Background

The Office of the U.S. Trade Representative has released its 2020 report on notorious markets, which identifies 39 online markets and 34 physical markets around the world that reportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. USTR notes that this list does not reflect findings of legal violations or the U.S. government’s analysis of the general IPR protection and enforcement climate in the countries concerned.

According to USTR, this year’s report includes for the first time a section addressing the role of e-commerce platforms in facilitating the importation of counterfeit and pirated goods. “Today, the greatest risk of importation of counterfeit and pirated goods, harming both U.S. content creators and U.S. consumers, is posed not by foreign flea markets and dark web sites but by inadequate policies and inadequate action by e-commerce companies that market and sell foreign products to American consumers,” USTR Robert Lighthizer said. USTR noted that while some of these companies have invested significant time and resources to combat this problem, those who traffic in counterfeit and pirated goods have evolved their tactics to evade and overwhelm these responses. As a result, USTR said, e-commerce platforms, other intermediaries, right holders, and governments need to significantly increase their efforts and collaboration.

The report highlights the use of small, direct-to-consumer packages to ship counterfeit goods, which has been further encouraged by Section 321 of the Tariff Act of 1930. Under this provision a foreign product valued at $800 or less and imported by one person on one day is not subject to the same formal customs entry procedures and data requirements as higher-value packages, which USTR said has resulted in a “reduced level of scrutiny” for such shipments.

U.S. Customs and Border Protection is conducting two tests (the Section 321 data pilot and the entry type 86 test) that aim to provide more visibility into these types of shipments. In addition, a ruling (HQ H290219) CBP issued in July 2020 addresses the proper identification of the consignee and importer in e-commerce transactions involving fulfillment warehouses and provides clarification on the identity of the “one person on one day” under Section 321. 

For more information on IPR-related trade issues, please contact Lee Sandler at (305) 894-1000.

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