On January 24, the U.S. Department of Homeland Security released "Combatting Trafficking in Counterfeit Goods," a report to the President of the United States. The report lays out a series of actions that federal law enforcement agencies plan to take in order to combat the growing problem of trafficking in copyright-infringing goods as well as other counterfeit or pirated products.
Over the last several years, international trafficking in counterfeit and pirated goods – including infringing copies of copyrighted works – has increased. The report cites OECD figures indicating an increase in internationally traded counterfeits from $200 billion in 2005 to $509 billion in 2016, a 154% increase. As the report observes: "E-Commerce…facilitates the widespread sale of pirated versions of copyrighted works. Pirated medical books — which can contain errors that endanger patients’ lives — have been found on platforms along with other pirated books (textbooks and trade books) and illicit reproductions of music-CD box sets."
The purpose of DHS's report is "to develop a deeper understanding of how e-commerce platforms, online third-party marketplaces, and other third-party intermediaries facilitate the importation and sale of massive amounts of counterfeit and pirated goods." The report points out: "[R]ights holders are often burdened by e-commerce platforms that operate third-party marketplaces with a disproportionate share of the costs of monitoring, detection, and enforcement falling on rights holders. This burden falls heavily on smaller American enterprises that cannot spread the costs due to trademark infringements and brand enforcement over large sales and inventories."
The report sets forth several enforcement-related actions that the U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement agencies intend to take to curb the trafficking of counterfeited pirated goods into the U.S. Significantly, the report identifies application of civil fines, penalties, and injunctive actions for imports of counterfeit and pirated products. According to the report:
- CBP and ICE will immediately begin to identify cases in which third-party intermediaries have demonstrably directed, assisted financially, or aided and abetted the importation of counterfeit merchandise. In coordination with the Department of Justice, CBP and ICE will seek all available statutory authorities to pursue civil fines and other penalties against these entities, including remedies under 19 U.S.C. § 1526(f), as appropriate.
- DHS recommends the administration pursue a statutory change to explicitly permit the government to seek injunctive relief against third-party marketplaces and other intermediaries dealing in counterfeit merchandise.
- In the interim, DHS will provide information and support to registered brand owners looking to utilize statutory authorities to seek injunctive relief against persons dealing in counterfeit merchandise, whether through direct sales or facilitation of sales, following seizures of goods that are imported contrary to law.
- ICE shall prioritize investigations into intellectual property-based crimes regardless of size and will make referrals for all such investigations where appropriate.
- ICE will coordinate with the Department of Justice to develop a strategy to investigate and prosecute intellectual property violations at all levels of the supply chain at a sufficiently high level to respond to the concerns raised in this report and according to its budget and broader mission goals.
The DHS report's action items and recommendations appear sensible and hopefully will help reduce trafficking in copyright-infringing goods as well as other counterfeit and pirated products. Free State Foundation President Randolph May and I have previously recommend that foreign trade agreements and treaties negotiated by the U.S. include language requiring foreign nations to improve their interdiction efforts and prosecutorial resources to stop the international flow of infringing goods and other illicit products.
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