United States - Legislation paves way for increased information sharing from Customs
By Jack Ellis
October 18 2011
Amendments to the proposed Currency Exchange Rate Oversight Reform Act are set to ease restrictions on the pre-seizure sharing of information regarding potential counterfeit goods by US Customs & Border Protection. But could more be done to strengthen the sharing of information between Customs and rights holders?
The bill (which has been passed by the Senate and is now awaiting House of Representatives approval) is intended to stimulate US job creation and investment by discouraging trading partners from undervaluing their currencies to gain unfair advantage. Senator Chris Coons introduced two amendments to the bill, the second of which is of particular interest to trademark owners as it seeks to alleviate current restrictions on the pre-seizure sharing of information regarding potential counterfeit goods by US Customs & Border Protection.
Presently, the US Code of Federal Regulations (19 CFR § 133.25) states:
Notice of detention and disclosure of information. From the time the merchandise is presented for Customs examination until the time a notice of detention is issued, Customs may disclose to the owner of trademark or trade name any of the following information in order to obtain assistance in determining whether an imported article bears an infringing trademark or trade name … (1) The date of importation; (2) The port of entry; (3) A description of the merchandise; (4) The quantity involved; and (5) The country of origin of the merchandise.
Samples available to the trademark or trade name owner. At any time following presentation of the merchandise for Customs examination, but prior to seizure, Customs may provide a sample of the suspect merchandise to the owner of the trademark or trade name for examination or testing to assist in determining whether the article imported bears an infringing trademark or trade name.
James Bikoff, partner at Silverberg Goldman & Bikoff and trademark enforcement expert, explains that, while “Customs have shared information and samples with trademark owners in the past, there has been some reluctance by Customs to continue to do so out of fear of liability under the US Trade Secrets Act, which relates to government disclosure of confidential information and trade secrets”.
The Trade Secrets Act currently provides that:
Whoever, being an officer or employee of the United States or of any department or agency thereof, … publishes, divulges, discloses, or makes known in any manner or to any extent not authorised by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigation made by, … which information concerns or relates to the trade secrets, … to be seen or examined by any person except as provided by law; shall be fined under this title, or imprisoned not more than one year, or both; and shall be removed from office or employment.
As a result, while on the one hand Customs are free to share information, on the other there is potential liability for doing so. Bikoff notes that these constraints have been further compounded by court decisions: “The Ninth Circuit Court of Appeals, which has jurisdiction over California and other Pacific coast states with ports of entry, recently held that, when Customs discloses information to trademark owners, it must expressly instruct them not to disseminate that information further. Absent that instruction, the confidentiality of the information provided could be deemed waived, and made accessible to the public under the Freedom of Information Act. Problems of this sort tend to further discourage Customs officers in their efforts to prevent the importation of counterfeit goods.”
Senator Coons’ second amendment, introduced with Senator Chuck Grassley, will modify the Trade Secrets Act to authorise the Secretary of Homeland Security “to share information on, and unredacted samples of, products… with the right holders of the trademark suspected of being copied or simulated, for purposes of determining whether the products are prohibited from importation.” This could include evidential information such as UPC codes.
Bikoff believes the amendment is a positive development for trademark owners: “The amendment should dissipate any doubts regarding how much information can be shared under current law and should assist Customs in verifying the counterfeit nature of suspect imports.”
Despite this, he suggests more could be done. “Congress could go farther by creating an explicit ‘safe harbour’ in the Trade Secrets Act for Customs & Border Protection. Such a safe harbour could permit disclosure of information and samples to trademark owners irrespective of liability under the Trade Secrets Act or disclosure pursuant to the Freedom of Information Act. The disclosure should be construed to extend only to the rights holders, consonant with the purposes of the statutory and regulatory scheme.”
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