New Bill Would Empower U.S. Customs To Enforce Design Patents At The U.S. Border To Combat Imported Counterfeit Products

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“In several recent cases, an enhanced CBP authority would have been a faster and more cost-effective tool to stop design patent infringement than existing enforcement forums. In many cases, accused offenders do not appear when prosecuted in district court. “

Yesterday, the Counterfeit Goods Seizure Act of 2019 was introduced in the US Senate to empower US Customs and Border Protection to enforce US design patents at the US border. The bill is co-sponsored by Senators Thom Tillis (R-NC), Chris Coons (D-DE), Bill Cassidy (R-LA) and Mazie Hirono (D-HI).

Currently, Section 1595a (c) (2) (C) of Title 19 of the United States Code empowers Customs to enforce copyrights and trademarks previously registered with Customs. The bill proposes to amend 19 USC § 1595a (c) (2) (C) to give customs similar discretion to seize and detain imported goods that infringe a registered U.S. patent. The bill is publicly supported by Nike Inc. and the 3M Company, as well as the Intellectual Property Owners Association (IPO) and the American Intellectual Property Owners Association (AIPLA).

Counterfeiters have gotten smarter in the 21st century. Illegitimate manufacturers and sellers have recognized that counterfeit products (which bear counterfeit trademarks) are potentially at risk of being seized by border officials, but the same products not bearing the counterfeit trademarks generally escape seizure by customs. In 2018, federal authorities arrested a group of counterfeiters who had imported more than $ 70 million in fake Nike shoes, especially Jordan-branded shoes, by omitting the labels to escape customs officials. The Joint United States Strategic Plan on Intellectual Property Enforcement notes that another technique used by counterfeiters is to cover or obscure the mark and subsequently remove the cover or obscuring element after the goods have cleared customs. in order to complete the counterfeiting process. Changing the law to allow customs to enforce design patents would go a long way to closing these loopholes.

The United States Joint Strategic Plan also described the ramifications of these counterfeiting techniques. In addition to the significant negative tax impact that counterfeit products have on the U.S. economy, the report also noted that the products can pose consumer safety concerns. For example, the Joint Strategic Plan identified the risk to consumer health and safety posed by counterfeit versions of personal care products, consumer electronics and auto parts, all of which are often protected by patents. Design. According to the Plan, counterfeit personal care products (eg, sunscreen, cosmetics, and perfumes) often contain dangerous contaminants (eg, carcinogens and urine) or lack effective ingredients (eg, SPF). ). Likewise, counterfeit consumer electronics (for example, power adapters, chargers, and devices) can fail or overheat, causing fire and electric shock hazards. Counterfeit auto parts (e.g. wheels, headlights, and windshields) often have higher failure and malfunction rates than original parts.

The infringement test for design patents was simplified in 2008, which should make it easier for customs officials to assess the infringement of a design patent. Customs officials would only need to determine whether the patented design and the suspect imported design had substantially the same general appearance. See Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Cir. Fed. 2008). This analysis is similar to the analysis currently undertaken by Customs in the event of suspected trademark infringement. Customs officials have already demonstrated their ability to determine whether imported goods infringe a design patent, through the continued enforcement of design patent exclusion orders. But, as the amendment is currently being drafted, in the event that Customs is unable to concretely determine a violation, the agency would have discretion. not seize the goods because, as with copyright and trademark infringements, CBP’s seizure power is discretionary (for example, “the merchandise may be seized and confiscated if. . . . “).

In several recent cases, an enhanced CBP authority would have been a faster and more cost-effective tool to stop design patent infringement than existing enforcement forums. In many cases, accused offenders do not appear when prosecuted in district court. See, for example, Deckers Outdoor Corp. vs. Alphabetdeal.com, Inc., 2018 WL 6133705 (CD Cal. Aug. 1, 2018) (court issued default judgment and awarded Deckers $ 200,000 in damages and issued an injunction). In other cases, rights holders have difficulty identifying the sellers of the offending products. See, for example, Altinex Inc. v. Alibaba.com Hong Kong Ltd., 2016 WL 6822235 (CD Cal. March 25, 2016) (the plaintiffs could not identify the third-party sellers and the court issued a legal judgment in favor of the online marketplace). These design rights could have been enforced at the border by Customs, had Customs had the authority to do so, which would have been faster and cheaper for design rights holders.

If the bill is enacted, the United States will join many other countries that have already enforced design rights at their borders, including the EU, Japan, South Korea, China, India, Mexico, Turkey, Argentina, South Africa, Switzerland and Panama.

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Copyright: danielfa

Elizabeth ferrill

Elizabeth Ferrill is a partner in the Washington, DC office of Finnegan LLP. She focuses her practice on all aspects of design patents, including prosecution, advice, post-grant and litigation, representing both design rights holders and those accused of infringement. Beth is also one of the vice chairs of the Industrial Design Rights Committee of the Intellectual Property Owners Association.

For more information or to contact Beth, please visit her Company Profile page.


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