10.5 Intellectual Property Rights Border Enforcement (19 CFR Part 133)

10.5 Intellectual Property Rights Border Enforcement (19 CFR Part 133)

Where this fits: intellectual property is an admissibility question, not a revenue question. It sits alongside marking, forced labor, and partner government agency holds as one of the reasons CBP will stop otherwise properly classified and appraised merchandise. Broker Compliance and Entry/Entry Summary questions both draw on it, because a broker's duty of diligence under 19 CFR 111.29 and the prohibition on false information in 19 CFR 111.32 extend to what the broker knows about the authenticity of the goods it declares.

Recordation: the Gateway to Enforcement (19 CFR Part 133)

CBP enforces private intellectual property rights only where the owner has brought them to CBP's attention. Part 133 provides for the recordation of:

Recordation is what puts the mark or work into CBP's targeting systems and what entitles the owner to the procedural benefits described below. An unrecorded registered trademark is enforceable in court but does not trigger border enforcement.

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The Central Distinction: Counterfeit Versus Confusingly Similar

This is the distinction the exam is built on, because the consequences diverge completely.

Counterfeit Marks

A counterfeit mark is a spurious mark that is identical with, or substantially indistinguishable from, a registered mark recorded with CBP. Merchandise bearing a counterfeit mark is seized and, in the ordinary case, forfeited. The importer does not get the option of removing the mark and entering the goods. CBP may also:

• Assess a civil fine against any person who directed, assisted financially or otherwise, or aided and abetted the importation;
• Dispose of the forfeited merchandise, which for counterfeits ordinarily means destruction, with narrow exceptions permitting donation after obliteration of the mark where the right holder consents and the goods are not a health or safety hazard.

Confusingly Similar Marks

Merchandise bearing a mark that copies or simulates a recorded mark — close enough to be confusing but not substantially indistinguishable — is denied entry, not seized outright. Here the importer has options: the merchandise may be permitted to be exported or destroyed, and in appropriate cases may be entered after the offending mark is removed or obliterated under CBP supervision.

THE EXAM HINGE: When a question describes a mark as "identical" or "substantially indistinguishable," the answer is seizure. When it describes the mark as merely "similar," "resembling," or "likely to cause confusion," the answer is denial of entry with the option to export or to remove the mark. Reading the adjective carefully is the whole task.

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Detention, Disclosure, and Samples

When CBP suspects that detained merchandise bears a counterfeit or infringing mark, it needs the right holder's help to make the call. Part 133 authorizes a controlled disclosure:

1. CBP may notify the recorded right holder of the detention and disclose limited information about the merchandise — the kind, the quantity, the country of origin, the ports, and images or the mark itself — to obtain assistance in determining whether the goods are counterfeit or infringing.
2. CBP may provide a sample of the suspect merchandise to the right holder for examination or testing.
3. To protect the importer's interest in the sample, CBP may require the right holder to furnish a bond to indemnify the importer against loss or damage resulting from the furnishing of the sample. Those bond conditions are set out in 19 CFR 113.70 and correspond to bond activity code 8.

For the importer, the practical point is that a detention for suspected IPR infringement is a window in which to produce evidence of authorization — a license, a distribution agreement, or proof that the mark is the importer's own — before the matter hardens into a seizure.

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Copyright Enforcement

The copyright track under Part 133, Subpart D runs on a similar recordation model, and the border test is whether the merchandise is a piratical copy — an unauthorized copy or substantial reproduction of a recorded copyrighted work. Piratical copies are subject to seizure and forfeiture. Where the question of substantial similarity is genuinely disputed, Part 133 provides an administrative procedure in which CBP gives notice to the importer and the copyright owner, receives submissions from both, and decides admissibility.

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Section 337 Exclusion Orders

Section 337 of the Tariff Act of 1930 gives the U.S. International Trade Commission authority to investigate unfair acts in importation — most commonly patent, trademark, or trade secret infringement — and to issue exclusion orders that CBP enforces at the border. Two features matter for customs practice:

1. CBP is the enforcement arm, not the adjudicator. Where an exclusion order covers the merchandise, CBP refuses entry. Questions of the order's scope go back to the USITC.
2. Entry under bond during the Presidential review period. A USITC exclusion order is subject to a 60-day Presidential review period, during which merchandise may in some circumstances be entered under bond. 19 CFR 113.74 sets out the bond conditions that indemnify a complainant under Section 337 — protecting the party who obtained the order if the goods enter during the review period and the order later becomes final.

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Gray Market Goods

A gray market article is a genuine article bearing a genuine mark, manufactured abroad by or under authority of the mark owner, imported into the United States without the authorization of the U.S. mark owner. Because the article is genuine, it is not counterfeit, and the counterfeit seizure rules do not apply. Part 133 instead treats these under the restricted gray market provisions, and admissibility turns on a set of relationships and exceptions:

• Common control exception. Where the foreign and U.S. trademark owners are the same entity, or are parent and subsidiary, or are otherwise subject to common ownership or control, the restriction generally does not apply and the goods may enter.
• Authorized use. Where the U.S. owner authorized the use of the mark abroad, the goods are generally admissible.
• The physical and material differences exception (the Lever rule). Even where common control exists, goods that are physically and materially different from the authorized U.S. version may be restricted unless they bear a conspicuous label advising the consumer that the product is not authorized by the U.S. trademark owner and differs from the authorized product.

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The Broker's Position

A broker confronted with facts suggesting counterfeit merchandise cannot simply file the entry as instructed. Three obligations converge:

• 19 CFR 111.29 — diligence in preparing and filing documents and in inquiring into the correctness of the facts;
• 19 CFR 111.32 — a prohibition on knowingly imparting false, deceptive, or misleading information to CBP; and
• 19 CFR 111.39 — a duty to advise the client promptly of noncompliance, error, or omission.

The broker is not required to report a client's past noncompliance to CBP, but it may not participate in an ongoing violation. Filing an entry the broker knows declares counterfeit merchandise as genuine is participation, and it exposes the broker to penalties under 19 U.S.C. § 1592 in addition to the Part 111 consequences.