This post is the second part of the second installment in a multipart series designed to help right holders and importers better understand the opportunities and obligations that attach to intellectual property rights (IPR) in the U.S. Customs regulatory environment. Part 1 of the second installment discussed copyright infringement levels recognized by U.S. Customs and Border Protection and their attendant enforcement regimes. In Part 2, we complete the copyrights-trade picture by discussing enforcement relief options and presenting best practice tips for both right holders and importers.
Enforcement Relief
Assuming the gravity of a copyright infringement does not rise to the level of a criminal referral, both remission and mitigation/cancelation relief is available. The authority for this relief is found at 19 USC 1618 and 19 CFR 171.
Remedies Following Seizure
A copyright-based seizure presents an importer with a choice of procedural pathways. These include: (i) requesting administrative forfeiture proceedings; (ii) filing a claim and cost bond and requesting referral of the matter to the U.S. Department of Justice (for subsequent judicial action); (iii) submitting an offer in compromise to the port director (with an eye to reaching a settlement); and (iv) filing a petition for administrative relief with the fines, penalties, and forfeitures officer (FPFO) at the port of seizure. Petitions seeking relief from a seizure typically advance claims regarding the distinctive and non-infringing characteristics of the merchandise, the attainment of right holder consent, the availability of an exemption (not for private gain, public domain, qualifying use, etc.), and/or the controlling nature of an importer’s interest in the IPR. The FPFO’s relief decision will be taken with refence to the parameters set forth in CBP’s published guidelines and is not subject to administrative protest.
Mitigation/Cancelation of Penalties
Importers can seek relief from CBP-issued penalties by filing a petition for their mitigation or cancelation. In reviewing such petitions, the FPFO will, consistent with published penalty guidelines, evaluate an importer’s prior violation history in relation to a number of mitigating and aggravating factors.
Mitigating factors include:
- Prior good record of the importer
- Lack of importer experience
- Evidence of extraordinary cooperation
- Evidence of remedial action
Aggravating factors, by way of contrast, include:
- Criminal conviction relating to the subject transaction
- Repetitive violations of the same import restriction involved in the penalty
- Multiple violations within the same transaction
- Circumstances suggesting an intentional importation contrary to law
- Pattern of importer disregard for its responsibilities under U.S. laws and regulations
Where relief is granted under a petition for the mitigation of a penalty, FPFOs routinely require importers to satisfy all costs incurred in connection with a seizure (demurrage, storage, etc.) and sign off on a hold harmless agreement. Penalty-focused petition decisions are not, in their final form, subject to administrative protest.
Best Practice Tips for Managing Copyrights in the U.S. Customs Regulatory Environment
There are several measures right holders and importers can take to protect their intellectual property rights and avoid unwanted scrutiny.
Right Holders
The most important measure available to right holders (outside of registering with the USCO) is recording their IPR with CBP’s Intellectual Property Rights Recordation system (IPRR). The process is simple, quick, and inexpensive ($190 per copyright registration). The act of recording has the beneficial effect of putting CBP on alert for inbound products with infringing copyrights. It also serves as an efficient means of ensuring CBP has up-to-date point of contact information. This can be used to expeditiously communicate with right holders if/when imported merchandise is detained. In the event piratical copies are detected, recordation opens the door to enforcement options not otherwise available to works whose copyrights have not been recorded with CBP.
Right holders can enhance the protection CBP recordation offers by subsequently reaching out to field operations officers at all logistically relevant U.S. ports of entry for the purpose of educating them on the distinguishing characteristics of protected works. Sharing a product information guide or giving a product information webinar can, in this vein, enable CBP to better monitor imports and, if appropriate, take action to prevent the entry of violative articles.
Finally, right holders can maximize the protection of their IPR by actively exercising oversight over both the digital and physical marketplaces in which their goods are produced and/or commercialized. If/when this sort of vigilance results in the detection of violative merchandise, right holders will consequently be well-positioned to deploy the administrative and/or judicial tools available for shutting down the infringement (through, for example, the filing of an e-Allegation to CBP, the submission of an IPR theft report to the National Intellectual Property Rights Coordination Center, the obtainment of a court-ordered injunction, etc.).
The foregoing right holder-oriented best copyright practice measures can be summarized as follows:
- Register copyrights with the USCO
- Record copyrights with CBP’s IPRR
- Educate CBP field operations officers at all logistically relevant U.S. ports of entry on the distinctive characteristics and attributes of the protected and recorded work
- Proactively monitor marketplaces in which the protected work is produced and commercialized
- Take timely administrative or judicial action against IPR violations
Importers
There are, alternatively, several measures importers can take to avoid unwanted CBP or right holder scrutiny. For example, importers can, prior to engaging in an importation, clear the intellectual property rights associated with the merchandise to be shipped by searching, free of charge, CBP’s Intellectual Property Rights Search system (IPRS). The realization of this step facilitates, on a pre-importation basis, the identification of previously unknown intellectual property rights that have been recorded for protective purposes with CBP, thereby allowing importers to timely secure the consent of a right holder and, by extension, avoid downstream compliance problems.
Where an importer obtains right holder consent to import an otherwise protected work, the risk of an improper detention/seizure can be minimized by proactively providing advance notification of this fact to CBP officials at all logistically relevant U.S. ports of entry. This action avoids potentially disruptive and costly downstream surprises, builds trust between importers and CBP, and facilitates legitimate trade.
The final best practice measure an importer can take to minimize IPR-related customs compliance risk involves obtaining, also on a pre-importation basis, written assurances from foreign suppliers and producers that the merchandise they will export does not infringe the intellectual property rights of third parties.
The foregoing importer-oriented best copyright practice measures can be summarized as follows:
- Clear the intellectual property rights associated with inbound merchandise on CBP’s IPRS system
- Secure all necessary right holder authorizations in advance of entering merchandise
- Provide CBP field operations officers with pre-importation notice of the forthcoming entry of merchandise for which the authorization of a right holder has been previously secured
- Insert provisions into relevant transaction documents (contract manufacturing agreements, for example) forbidding piratical works in merchandise produced abroad for subsequent importation into the United States
Conclusion
Navigating copyright issues in international trade can, as this blogpost highlights, be tricky and complex. This is especially the case for small- and medium- sized entities that lack the legal spend resources of larger corporations. Understanding the concepts and following the best practice tips laid out in this piece will go a long way to ensuring that right holders protect their hard-earned intangible assets and importers avoid the delay and expense that can be triggered by non-compliance with the laws and regulations that apply to IPR in the U.S. Customs regulatory environment.