MS+K in LA presented a timely program on November 14th about the future of the fashion industry. The speakers were each from companies prominent in the industry who shared their views about where the industry is headed and the importance of social media to that future. For more details, check out – http://www.oohlawlaw.msk.com/- which will take you to the firm’s fashion blog.
We recently were contacted by a person who had his NEXUS pass confiscated because he declared a carton of cigarettes, but did not declare the open package of cigarettes. The CBSA seized the open package of cigarettes and did not give them back. The CBSA officer also confiscated the traveler’s NEXUS pass.
While the CBSA officer could have used his discretion to allow the person to keep the open package of cigarettes, the CBSA officer for whatever reason chose not to use his discretion.
We are sharing this because most smokers we know do not arrive that the duty free store when they are down to their last cigarette.
Individuals who use their NEXUS passes on a regular basis (and who smoke) should adopt a policy to inform the CBSA of the open package.
Cross-border long week-end travel by Canadian residents sometimes results in disagreements with the Canada Border Services Agency (CBSA) at the Canada-US border and/or at airports. The best tip that I can offer is to make a list of (1) all purchases of goods outside Canada AND (2) all goods received as gifts AND (3) all other goods acquired in any manner whatsoever while outside Canada. Check the list twice.
If you have purchased goods while away from Canada, organize all your receipts then make a list with the values paid (including taxes).
If you have received gifts while away from Canada, make a list of the goods and ask the giver of the gift the value of the gift. It is best to ask for the receipt and not a gift receipt that does not show the price.
If you have acquired goods (e.g., finally removed the box of childhood toys from Mom and Dad’s garage), you also have to declare these goods. If you receive a bequest, you must declare the good. If you pick up freebies at a convention, you have to declare those too. Sometimes it is difficult to value acquired goods that you did not pay for. A reasonable attempt is required.
Check the list after making it because you must make sure you do not forget anything. Go through the shopping bags. Go through your wallet or purse. Go through your pockets.
Tally the values of the goods purchased. If you are over the exemption limit, tell the CBSA you are over the limit. The CBSA has the job to collect duties and taxes (GST/HST/PST, excise taxes) on imported goods. If you under-report in your declaration, you may not be paying your fair share of duties and taxes – that is where the problem arises.
When you arrive at the CBSA primary inspection, provide your list and your total. Read from your list. Have all your receipts with your list.
This does not prevent a mathematical error on your part, but it reduces the chance of an oversight or a mathematical error. It reduces that chance of a disagreement with the CBSA over whether you declared a particular item. If the CBSA sees that you are organized, they will appreciate your efforts. That does not mean they will not conduct secondary, inspections – but, you should pass the secondary inspection with flying colours.
We have successfully shown that goods are properly declared when there is evidence the goods have been communicated to the primary CBSA officer. Recently, a client was successful in the appeal of a NEXUS pass confiscation because we were able to show that a paid of shoes were properly declared. The CBSA had seized a pair of shoes as undeclared. When the officer’s narrative report was reviewed and the completed E311 form, it was clear the goods had been properly declared.
When you are prepared with a list and use a calculator when adding the values on the list, you are less likely to have a disagreement with the CBSA. However, when there is a disagreement and if you can demonstrate that you had a list and gave the list to the CBSA, you have evidence that will be helpful. If you must file an appeal to the Recourse Directorate, you have something to show that you tried to comply with Canada’s customs law.
The coverage has been wall-to-wall this weekend about Pres. Obama’s veto of the exclusion order entered in favor of Apple by the International Trade Commission regarding its on-going patent dispute with Samsung. The letter can be found here – http://www.ustr.gov/sites/default/files/08032013%20Letter_1.PDF.
There are perhaps two noteworthy points about this letter. First, that the Administration even got involved was surprising. After all, the last time a President took a position on an ITC exclusion order was 1987 . Equally noteworthy are the grounds on which the Administration chose to rely.
As lawyers, we are used to a trial court developing a record and when the higher court hears the appeal, it considers that record and decides whether a violation of law has occurred. What USTR Froman did in the August 3rd letter was to basically tell the ITC it decided the case on the wrong grounds. There is no doubt the ITC considered the patent infringement issue. However, Mr. Froman said it should have also considered the factors stated in the legislative history to 19 U.S.C. § 1337: 1) public health and welfare; 2) competitive conditions in the U.S. economy; 3) production of competitive articles in the U.S.; 4) U.S. consumers; and 5) U.S. foreign relations, economic and political.
I had said all along I did not see Obama getting into the middle of the Apple – Samsung dispute, for a variety of political reasons, but the Administration chose to do so by reference to a January 8, 2013 policy statement issued by the Dept. of Justice and the Patent and Trademark Office. It deals with standard-essential patents (SEPs) which the rights holder voluntarily commits to make available for licensing on terms that are fair, reasonable and non-discriminatory (FRAND). SEPs are patents which result from consensus technology standards set by standard setting organizations. The anti-trust concern is that by asserting the patent on unreasonable grounds to exclude an implementor, there could be unfair steps taken to limit competition.
In the end, what USTR said was the ITC did not evaluate the policy factors contained in 337’s legislative history and so the order should be overturned. Apple had the right to appeal the ITC order to the Court of Appeals for the Federal Circuit, but since it has been overturned, Apple has no grounds to proceed. At the same time, Samsung is now left without an avenue for appeal of this particular decision, but the two companies continue to fight it out all over the world. So, it makes one wonder, when will the parties settle their differences and enter into cross-licensing agreements?
An issue that frustrates trademark and copyright holders in all industries is counterfeit goods. It is commonly understood that many of the imported counterfeit goods coming to the U.S. originate in China. In fact, the seizure statistics released by CBP and ICE bear that out. According to those numbers, for the 2011 fiscal year, there were 24,792 seizures worth a manufacturer’s suggested retail price (MSRP) of US $1.1 billion. In fiscal year 2012, 22,848 shipments were seized worth an MSRP of $1.2 billion. In 2012, a jaw-dropping 72% of all seizures originated with goods exported from China. Hong Kong is next accounting for only 12%, followed by Singapore and India at 1% each, and then the rest of the world. In 2011, China also accounted for the same staggering 72% of all seizures, followed by Hong Kong at 14%, India, Pakistan, Switzerland and Taiwan at 1% each, and then the rest of the world.
So, it was somewhat ironic to see the July 31, 2013 press release issued by CBP, see http://www.cbp.gov/xp/cgov/newsroom/news_releases/national/07312013_7.xml. It summarizes the results of a joint intellectual property rights enforcement operation between the customs agencies of China and the U.S. The month-long operation was focused on consumer electronics articles and seized some 243,000 items. China’s Vice Minister of the General Administration of China Customs is Zou Zhiwu who was quoted as saying: “IPR infringement is a global issue … [that] … threatens the health and safety of consumers. Enforcement agencies around the world should work more closely to crack down [on] these illegal activities. China customs has been making unremitting efforts to promote international cooperation in this field.” His statement could have come from an American customs official!
This effort was also reported to result in the arrest of a New Orleans area U.S. citizen who repeatedly imported counterfeit headphones and was the result of a referral from China Customs to CBP and ICE. This joint operation is also described to be a result of the effort between the two customs agencies to work cooperatively. Supposedly more joint operations are planned.
While this operation focused in the electronics field, one has to wonder how quickly it will spread to other commodities and industries and so help to further protect American ingenuity.
Here is a link to the July 19th statement by the U.S. Dept. of Labor, USTR and State Dept. about conditions expected of factories in Bangladesh – http://www.dol.gov/opa/media/press/ilab/ILAB20131494.htm. Full implementation is necessary for Generalized System of Preferences benefits to be reinstated by the U.S.
The major topics contained in the release are:
Government Inspections for Labor, Fire and Building Standards
Ready Made Garments (RMG)/Knitwear Sector
Export Processing Zones
Shrimp Processing Sector
While not all products originating in Bangladesh will benefit from GSP’s duty free treatment, certainly major U.S. brand holders can be expected to insist many/most of these provisions be implemented before feeling their brands are adequately protectedupon returning to Bangladesh to manufacture their products.
As of this posting, GSP expires today. A proposed for renewal is pending in Congress but one Member has a hold on it for reasons that are somewhat unclear.
There continues to be a lot of press about the impact of Kirtsaeng v John Wiley & Sons, 133 S. Ct. 1351 (2013), in which the U.S. Supreme Court recognized the validity of grey market goods being imported into the U.S. The thrust of the decision was recognition of a first sale doctrine, meaning once the copyright holder sold the goods, he could no longer control their disposition. While this is a big plus when it comes to domestic sales, international traders are reminded Customs and Border Protection (CBP) will still require the importer be able to prove the goods are grey market and not counterfeit. Similarly, if you are exporting grey market goods, you will also be faced with proving they are legitimate goods.
To satisfy CBP, your suppliers will have to provide you with the documentation to show the source of the goods being sold to you is an authorized licensee. This could take the form of purchase orders, license agreements and other documents from the brand holder to the manufacturer, but that is only the first step. You still need to be able to trace the goods from the manufacturer to your supplier and then to you. Often style numbers get changed, so make sure you have a good paper trail before trying to import or export grey market goods of any sort.
It is also worth keeping in mind that just because you are shown a license agreement, that does not mean it is a valid document. You want to check the brand holder’s website and see if its supply chain is public so you know whether or not the seller is an authorized licensee. If the information is not public, you would do well to speak with counsel for the brand holder and make sure you are getting legitimate goods. Who to contact can be found on the CBP website, if the mark is recorded with CBP. If not, you can check the listing with the Copyright Office.
There is no point to paying for the goods, and then having them seized by CBP because you cannot prove they are real. Remember, not only do you lose the goods in that circumstance, but you are also assessed a penalty for trading in counterfeit goods and the size of that penalty is tied to the manufacturer’s suggested retail price for the real goods!
Silence can be used against an individual based on the U.S. Supreme Court’s holding in Salinas vs. Texas. As such, companies would do well to expand the training they provide to staff to all employees. The failure of individuals to fully understand their legal rights can lead to terrible consequences for those individuals and their employer-companies. For more details, check out this article just posted on the MS+K website – http://www.msk.com/news/pub.cfm?id=2071&type=Alerts
At the AAEI Conference, the topic of one face at the border was discussed in the context of an update. The efforts of Customs and Border Protection (CBP) take place through the Border Interagency Executive Council. Right now, the Council is co-chaired by CBP (Asst. Comm. Al Gina) and the Consumer Product Safety Commission (Director, Import Surveillance Division Carol Cave). The charter agencies are:
- Animal and Plant Health Inspection Service
- Bureau of Alcohol, Tobacco, Firearms and Explosives
- Consumer Product Safety Commission
- Customs and Border Protection
- Environmental Protection Agency
- Food and Drug Administration
- Food Safety Inspection Service
- Immigration and Customs Enforcement
- National Highway Traffic Safety Administration
- National Marine Fisheries Service
The three “pillars” of the BIEC were described as information sharing across agencies, the expansion of public-private partnerships and automation. The BIEC continues to work towards a single window for interface with the trade (ITDS) and common messages.
At the AAEI Annual Conference going on in D.C. right now, CBP has made several statements about its direction which are hopeful, if not somewhat eye-opening. First, trade in the last fiscal year increased yet again. Exports totaled $1.3 trillion and imports $2.3 trillion.
It was also refreshing to hear CBP acknowledge that an efficient supply chain plus secure trade flows equates to economic competitiveness. On the other hand, it is now clear the legacy computer system, the Automated Cargo System, will cease operating at the end of 2016, which is presumably the fiscal year not the calendar year, although that point was not clarified.
CBP did spend a bit of timing explaining its roll out process is now tied to the Agility approach, meaning every two weeks an update to the product for a particular purpose is presented internally (called a sprint), leading to quicker product completion and roll outs to the trade. With exports, there will be six (6) such sprints. So, by the end of the year, CBP expects to retire the Automated Export System and instead be able to use ACE (the Automated Commercial Environment). License validation fields are being expanded to include value (less transportation and insurance) plus ultimate consignee and advanced export information (AEI) data. AEI was described as a hybrid between Option 3 and 4 wherein some data is reported pre-departure and the rest post-departure, but the post-departure period will be shortened from 10 to 5 days. Besides providing a modern system for interface with the trade and its partner government agencies, CBP expects the new set-up to be beneficial to its own operation because it will bring licensing, shipment and manifest data into one computer program, but then company history is also expected to be available to the individual CBP Officer to do his or her risk assessment.