blog posts, we explained benefits of taking the extra step of recording your registered trademark or copyright with CBP, and CBP’s additional enforcement powers as a result of the recordations.

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.

Florida Companies Convicted and Sentenced

Co Authored by Robert Becerra

In another example of the government’s continuing use of the criminal justice system to enforce international trade laws, three Florida companies and their management were recently convicted and sentenced for importing smuggled toys from China containing lead and containing counterfeit trademarks.

LM Import-Export, Inc., Lam’s Investment Corp., and LK Toys Corp., Hung Lam and Isabella Kit Yeung plead guilty to charges of conspiracy to traffic and smuggle toys containing hazardous substances such as lead, and one count of trafficking in counterfeit goods, in violation of 18 U.S.C. Secs. 371 and 2320, respectively. Co-defendant Yeung plead guilty to one misdemeanor count of submitting a false country of origin label, in violation of 19 U.S.C. Sec. 1304(a). The information, or charging document filed in court, against all defendants, as well as the plea agreements for each defendant can be found on the website of the District Court for the Southern District of Florida. (If you have trouble getting these documents, email me and I'd be happy to share them with you).
The facts underlying the charges, as stated in court documents, are that from April, 2000, until May 2011, a span of 11 years, the corporate defendants conspired to sell children’s products imported from China in violation of the Consumer Product Safety Act 15 U.S.C. Sec. 2068, and the Federal Hazardous Substances Act, 15 U.S.C. Sec. 1263. Some of the toys contained lead, while others presented various hazards such as choking, aspiration or ingestion. The products were imported using false statements on Customs declaration forms and with false country of origin labeling.

Hung Lam was sentenced to 22 months incarceration, 3 years of supervised release and a $10,000 fine. The corporations were sentenced to 5 years of probation. Yeung was sentenced to 1 year probation and a $1,000 fine. An order was entered mandating the forfeiture to the government of $862,500 and all products imported by the defendants that were seized by the government. The press release from the Consumer Products Safety Commission and Department of Justice discussing the case can be found here and here respectively.

This case is extremely important for importers to be familiar with and understand that:

1. It is vital for importers to retain counsel to assist with pre-compliance before you import.
2. When you receive any violation notice from the federal government, retain counsel immediately and be sure to address all violations with remedial action and enhanced compliance procedures in an attempt to keep administrative penalties or forfeiture cases from turning into potential criminal matters.
3. Resolving a civil action through a consent decree with the government does not absolve you of criminal liability.
4. Once contacted by government officials, retain counsel immediately. Any evidence you provide or any statements you make will be used against you in court.
5. Repeated misconduct and federal regulatory law violations over a period of years will often result in criminal prosecution of both companies and their individual employees, resulting in federal prison sentences and substantial fines and forfeitures.