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Intellectual Property Rights
01/28/2008

Value of CBP, ICE seizures of counterfeit goods in FY2007 is up 27%

Nearly $200 million in goods confiscated as a result of enforcement actions

WASHINGTON, D.C. - The U.S. Department of Homeland Security (DHS) announced today it had seized counterfeit or pirated merchandize worth approximately $200 million in domestic value for fiscal year (FY) 2007. This year's activities continue a significant upward trend in the value of seizures, exceeding the value of last year's by 27 percent.

The domestic value of the goods is determined by adding the cost of manufacturing goods in a foreign country to the costs of shipping, insurance and customs duties to enter the United States and, therefore, is lower than the manufacturer's suggested retail price.

The departments of U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), components of DHS, made over 13,600 seizures last year. ICE investigations in FY 2007 resulted in 241 arrests, 149 indictments and 134 convictions on intellectual property rights violations.

"These criminal organizations are not only stealing the trademarks of U.S. businesses, they are siphoning millions of dollars from the American economy and are often deceiving an unsuspecting public," said Julie L. Myers, Assistant Secretary for Immigration and Customs Enforcement. "These results show that ICE has made protection of U.S. intellectual property rights our trademark."

"Where there is money to be made, counterfeiters and pirates will steal intellectual property and capitalize on the innovations of others without regard for the consequences to the people and to the businesses that they steal from or the consumers that are harmed by their fake products," said W. Ralph Basham, Commissioner, U.S. Customs and Border Protection. "CBP is committed to stopping trade in pirated and counterfeit goods and is taking action to confront the growing global theft of intellectual property. "

DHS is countering the growing trade in counterfeit commodities that adversely impacts the American economy and may pose health and safety risks to consumers. Although the top commodity  seized in FY 2007 continued to be footwear - with a domestic value of $77.7 million, which accounted for 40 percent of the entire value of goods seized - counterfeiters use the same methods to bring in fake pharmaceuticals, electrical items, food and hygiene products that threaten the health and safety of consumers as well as their pocketbooks.

Major cases executed in FY2007 included:

  • In September 2007, CBP Officers in Anchorage, Alaska, targeted a shipment from China manifested as "samples". When officers opened the box, they discovered 1,460 counterfeit "IDT" ("Integrated Device Technology") integrated circuits.  Integrated Circuits (ICs) are used in a wide range of applications, including automobiles, appliances, computers, telecommunications, medical devices, and consumer electronics. Counterfeit ICs can create reliability problems in end-products.
  • On Aug. 1, 2007, ICE agents from 22 offices assisted by representatives of the electronic industry executed 32 federal search warrants in 16 states as part of an investigation into the alleged sale and distribution of illegal modification chips and disc copyright circumvention devices. This investigation represents the largest national enforcement action of its kind targeting this type of illegal activity. The search warrants were executed at businesses, storefronts and residences associated with subjects who are allegedly involved in the direct importation, installation, sale and distribution of the devices that are of foreign manufacture and smuggled into the United States. The chips and devices allow users to play illegally obtained, pirated and/or counterfeit software on video game consoles by Microsoft, Nintendo and Sony. The names of those targeted and case specifics are not releasable at this time.
  • In July 2007, CBP Officers at the Los Angeles Seaport seized a shipment of counterfeit Nike footwear. Counterfeiters attempted to smuggle the 21,492 pairs of fake Nike shoes by describing the merchandise as furniture.
  • In July 2007, CBP Officers in Newark seized 20,208 bottles of counterfeit Ralph Lauren perfume. The counterfeiters attempted to smuggle in the perfume by concealing it in the nose of the container. This counterfeit perfume could have potentially contained harmful bacteria.
  • In late June 2007, 29 defendants were charged in three separate complaints with conspiracy to smuggle over 950 shipments of merchandise into the United States, principally from China - through ports of entry at Newark, N.J., Houston, Texas, Long Beach, Calif., New York Container Terminal in Staten Island, N.Y. and John F. Kennedy International Airport - and/or conspiracy to traffic in counterfeit goods. Four of the defendants were also charged with money laundering. The charges are the result of a 19-month coordinated initiative by agents of U.S. Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP). The investigative techniques employed by ICE and CBP included the use of cooperating witnesses, undercover agents and video and audio surveillance. During the course of their investigation, officers seized counterfeit merchandise which, had it been authentic, ICE and CBP estimate would have had a manufacturer's suggested retail price of approximately $700 million.
  • In May 2007, CBP Officers in Newark seized 144,000 tubes of counterfeit Colgate toothpaste. Some of the toothpaste in the shipment contained a toxic chemical found in antifreeze and posed a serious health and safety risk to the buying public.

In recent years, counterfeiting, piracy and other intellectual property rights violations have grown in magnitude and complexity, costing U.S. businesses billions of dollars in lost revenue and often posing health and safety risks to U.S. consumers. The growth in IPR violations has been fueled in part by the spread of enabling technology allowing for simple and low-cost duplication of copyrighted products, as well as by the rise in organized crime groups that smuggle and distribute counterfeit merchandise for profit. In many cases, international organized crime groups use the profits from the sale of counterfeit goods to bankroll other criminal activities, such as the trafficking in illegal drugs, weapons, and other contraband.

As the largest investigative arm of the Department of Homeland Security, ICE plays a leading role in targeting criminal organizations responsible for producing, smuggling, and distributing counterfeit products. ICE investigations focus not only on keeping counterfeit products off U.S. streets, but also on dismantling the criminal organizations behind this activity. ICE manages the National Intellectual Property Rights Coordination Center, which coordinates the U.S. government's domestic and international law enforcement attack on IPR violations. ICE agents and CBP personnel throughout the country rely upon the IPR Coordination Center for guidance in their inspections and investigations.

As the primary agency responsible for U.S. border enforcement, CBP is a key player in IPR enforcement. CBP's new methods focus on improving risk analysis to enhance the capability to target and interdict shipments of fake goods while facilitating the flow of trade in legitimate goods; identifying business practices linked to importing counterfeit goods and working with companies to change those practices; using audits to deprive counterfeiters and pirates of their profits; working with right holders to protect their rights at our borders; and cooperating with other government agencies, customs administrations and international organizations to strengthen IPR enforcement.

ICE and CBP will continue to work vigorously to pursue IPR violations.