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IPR Infringing Goods Seizures Increase in Number and Value in FY 2016

Wednesday, January 18, 2017
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has released statistics showing that both the number and value of its seizures of goods infringing intellectual property rights increased in fiscal year 2016. Watches and jewelry extended their lead as 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 value and number of IPR seizures.

Value and Number of Seizures. The number of IPR seizures increased nine percent from 28,865 to 31,560 while the value of IPR seizures in terms of the manufacturer’s suggested retail price rose 2.2 percent to $1.38 billion. The average value per seizure fell again, down 6.5 percent to $43,726.

Other statistics of note include the following.

- There were 451 arrests (down from 538), 304 indictments (down from 339), and 272 convictions (down from 357) for intellectual property crimes.

- CBP completed 165 exclusion order enforcement actions (shipments seized and excluded), up from 152 in FY 2015, with an estimated MSRP of $3.25 million, down from $8.74 million.

- Seventy shipments of circumvention devices were seized for violation of the Digital Millennium Copyright Act, up from 62 in FY 2015.

- Components of CBP’s Integrated Trade Targeting Network conducted 17 national level IPR-mitigating trade operations targeting high-risk shipments at seaports, airports, international mail facilities, and express carrier hubs and resulting in nearly 3,000 tactical seizures with an MSRP of more than $99 million.

- Eleven of these operations were conducted by mobile intellectual property enforcement teams (up from five in FY 2015), which made 2,680 seizures of goods (up 98.7 percent) with a combined estimated MSRP of more than $85 million (up nearly 300 percent).

- The voluntary abandonment pilot program conducted in partnership with the Express Association of America and its members resulted in 3,763 voluntary abandonments of detained goods and more than $3 million in estimated interdiction cost savings to the government.

Commodities Seized. The top categories of products seized in FY 2016 were as follows.

Product

Value of seizures

Percent change

Number of seizures

Percent change

Watches and jewelry

$653.6 million

+12.5

3,407

+23.7

Handbags and wallets

$234.1 million

+12.3

3,184

+48.2

Consumer electronics and parts

$122.9 million

-7.2

5,043

-5.3

Wearing apparel and accessories

$110.8 million

-29.5

6,406

+2.8

Pharmaceuticals and personal care items

$73.7 million

-1.9

2,401

+4.3

Footwear

$51.2 million

-21.2

3,630

+28.8

Computers and accessories

$19.3 million

-49.7

686

-18.9

Labels and tags

$17.1 million

-48.6

572

-4.0

Optical media

$8.2 million

-74.8

963

-33.2

                       

Source Countries. China and Hong Kong together accounted for 88 percent of the total MSRP value of seizures, including 45 percent for China at $616.9 million (down 11.5 percent) and 43 percent for Hong Kong at $599.8 million (up 27.0 percent).

Cambodia ($7.0 million), Pakistan ($4.78 million), Bangladesh ($4.59 million), Colombia, ($4.22 million), and Mexico ($3.54 million) are new to the top 10 list of source countries by value this year, while India, the United Kingdom, the United Arab Emirates, Italy, Malaysia, and Canada fell out. Other top source countries by value included India ($14.7 million, up 129.3 percent), Singapore ($7.71 million, down 24.9 percent), and Korea ($3.59 million, down 5.3 percent).

China and Hong Kong also accounted for a combined 88 percent of the total number of seizures, up from 83 percent in FY 2015. The top five list of source countries by number of seizures includes China (16,417, up 15.9 percent), Hong Kong (11,462, up 17.9 percent), Singapore (583, down 58.2 percent), Germany (396, not in FY 2015 top five), and Turkey (309, up 93.2 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

$614.5 million

+41

17,363

+17

Mail

$100.4 million

+7

11,326

+5

Cargo

$495.6 million

-8

1,621

+26

Other

$326.3 million

-36

1,250

-32

Total

$1.35 billion

+2

31,560

+9

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