After Multi-year NEMA Effort, CBP Has Clear Authority to Share

After Multi-year NEMA Effort, CBP Has Clear Authority to Share

This piece was originally published in the May 2016 issue of ei, the magazine of the electroindustry.

By Craig Updyke, Director, Trade and Commercial Affairs, NEMA
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Section 302 of the Trade Facilitation and Trade Enforcement Act, signed into law in February, resolves legal uncertainty and strengthens the authority of U.S. Customs and Border Protection (CBP) to share information and product samples with U.S. electroindustry companies and others who face a threat of counterfeit products entering the U.S.

As part of a multiple-Congress effort to pass a bill reauthorizing the trade functions of CBP, NEMA advocated consistently for the inclusion of language necessary to ensure that the agency can cooperate efficiently and effectively with U.S. holders of copyrights and trademarks to prevent importation of fake products.

NEMA action was necessary for several reasons. First, several NEMA member companies and particular product types have been victims of importation of counterfeit products. These include circuit breakers, batteries, extension cords, receptacles, ground fault circuit interrupters, light bulbs, and grounding rods. In addition to the damage counterfeits can do to sales, counterfeit products are usually unsafe because they have not been built to meet applicable standards.

Second, due to a conflicting interpretation of the Trade Secrets Act, several years ago CBP ceased sharing with U.S. companies, for verification purposes, the images and samples of suspected counterfeit products they detained.

The effort to rectify this situation began to bear fruit in December 2012. At that time, a section in Rep. Kevin Brady’s proposed Customs Trade Facilitation and Enforcement Act would permit CBP, with conditions, to “provide to the owner of a copyright or a registered mark…to assist [CBP] in determining whether the merchandise, packaging, or packing material infringes the copyright or bears or consists of a counterfeit mark of the registered mark.”

The following spring, NEMA General Counsel Clark Silcox testified before the U.S. Senate Committee on Finance in support of a similar provision included in the Senate version of the bill. Mr. Silcox cited in particular that labeling of some counterfeit products can successfully simulate the labeling on a genuine product. Thus, it can be difficult to tell the difference by visual inspection.

“There are situations where it can be very difficult for a [CBP] port official to determine whether a suspect product is genuine or counterfeit,” he told the committee.  “A look under the hood, so to speak, may be required.” Sharing and inspection of product samples by CBP, not just photographs, can be essential.

While NEMA continued its education effort on the Hill, the vital information-sharing provision waited for pent-up demand for trade legislation to build until the 114th Congress in 2015. Open consideration of the bill in the House and Senate began in the spring, but final compromise and passage was not secured until this year.

Section 302, “Exchange of Information Related to Trade Enforcement,” authorizes CBP to share with rights holders images or samples of suspected merchandise prior to formal seizure by CBP, including any information appearing on the merchandise and its packaging and labels.

In an April meeting with manufacturers about the new law, Michael Walsh, Director of Intellectual Property Rights (IPR) Policy and Programs for CBP (an agency of the Department of Homeland Security), explained several additional provisions that will help CBP cooperate with legitimate traders to catch illegal trade. These include better coordination among CBP experts organized in virtual centers and with the National Intellectual Property Rights Center, as well as creation of a joint strategic plan for IPR enforcement.

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