Editor’s Note: Cross-posted from FISMA Focus/Regulatory Cyber Security.
From: US General Accountability Office
Intellectual Property: CBP Can Enhance Information Sharing with the Private Sector to Address Changes in the Counterfeits Market
Chairman Hatch, Ranking Member Wyden, and Members of the Committee:
I am pleased to be here to discuss the results of our review of U.S. agencies’ efforts to address changes in the market for counterfeit goods and their work with the private sector. Intellectual property is an important component of the U.S. economy, and the United States is an acknowledged global leader in its creation. Infringement of intellectual property rights (IPR) through the illegal importation and distribution of counterfeit goods harms the U.S. economy by stifling innovation, slowing economic growth, weakening the competitiveness of U.S. employers, and threatening American jobs. IPR infringement can also threaten the health and safety of American consumers. The Department of Homeland Security’s U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE)—two of the many agencies involved in IPR enforcement—are responsible for IPR enforcement at U.S. borders. CBP leads enforcement activity at the border by detecting and seizing counterfeit goods that enter the United States through its more than 300 ports of entry and by assessing penalties against IPR infringers. CBP coordinates its efforts with ICE, which investigates IPR violations for federal prosecution.
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CBP Data Indicate Changes in Several Key Characteristics of Counterfeit Goods Seized
According to CBP seizure data and CBP officials, the volume, variety, and methods of shipment of counterfeit goods seized by CBP and ICE have changed in recent years. CBP reports indicate that the number of IPR seizures increased by 38 percent in fiscal years 2012 through 2016. According to CBP data, approximately 88 percent of IPR seizures made during this period were shipped from China and Hong Kong. The variety of products being counterfeited has also increased, according to CBP officials. CBP and ICE officials noted that, while many consumers may think of luxury handbags or watches as the most commonly counterfeited goods, counterfeiting occurs in nearly every industry and across a broad range of products. In addition, according to CBP data we reviewed and officials we spoke to, the methods of importing counterfeit goods into the United States have changed in recent years. Specifically, express carriers and international mail have become the predominant form of transportation for IPR-infringing goods entering the United States, constituting approximately 90 percent of all IPR seizures in fiscal years 2015 and 2016, according to CBP data.
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CBP and ICE Generally Collaborate on IPR Enforcement, but CBP Is Restricted in Sharing Information with the Private Sector
Our analysis showed that CBP and ICE interagency collaboration on IPR enforcement is generally consistent with the following selected key practices for effective interagency collaboration: (1) define and articulate a common outcome; (2) establish mutually reinforcing or joint strategies; (3) identify and address needs by leveraging resources; (4) agree on roles and responsibilities; and (5) establish compatible policies, procedures, and other means to operate across agency boundaries.5 For example, the agencies may leverage resources by collocating staff or sharing their expertise. CBP and ICE have also issued guidance and developed standard operating procedures to clarify roles and responsibilities. CBP and ICE also coordinate with the private sector in a variety of ways, such as obtaining private sector assistance to determine whether detained goods are authentic and to conduct training.
Representatives of rights holders and e-commerce websites noted that information shared by law enforcement entities is critical to private sector IPR enforcement, such as pursuing civil action against a counterfeiter or removing counterfeit items from websites. In the Trade Facilitation and Trade Enforcement Act of 2015, Congress provided CBP with explicit authority to share certain information with trademark and copyright owners before completing a seizure. CBP officials stated that they share information about identified counterfeits with e-commerce websites and rights holders to the extent possible under current regulations. However, according to private sector representatives we spoke to, restrictions on the amount and type of information about seized items shared by CBP limit the ability of rights holders and e-commerce websites to protect IPR. CBP officials noted that there are legal limitations to the amount and type of information they can share, particularly if the e-commerce website is not listed as the importer on forms submitted to CBP.
Several private sector representatives stated that receiving additional information from CBP would enhance their ability to protect IPR. Representatives of one website noted that information on the exterior of seized packages, such as business identifiers on packages destined for distribution centers, would be helpful for identifying groups of counterfeit merchandise from the same seller. However, according to CBP officials, CBP cannot provide such information to e-commerce websites. Representatives of one e-commerce website noted that ICE sometimes shares information related to an investigation, but that ICE’s involvement in the enforcement process begins only after CBP has identified and seized counterfeit items. Representatives of two e-commerce websites stated that, because of the limited information shared by CBP, they may not be aware of IPR-infringing goods offered for sale on their websites, even if CBP has seized related items from the same seller.
