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IPR Infringing Goods Seizures Increase in Value, Decline in Number in FY 2018

Friday, August 23, 2019
Sandler, Travis & Rosenberg Trade Report

The number of seizures of goods infringing intellectual property rights decreased in fiscal year 2018 but the value of those seizures increased, according to statistics released recently by U.S. Customs and Border Protection. Watches and jewelry remained the most seized commodity by value, wearing apparel continued to be the most seized item by number, and China and Hong Kong continued to account for more than three-quarters of the number of IPR seizures.

For more information on pursuing or mitigating IPR-related import restrictions, please contact customs and trade attorney Lee Sandler at (305) 894-1000.

Value and Number of Seizures. The number of IPR seizures decreased 9.8 percent from 34,143 to 33,810 while the value of IPR seizures in terms of the manufacturer’s suggested retail price rose 15.7 percent to $1.40 billion. Other statistics of note include the following.

- There were 381 arrests (down from 457), 296 indictments (up from 288), and 260 convictions (up from 242) for intellectual property crimes.

- CBP completed 203 exclusion order enforcement actions (shipments seized and excluded), up from 115 in FY 2017, with an estimated MSRP of $968,803, down from $1.87 million.

- CBP’s Integrated Trade Targeting Network conducted 26 national-level IPR trade special operations (up from 12) and 103 local operations targeting high-risk shipments at seaports, airports, international mail facilities, and express carrier hubs, resulting in 4,891 seizures (up from 1,845) with an estimated MSRP of $94 million, up 104 percent from FY 2017.

- CBP’s Centers of Excellence and Expertise initiated 24 of 26 national operations, up from 6 of 27 in FY 2017.

- More than 90 percent of IPR-related seizures occurred in the international mail and express environments and a majority of those fell under the $800 de minimis threshold.

- The voluntary abandonment pilot program conducted in partnership with the Express Association of America and its members was officially concluded.

Commodities Seized. The top categories of products seized in FY 2018 were as follows.

Product

Value of seizures

Percent change

Number of seizures

Percent change

Watches and jewelry

$618.2 million

+34.3

4,291

-0.1

Handbags and wallets

$226.5 million

-3.4

3,593

+10.0

Pharmaceuticals and personal care items

$131.5 million

+88.4

2,293

+38

Wearing apparel and accessories

$115.2 million

+53.8

6,098

+16.8

Consumer electronics

$89.6 million

+5.3

3,388

-18.1

Footwear

$77.5 million

+86.7

4,728

+11.9

Consumer products

$40.8 million

-11.9

2,816

-28.0

Computers/accessories

$29.9 million

n/a

450

-0.9

Toys

$10.6 million

-12.4

487

+8.5

Source Countries. China and Hong Kong together accounted for 85 percent of the total MSRP value of seizures, including 54 percent for China at $761.1 million (up 37.2 percent) and 31 percent for Hong Kong at $440.3 million (up 14.0 percent).

Malaysia ($4.7 million) and Pakistan ($2.8 million) are new to the top 10 list of source countries by value this year, while Thailand and Singapore fell out. Other top source countries by value included India ($20.0 million, up 141 percent), Korea ($10.1 million, up 140 percent), Canada ($7.8 million, up 160 percent), Turkey ($5.8 million, up 16 percent), Vietnam ($5.2 million, up 18.2 percent), and Taiwan ($5.0 million, up 2.0 percent).

China and Hong Kong accounted for a combined 87 percent of the total number of seizures, down from 88 percent in FY 2017. The top five list of source countries by number of seizures includes China (15,674, down 4.2 percent), Hong Kong (13,785, up 3.2 percent), Turkey (618, up 5.3 percent), India (439, not in FY 2017 top five), and Taiwan (408, down 13.6 percent).

Shipping Environments. Seizure statistics by shipping environment are as follows.

Environment

Value of seizures

Percent change

Number of seizures

Percent change

Express consignment facilities

$549.2 million

+28

21,632

+6

Cargo

$447.9 million

+13

1,673

-36

Other

$205.4 million

-18

862

-22

Mail

$197.3 million

+54

9,643

-3

Total

$1.40 billion

+16

33,810

-1

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