COAC Wants C-TPAT & Distribution IP Programs, CBP Wants New Samples Law

CBP Sends Congress Legislative Proposal for Sharing Unredacted Samples

CBP says that it has sent a legislative proposal to Congress that would authorize sharing of unredacted samples (which may include information protected by the Trade Secrets Act) with rights holders prior to seizure to assist with infringement determinations. Under its proposal, importers would first have an opportunity to show that suspect goods are not infringing¹.

COAC Approves Recommendations to CBP on Facilitating Legitimate Trade

COAC has been requested to provide feedback as part of its contribution to CBP’s efforts to continue to develop an effective IPR enforcement process in which (i) legitimate cargo is released without delay; (ii) infringing goods are intercepted; and (iii) violators are deterred or put out of business.

As part of that feedback, COAC has made recommendations for the facilitation area of CBP's 5-Year IPR Enforcement Strategy. CBP's strategy is a three pronged approach: facilitate, enforce, and deter. The recommendations developed by the IPR Subcommittee on facilitation were adopted by COAC during the December 7, 2011 meeting.

Highlights of COAC’s "draft" recommendations to CBP on facilitation include:

C-TPAT like program for IPR. COAC suggests that CBP outline an IPR Partnership Program concept for licensees and parallel importers modeled on or as an adjunct to the Customs-Trade Partnership Against Terrorism (C-TPAT) program and further explore its viability with the trade. Further detailing the proposed program and socializing it in the trade will help determine whether there’s sufficient interest to support its viability.

(Subcommittee members have indicated that an Importer Self Assessment (ISA) IPR supply chain program may not be attractive to importers, but that a program modeled on the Customs-Trade Partnership Against Terrorism (C-TPAT) may have more appeal.)

COAC suggests that CBP explore whether the program could exist as an adjunct to the existing C-TPAT program, adding an optional set of IPR related controls to existing C-TPAT security criteria that would give C-TPAT certified importers the option of a “C-TPAT Plus IPR” benefit. This would minimize the burden of managing a separate partnership program for importers and may accomplish CBP’s goal of attracting more participants to C-TPAT.

Further develop distribution management serialization concept. COAC recommends that CBP further outline the distribution chain management serialization concept, a code or key passed through the supply chain as a way of validating authenticity. The responses to the Subcommittee’s survey on this topic indicated an interest in learning more about how the program might work and whether the benefits would outweigh the costs of implementation. COAC recommends that CBP explore the idea in a workshop environment and continue to work with COAC to assess feedback from those meetings. Such workshops may be held in January 2012 in Washington, DC.

Voluntary IPR indicator in cargo release data set. COAC suggests that CBP allow legitimate importers to voluntarily transmit an IPR indicator to CBP in the cargo release data set that would link to a robust database. A valid IPR indicator would lower the IPR risk assessment for that shipment, segmenting risk for CBP and speeding release for the importer. COAC suggests a simplified approach where certain identifiers are provided to CBP so an evaluation can be made against a shipment. An indicator could be voluntarily transmitted at time of entry (cargo release) and CBP could validate the data against the IOR# in a robust database (as outlined below). It would be the responsibility of the right holders to provide CBP with updated data for the robust database to insure their brand is protected. COAC further recommends that the data elements supplied to CBP to identify legitimate imports in an advanced data set be limited to the smallest number possible. COAC suggests that this program should come with assurances of confidentiality and non-disclosure of any information provided to CBP by the importer.

Robust database to improve targeting. COAC recommends that CBP establish a robust database for use by CBP Officers and by Automated Targeting Systems (ATS) in determining the authenticity of merchandise and in improving targeting to focus inspections on high risk cargo. COAC notes that there are several ways this can be done: (i) expanding the existing recordation database so that it becomes the repository of other appropriate IPR-related information; (ii) creating a larger, independent IPR database of which the recordation database is a part; or (iii) establish an IPR database separate from the recordation database which contains supplementary information.

Explore ISF-type data for IPR targeting pre-arrival. COAC recommends that CBP explore the use of ISF type data for improved IPR targeting pre-arrival. Under Simplified Entry, cargo release decisions will likely be made earlier, requiring targeting for admissibility and trade violations pre-arrival. CBP could use this data for targeting pre-arrival without use under an enforcement action to comply with the requirements of the Safe Ports Act.

Continue to use methods currently available. COAC recommends that CBP continue to use the methods currently available to it and work with rights holders to identify certain product and package elements that can be shared without violating the Trade Secrets Act. The subcommittee recommends that CBP provide clear internal communication and port level training so officers are aware of their options with respect to release of redacted samples and other information about the imported product so that the rules are applied uniformly.

Explore use of port level Microscopy analysis. COAC recommends that CBP explore the use of port level Microscopy analysis. Many counterfeit packages, printing, fabric weaves and product contents will look different from the genuine goods under a microscope. CBP should provide low cost digital microscopes to officers in the field; allowing digital, microscopic photos of product manufacturing and packaging elements to be jointly shared with rights holders. Rights holders could, in turn, identify counterfeit indicators on their products and packaging that are difficult for counterfeiters to replicate, but that are not protected under the Trade Secrets Act. Training materials could be updated to include these indicators and made available to CBP officers in the field via CBP’s internal Recordation system. Rights holders would continue to update training materials as genuine and counterfeit manufacturing standards evolve so CBP officers in the field would know which product and packaging elements are useful for authentication.

Coordinate with OGAs. COAC recommends that CBP coordinate all of its efforts and initiatives with respect to IPR enforcement with other government agencies to insure importers benefit from a harmonized approach.

¹As a result of CBP’s action, the subcommittee has temporarily tabled its discussions about the legal authority to share unredacted samples with right holders prior to seizure with appropriate safeguards for importers pending Congressional action on the topic.

²The IPR Enforcement Subcommittee surveyed the trade regarding (i) a C-TPAT-like supply chain partnership program for licensees and parallel importers and (ii) a distribution chain management serialization concept for validating the authenticity of goods.

CBP’s report available here

Subcommittee comments on CBP IPR Enforcement Strategy available here

Subcommittee draft recommendations available here