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Joint Strategic Plan on Intellectual Property Enforcement SECTION 3 Effectively policing a continuous high-volume of shipments requires a well-developed, layered risk management approach that includes enhanced identification efforts prior to arrival and augmented authentication and interdiction techniques at the POE, followed by tailored investigative procedures designed to protect rights holders’ IP, the health and safety of consumers, and other important national interests. Enhanced coordination between agencies at various levels of government, both foreign and domestic, as well as public-private collaboration and data-sharing, are also essential elements of an effective enforcement agenda, and are discussed in Section IV of the Strategic Plan. 1.Employ an “All-Threats” Approach to Cargo Screening. Intellectual Property enforcement is often regarded as a trade matter and not as a national security threat for cargo screening purposes. While trade concerns are indeed materially present in the importation of counterfeit goods, the failure to regard such goods as also posing a security threat undermines enforcement efforts in a number of ways. Security initiatives such as the Container Security Initiative (CSI) and the Importer Security Filing (ISF) and Additional Carrier Requirements, often referred to as “10+2,” employ a “single-threat” approach to cargo screening. This means that a single threat is the focus of the search, and any other actual or potential threats discovered in the course of the search for that threat may go unreported when discovered. CSI, for example, is an initiative where CBP officers abroad work with host customs administrations to identify maritime containers used to deliver weapons illicitly. CSI results in prescreening of over 80 percent of all maritime containerized cargo bound for U.S. ports. The ISF initiative, on the other hand, requires carriers of cargo to transmit electronically data about shipments prior to lading, allowing CBP to target containers that pose an elevated risk of transporting illicit weapons. In both cases, CBP officers are bound by established arrangements and regulations, and may be unable to act upon any additional illicit IPR intelligence that is identified in the process of screening the cargo. As a result, dangerous counterfeits that pose serious risks to U.S. health, safety, and national security may be identified by CBP officers but, because they are subject to the arrangements governing CSI and ISF, the contents may not be acted upon without being subject to additional screening or confiscation by CBP personnel. An “all-threats” approach to cargo screening would reflect the reality, discussed in detail in Section I of this Plan, that trade in counterfeit and pirated goods increasingly presents a clear threat to national security by undermining legitimate markets, financing transnational criminal organizations, endangering the health and safety of consumers, exploiting labor, and harming the environment. Shifting from the current “single-threat” approach to an “all-threats” approach to cargo screening would present opportunities to increase the efficiency and effectiveness of CBP screening operations. It would reduce screening redundancies. This would also empower CBP officers to act upon any relevant intelligence gathered in the course of a permissible cargo screening to further screen, exclude, or seize cargo, as appropriate, under the full spectrum of U.S. law. ACTION NO. 3.1: Consider opportunities to utilize an “all-threats” approach in cargo screening programs. CBP will assess opportunities for existing cargo screening programs, including CSI and ISF, to evaluate a shipment concurrently for threats to national security, IPR violations, and other issues as appropriate. 2. Combat the Domestic Assembly and Finishing of Counterfeit Goods. When law enforcement entities take action against certain illicit methods and tactics, criminals tend to migrate to and exploit other methods. In part, this reflects that more aggressive policy actions and enforcement measures increase the risk of detection and seizure, raising the counterfeiter’s costs. Put differently, the illicit trader is continually conducting both a risk and cost-benefit analysis to determine the best course of action to evade detection and maximize profits. As a result of rising seizures at U.S. POE and other factors, law enforcement is reporting an increase in “domestic production and assembly” of counterfeit products, that is, the practice of shipping unbranded 94
Office of the Intellectual Property Enforcement Coordinator items into the United States, to which domestic workers then affix branded labels, hangtags, logos, stamps, hardware, embroidery, or other identifying details (collectively referred to as “labels and tags”) to the finished counterfeit product. FIG. 47: Illustration of Domestic Assembly and Finishing Operation: Individual Components Come in, Counterfeit Products Goes Out. illicit trader will merely send a second parcel (filled with labels) to replace the first, and the game of cat-andmouse continues. Between FY 2012 and FY 2015, DHS seized over 2,500 shipments containing millions of individual labels and tags intended for domestic finishing, with an affixed value of more than $115 million, had the finished goods been genuine. The dollar value of seized labels and tags increased by 46.9 percent in FY 2015 over FY 2014, and 37 percent in FY 2013 over FY 2012. 4 Domestic assembly is reportedly a widespread practice across different parts of the world. 5 These tactics merit further attention and a comprehensive assessment, as little information is publicly available. Moving forward, it is important to evaluate the impact of seizures on the illicit domestic production industry, including resulting disruptions to criminal networks and an overall assessment of the effectiveness of law enforcement programs. Relatedly, the Federal Government can optimize its response to illicit domestic finishing through an evaluation of the scope and nature of domestic criminal production and finishing operations. ACTION NO. 3.2: Identify and evaluate trends in domestic production and finishing operations for counterfeit goods. Within 18 months of the issuance of this Plan, ICE will identify and evaluate trends in domestic production and finishing operations. Source: U.S. Customs and Border Protection Domestic assembly is a common tactic to try to circumvent Customs interdiction. 3 As illustrated above (FIG 47), a common practice is to reduce a product to its smallest form—blank or unbranded products in one or more packages, with identifying labels, hang tags, and packaging in other packages—with the parts imported independently in the hope that, separately, each of the individual components may clear Customs. If Customs seizes one shipment, it may likely be the one of least monetary value: the un-affixed labels featuring the famous brand. Should that occur, the ACTION NO. 3.3: Enhance interdiction efforts and the identification, investigation, and prosecution of illicit domestic finishing operations. Based on its identification and evaluation of trends in domestic production and finishing operations, ICE will work, as appropriate, with CBP and other Federal, State, and local law enforcement partners to enhance interdiction efforts and other activities for combating such operations. This may include identifying opportunities for increased collaboration with and among Federal, State and local law enforcement entities–to further the identification, investigation, and prosecution of illicit domestic finishing operations. SECTION 3 95
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U.S. JOINT STRATEGIC PLAN ON INTELL
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B. In Furtherance of a Healthy Doma
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PREAMBLE A Reflection on Creativity
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INTRODUCTION IP-intensive industrie
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EXECUTIVE SUMMARY Services, the Dep
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1 THE GLOBAL SCALE OF INTELLECTUAL
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INTRODUCTION The story of intellect
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ACKNOWLEDGEMENTS With thanks to, an
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