LEGISLATION INTRODUCED TO MAKE DESIGN PATENTS ENFORCEABLE AT THE U.S. BORDER, LIKE COPYRIGHTS AND TRADEMARKS

The “Counterfeit Goods Seizure Act of 2019” was introduced in the U.S. Senate to empower U.S. Customs and Border Protection to enforce U.S. design patents at the U.S. border.  

Currently, U.S. laws empower Customs to enforce copyrights and trademarks that have been previously recorded with Customs. The proposed legislation will give Customs similar discretionary power to seize and detain imported goods that infringe a recorded U.S. design patent. The bill is publicly supported by Nike Inc. and the 3M Company, as well as many other American companies, the International Trademark Association (INTA), the Intellectual Property Owners Association (IPO) and the American Intellectual Property Owners Association (AIPLA).

Currently, the only way to enforce a design patent at the U.S. border is for  the owner to undertake a long and expensive process at the U.S. International Trade Commission (ITC) under Sec. 337 of the Tariff Act.  Although Sec. 337 was originally designed to adjudicate much more complex, technology-based utility patents, design patents must go through the same process because – by historical accident – design and utility patents are governed by the same statute, Title 35 of the U.S. Code.  Advocates of the new bill point out, however, that design patents, which protect the appearance of a product, are much more akin to copyrights and trademarks than to utility patents, and that copyrights and trademarks do not have to go through the ITC in order to be enforced at the border.  The bill is an attempt to correct this dichotomy.   

Counterfeiters have become very clever. Knock-off manufacturers and sellers have recognized that counterfeit products (which bear infringing trademarks) are potentially at-risk to seizure by Customs, but the very same products not bearing the infringing trademarks generally evade seizure. In 2018, a group of counterfeiters was arrested who had imported over $70 million in fake Nike shoes by omitting labels to evade Customs officials;  the labels were attached after importation. Amending the law to empower Customs to enforce design patents would go a long way towards plugging these and similar loopholes.

Counterfeit products may pose serious consumer safety concerns. For example, counterfeit consumer electronics (e.g., power adapters, chargers, and devices) may fail or overheat leading to fire and electrocution risks. Counterfeit automotive parts (e.g., wheels, headlights, and windshields) often have higher failure and malfunction rates than genuine parts.

The infringement test for design patents was simplified in 2008 in the landmark case of Egyptian Goddess v. Swisa, which will make it easier for Customs officials to evaluate infringement of a design patent. Customs officers would only have to determine whether the patented design and the suspect imported design are substantially the same in overall appearance.  This analysis is similar to the analysis currently undertaken by Customs in cases of suspected trademark infringement. Customs officers have already effectively demonstrated the ability to determine whether imported goods infringe a design patent, through its ongoing enforcement of design-patent exclusion orders that are issued at the successful end of an ITC proceeding. But, as the amendment is currently drafted, in the event Customs is unable to concretely determine a violation, the agency would have the discretion not to seize the goods, because, as with violations of copyright and trademark, CBP’s authority to seize is discretionary (e.g., “The merchandise may be seized and forfeited if . . . .”).

If the bill is enacted, the United States will join other modern IP design rights border enforcement mechanisms used by many other countries including the EU, Japan, South Korea, China, India, Mexico, Turkey, Argentina, South Africa, Switzerland, and Panama.

Clearly, this legislation is long overdue, and would be a boon to the U.S. economy.  If you and/or your company favors enactment of this law, letters to your state’s House and Senate members would go a long way towards  its  enactment.  Following is a sample letter that can be used as a template:

Dear Congressman/Senator (fill in):

[name of company], headquartered in [city, state].  We design, engineer, manufacture and sell worldwide [name types of products].  Our largest market is in the U.S. 

[name of company] prides itself on, among other things, our iconic designs and our cutting-edge technology.  We are the owner of substantial intellectual property including many design and utility patents, and we work hard to create, maintain and protect our brand, our market and our innovative technology in a highly competitive industry.  U.S. design patents are a key component of our IP portfolio.

I want to express our company’s wholehearted support for the “Counterfeit Goods Seizure Act of 2019.”  We have had a number of issues with foreign manufacturers of knock-off [name types of products] shipping them into the US, and passage of this bill would be an enormous help in stopping those counterfeits from flooding the market and adversely affecting our business.

We urge prompt passage of this bill, without reservation.

Very truly yours,