Ahead of President Donald Trump signing an executive order last week aiming to prevent the online sale of fake goods to U.S. consumers, the Department of Homeland Security released a detailed new report outlining its strategy for “Combating Trafficking in Counterfeit and Pirated Goods.”
The 54-page document calls on the administration to put various measures in place to safeguard American consumers from imported knock-offs and other contraband goods.
Recommendations for Government
Among the policy changes recommended by the DHS planning office were for the government to:
- Have U.S. Customs and Border Protection adjust its processes to make more players in the supply chain financially responsible for “exercising a duty of reasonable care.”
- Increase scrutiny on shipments worth $800 or less which don’t require formal customs entry per Section 321 of the Tariff Act.
- Suspend or otherwise prevent repeat non-compliant offenders from importing, including via the postal system (this would require creation of a new registry).
- Use existing statutes to pursue civil fines and other penalties against third-party marketplaces and other e-commerce platforms where there is evidence they helped facilitate the import of counterfeit/pirated goods.
In addition to these recommendations — most of which were included as agency directives in the president’s executive order — a number of other suggestions were made with the aim of enhancing the U.S. government’s ability to combat the importation of fake goods.
Many of these proposals involve partnering with other agencies, comprehensively analyzing how resources are being allocated, re-examining certain legal liability issues, establishing a new consumer awareness campaign, and so on.
Recommendations for E-Commerce Platforms and Third-Party Marketplaces
In addition to urging the administration to bring about a “paradigm shift” which it sees as needed to “ultimately stem the tide of counterfeit and pirated goods,” the DHS calls on the private sector entities to adopt the following best practices:
- Comprehensive ‘Terms of Service’ Agreements, with explicit prohibition against selling counterfeit/pirated goods, that all third-party sellers on e-commerce platforms would be required to sign.
- A significant increase in the vetting of third-party sellers, with uniform standards and enforcement measures being applied across platforms.
- More efficient notice and takedown procedures in the case of trademark or other intellectual property violations, including improvements in post-discovery actions taken.
A detailed list of all the private sector best practices can be found here.
Scope of the Problem
Global trade organizations such as the OECD and the International Chamber of Commerce estimate that counterfeits account for 3.3% up to a whopping 9% of all worldwide trade. More importantly, they are projected to drain $4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022.
In the past fiscal year (ended Sept. 30, 2019), CBP seized 27,599 shipments with intellectual property rights violations. According to the agency’s annual report on trade and travel, had those products had been genuine, they would have had a combined retail value of more than $1.5 billion.