The saying once was that if you build a better mouse trap the world will beat a path to your door. Today, if you build a better mouse trap, your competition may beat a path to your customers' doors. So, how are customers to identify your better mouse trap? Obviously a patent can offer protection as can a trademark. But what can you do if you are worried that your competitors will be outside the United States?
How will you keep a watch on all of your competitors? What if someone brings mouse traps just like yours into the country and sells them? What if a foreign competitor labels its mouse traps the same as yours and the purchasers think they are buying your product? How much will it cost to keep up with all of this information? Are there companies which can be hired to monitor the problem for you?
The solution to this serious problem is actually much less complicated and expensive than you might expect. Because of its unique position of monitoring imports and exports, the U.S. Customs Service can provide assistance. The procedure is to record your trademark, trade name, copyright, or patent information with the Customs Service. As each is different, each of the procedures and limitations will be reviewed.
Trademarks and Trade Names
If the U.S. Patent and Trademark Office has registered a trademark, a status copy of the certificate of registration and five copies can be recorded with the Intellectual Property Rights Branch of the U.S. Customs Service.(1) The address will appear in the regulations published at 19 C.F.R. §§133.1 et seq. While no special application form is provided, the regulations do set out the information that must be included. The regulations require that 8 x 10 1/2 inch paper be used for the application. The current cost is $190 per class of goods based upon the classes listed on the certificate. The recordation remains in force concurrently with the 20-year trademark registration period and may be renewed. The regulations also establish rules for change of ownership of a recorded trademark.
There is no federal trade name registration without trademark registration, thus there is no certificate which can be issued for trade names. A trade name or trade style used for at least six months may be recorded to identify a manufacturer or trader. Trade names are different from trademarks although the same mark or symbol may be used for both purposes. If a symbol is also used as a trademark, it cannot be recorded with the Customs Service as a trade name without regard to whether or not the mark has been registered with the Patent and Trademark Office. In other words, the trademark protection is assumed to be adequate.
Because there is no central national registry for trade names registration, after an application to record the registration is filed, the proposed trade name is published in the Federal Register. Interested parties may oppose the recordation but, of course, this requires one to review the Federal Register.
After consideration of opposition, the Customs Service publishes a notice of final approval or disapproval in the Federal Register and the Customs Bulletin. This is very important as a Louisiana company which enjoys a state trade name registration with the secretary of state of Louisiana may lose the right to object to registration by someone from another state if the description of the products associated with the trade names are the same. Thereafter, if the Louisiana company attempts to import a product bearing its trade name into any state, including Louisiana, it could be barred from doing so because a company from another state has recorded its trade name with the Customs Service. Obviously, this can become a race to filing with Customs and the result in such a case would most likely be exclusion of the goods or the posting of a bond by the Louisiana company followed by litigation. Protection for a recorded trade name remains in force as long as the name is used but may be cancelled for disuse.
Protection for Trademarks and Trade Names
Regulations state that articles bearing a mark copying or simulating a registered trademark or trade name shall be denied entry and may be subject to forfeiture.The regulations, however, make a very important distinction between "simulating" marks, which are those which so resemble a recorded mark that it is likely to cause the public to associate the copying or simulating mark with the recorded mark or name, and a "counterfeit" trademark, which is indistinguishable from a registered trademark.
Foreign-made products bearing copying or simulated marks are subject to seizure and forfeiture as prohibited substitutions. There are, however, several exceptions, the most important relating to "gray market" goods. "Gray market" goods are goods made outside of the U.S. with the permission of the intellectual property owner or where there is a common ownership or control between the domestic and foreign producers but the product is imported into an unauthorized market (in this context usually the U.S.). This is a very ripe area for dispute, although the Customs Service has apparently decided not to be the arbitrator of disputes arising from conflicts between U.S. and foreign producers who should be working together.
When gray market goods enter the country, the owner of the recorded mark is notified and may resort to litigation. How does the Customs Service know what are "gray market" goods? A great deal of initial information will come from the application to record the trademark or trade name. Therefore, it is imperative in the application phase to determine the present or future possibility of gray market goods and to structure deals so the gray market goods exception does not render the protection useless.
Other exceptions include when the recordant itself imports goods, when the recordant gives written consent to importation, and when the objectionable mark can be removed or obliterated (this does not, however, apply to articles bearing counterfeit marks).
Special Rules for Counterfeit Goods
The regulations provide, in part, that if an article bears a mark which is counterfeit, in the absence of written consent of the trademark owner, the property shall be seized and forfeited.(2) After seizure, the registrant is notified of the seizure and of the quantity of goods. If the registrant does not provide written consent to importation, exportation, entry after removal of the mark, or other appropriate disposition, the goods are kept by the government, given to charities, or, if possible, sold. Because the regulations provide such harsh penalties against counterfeit goods, most violators take great care to make their marks "simulating" rather than "counterfeiting," with the hope that, if caught, they can remove the marks and avoid forfeiture. Thus, in order to obtain the fullest protection, a recordant must recognize that the mere recordation will not solve all potential problems and one may still have to seek a court order in the event Customs determines a mark to be simulating as opposed to a true counterfeit.
Anticounterfeiting Consumer Protection Act of 1996
On July 2, 1996, President Clinton signed the Anticounterfeiting Consumer Protection Act of 1996. Section 3 of the Act establishes counterfeiting and the trafficking of goods bearing counterfeit marks as a racketeering crime. Like any other criminal law, one can conspire to and attempt to violate the law. Further, since criminal law is involved, this opens the door for civil penalties as well. Section 10 of the Act modifies 19 U.S.C. §1526 to state that any person who directs, assists financially or otherwise, or aids and abets the importation of merchandise for sale or public distribution that is seized, shall be subject to a civil fine. What is missing from the civil penalties subsection are words such as "knowingly" and "intentionally" so those involved in importation must do what they can not to assist, aid, or abet. Attorneys, C.P.A.s, freight forwarders, customs brokers, bankers, and just about everyone involved must now do their part to stop trafficking in counterfeit goods or face penalties. This also includes owners of vessels, vehicles, and aircraft, as §13 of the Act forbids unlawful use of these in violation of the criminal provisions. Violations could lead to seizure of the vessels, vehicles, and aircraft, as is common in drug matters.
The Act is further strengthened by §§11 and 12, which call for public disclosure of aircraft manifests, and by allowing the Secretary of the Treasury to prescribe new regulations for entry documentation to determine if the goods sought to be imported bear an infringing trademark. One must remember to check for new regulations in the Code of Federal Regulations and the Federal Register before taking any actions.
Goods Already Passed Through Customs
Another powerful regulation is 19 C.F.R. §133.24, which allows for a demand for redelivery after release of the merchandise. If goods were released by Customs and the recordant discovers this, the port director (a Customs official) is to make demand on the importer for redelivery of the goods. If they are not redelivered, i.e., have already been sold, a claim for liquidated damages may be made.
Copyright Protection
Claims to copyrights which have been registered in accordance with the Copyright Act of July 1947, or the Copyright Act of 1976, may be recorded with Customs for import protection. An application to record a copyright must include a statement of actual or potential injury, the country of manufacture of the genuine copies or phonorecords, along with information identifying the copyright owner and all foreign persons or entities authorized or licensed to use the protected work.(3) An "additional certificate" of copyright registration issued by the U.S. Copyright Office must also accompany the application and five photocopies of the copyrighted work (except where the copyright covers a book, magazine, periodical, or similar matter readily identifiable by title or author). The recordation remains in effect for 20 years, unless the copyright ownership expires before that time.
As with trademarks and trade names, importation of infringing copies is prohibited. If the port director determines that an imported article is an infringing copy or phonorecord, it will be seized and the importer notified. The importer is then given an opportunity to contest the allegation that the article infringes a recorded copyright. If the importer contests the allegation, the copyright owner is supplied with a sample and notice that the copyright owner must demand exclusion, post a bond, and submit legal briefs, evidence, and other pertinent material to substantiate infringement. The burden of proof is on the copyright owner.
The copyright infringement procedure is as complicated as any administrative matter and there are important deadlines and cutoff dates which must be complied with. If the material is found to infringe on the copyright, the works are destroyed unless some "conditional" relief is possible. One such relief is to allow articles seized or detained to be returned to the country of export if the importer can show that he or she had no reasonable grounds for believing that his her actions constituted a violation. If articles infringing on a copyright have already cleared customs, the port director is promptly to demand redelivery, subject to a claim for liquidated damages if the articles are not redelivered.
The Anticounterfeiting Consumer Protection Act of 1996 provides criminal and civil protection for phonorecords, computer programs, packaging, and documentation, and motion pictures and other audiovisual works.
Patent Protection: Patent Surveys
The first requirement is that the patent be issued by the U.S. Patent and Trademark Office of the Department of Commerce. Since patents are more complicated than trademarks or trade names, obviously the Customs Service cannot check each item to determine how it works and if there is a violation of a patent. Some patent infringements may be quite obvious, while others may be quite difficult to detect. Thus, the Customs Service has only limited authority to assist patent owners and more active participation by the patent owner is required.
The remedies for patent owners are exclusion orders and seizure and/or forfeiture orders issued by the International Trade Commission under §337 of the Tariff Act of 1930. These orders are issued as remedies against the sale after importation of articles which infringe upon a patent or registered copyright, or which are made by a process covered by the claims of a patent. The major problem for U.S. patent owners is discovering who is infringing on the patent. The U.S. Customs Service can assist by providing the patent owner with the names and addresses of importers of merchandise which appears to infringe a registered patent.
Applications for patent surveys require the name of the patent owner, a certified copy of the patent, with additional photocopies, a statement of the requested length of the survey (two, four, or six months), and a list of all merchandise which is believed to infringe the patent, or in which it is a possible component part. Additional required information is the Harmonized Tariff System classification number, trade names, trademarks, and a statement of the manner in which the patent is used. Also required is a sample chemical analysis or other information used to identify the patented product or process. The Customs Service also requires identification of any information supplied in the patent survey application which is confidential or privileged.
The present costs of patent surveys are $1,000, for two months, $1,500, for four months, and $2,000, for six months. The more complicated the patented product or process, the more the patent owner will need to discuss the survey with Customs to better learn how to show the Customs officers what to look for in potential violations. If a patent survey demonstrates possible infringement, the evidence may be used to bring an action before the International Trade Commission.
Conclusion
The possible protection which the U.S. Customs Service has to offer U.S. trade name, trademark, copyright, and patent owners is not only unique, but is highly cost effective. Accordingly, businesses simply cannot ignore these forms of protection. This is particularly so for small to medium size businesses which cannot afford any reasonable alternative.
(1) 15 U.S.C. §1124.
(2) 19 C.F.R. §133.23a.
(3) 19 C.F.R. §133.32.
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