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IPR Infringing Goods Seizures Increase in Number, Decline in Value in FY 2017

Wednesday, March 07, 2018
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has released statistics showing that the number of its seizures of goods infringing intellectual property rights increased in fiscal year 2017, while the value of those seizures declined. 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.

Value and Number of Seizures. The number of IPR seizures increased 8.2 percent from 31,560 to 34,143 while the value of IPR seizures in terms of the manufacturer’s suggested retail price fell 12.8 percent to $1.21 billion. The average value per seizure fell again, down 19.4 percent to $35,333.

Other statistics of note include the following.

- There were 457 arrests (up from 451), 288 indictments (down from 304), and 242 convictions (down from 272) for intellectual property crimes.

- CBP completed 115 exclusion order enforcement actions (shipments seized and excluded), down from 165 in FY 2016, with an estimated MSRP of $1.87 million, down from $3.25 million.

- Two hundred and ninety-seven shipments of circumvention devices were seized for violation of the Digital Millennium Copyright Act, up markedly from 70 in FY 2016.

- Components of CBP’s Integrated Trade Targeting Network conducted 12 national level IPR-mitigating trade operations targeting high-risk shipments at seaports, airports, international mail facilities, and express carrier hubs and resulting in 1,845 seizures with an estimated MSRP of $44 million.

- Eight of these operations were conducted by mobile intellectual property enforcement teams (down from 11 in FY 2016), which made 1,687 seizures of goods (down 37.1 percent) with a combined estimated MSRP of $34.6 million and 67 abandonments.

- The voluntary abandonment pilot program conducted in partnership with the Express Association of America and its members resulted in 5,588 voluntary abandonments of detained goods and significant interdiction cost savings to the government. 

Commodities Seized. The top categories of products seized in FY 2017 were as follows.

Product

Value of seizures

Percent change

Number of seizures

Percent change

Watches and jewelry

$460.2 million

-29.6

4,297

+26.1

Handbags and wallets

$234.5 million

+0.2

3,266

+2.6

Consumer electronics

$85.1 million

-30.7

4,137

-18.0

Labels and tags

$81.0 million

+374.7

n/a

n/a

Wearing apparel and accessories

$74.9 million

-32.4

5,223

-18.5

Pharmaceuticals and personal care items

$69.8 million

-5.4

2,209

-8.0

Consumer Products

$46.3 million

n/a

3,912

n/a

Footwear

$41.5 million

-19.0

4,224

+16.4

Optical media

$27.6 million

+237.7

809

-16.0

Source Countries. China and Hong Kong together accounted for 78 percent of the total MSRP value of seizures, including 46 percent for China at $554.6 million (down 10.1 percent) and 32 percent for Hong Kong at $386.2 million (down 35.6 percent).

Turkey ($5.0 million), Taiwan ($4.9 million), Vietnam ($4.4 million), Canada ($3.0 million), and Thailand ($1.9 million) are new to the top 10 list of source countries by value this year, while Cambodia, Pakistan, Bangladesh, Colombia, and Mexico fell out. Other top source countries by value included India ($8.3 million, down 43.1 percent), Singapore ($5.0 million, down 35.1 percent), and Korea ($4.2 million, up 18.1 percent).

China and Hong Kong accounted for a combined 88 percent of the total number of seizures, unchanged from FY 2016. The top five list of source countries by number of seizures includes China (16,538, up 0.7 percent), Hong Kong (13,357, up 16.5 percent), Turkey (587, up 90.0 percent), Canada (581, not in FY 2016 top five), and Taiwan (472, not in FY 2016 top five).

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

Environment

Value of seizures

Percent change

Number of seizures

Percent change

Express consignment facilities

$429.3 million

-30

20,417

+18

Mail

$128.4 million

+28

9,992

-12

Cargo

$397.5 million

-13

2,628

+62

Other

$251.1 million

+19

1,106

-12

Total

$1.21 billion

-13

34,143

+8

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