Copyright/Trademark/Trade Name Protection; Disclosure of Information

Federal RegisterJul 14, 1995

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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 133

RIN 1515-AB28

Information

AGENCY: Customs Service, Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to revise a previous proposal to amend

the Customs Regulations to allow Customs to disclose to intellectual

property rights owners sample merchandise and certain information

regarding the identity of persons involved with importing merchandise

that is detained or seized for suspected infringement of registered

revised in response to comments received and to make the proposed

regulatory amendments consistent with provisions of the North American

Free-Trade Agreement (NAFTA) and the Uruguay Round Agreements Act

relating to the disclosure of information to intellectual property

rights owners. This document solicits comments regarding the revised

proposal.

DATES: Comments must be received on or before September 12, 1995.

ADDRESSES: Written comments (preferably in triplicate) may be addressed

to the Regulations Branch, U.S. Customs Service, Franklin Court, 1301

Constitution Avenue NW., Washington, DC 20229. Comments submitted may

be inspected at Franklin Court, 1099 14th Street NW--Suite 4000,

Washington, DC.

FOR FURTHER INFORMATION CONTACT: Karl Wm. Means, Intellectual Property

Rights Branch, (202) 482-6957.

SUPPLEMENTARY INFORMATION:

Background

On August 23, 1993, the Customs Service published a Notice of

Proposed Rulemaking in the Federal Register (58 FR 44476) regarding the

disclosure to intellectual property rights (IPR) owners of sample

merchandise and certain identifying information regarding the persons

involved with importing merchandise that is either detained or seized

for suspected infringement of registered copyright, trademark, or trade

name rights. Thereafter, the United States, Canada, and Mexico entered

into the North American Free-Trade Agreement (NAFTA) and, on December

8, 1994, the President signed the Uruguay Round Agreements Act (URAA)

(Pub. L. 103-465, 108 Stat. 4809), both of which contain provisions

pertaining to the protection of IPR.

Chapter 17, Article 1718 of the NAFTA provides for the enforcement

of IPR at the border and contains a provision concerning notification

of trademark or copyright owners when Customs suspends the release of

merchandise for suspected infringement. The provisions of Article 1718

were not addressed by the North American Free Trade Implementation Act

(NAFTA Implementation Act) (December 8, 1993) (Pub. L. 103-182, 107

Stat. 2057) because, as stated in the Statement of Administrative

Action (House Document 103-159, vol. 1, pp. 637-638, 103d Cong., 1st

Sess.), the United States was obligated to make changes in statute or

regulation in only five limited areas. The notification provision of

Article 1718 was not one of those areas. Accordingly, while the Customs

Service does not consider the regulatory changes proposed in this

document to be specifically mandated by Article 1718 of the NAFTA or by

the NAFTA Implementation Act, their inclusion in this proposal supports

the enforcement principles reflected in Chapter 17 of the NAFTA.

The URAA implements the Uruguay Round multilateral trade agreements

[[Page 36250]]

negotiated under the General Agreement on Tariffs and Trade (GATT)--now

the World Trade Organization (WTO). The GATT Agreement on Trade-Related

Aspects of Intellectual Property Rights, as adopted by Congress

(section 101(d)(15) of the URAA, 19 U.S.C. 3511), establishes

comprehensive standards for the protection of intellectual property and

the enforcement of IPR in signatory countries; article 57 of this

Agreement confers a right of inspection and information on IPR holders.

Because the proposed rule of August 23, 1993, did not consider the

expanded IPR owners notification requirements contained in article 1718

of the NAFTA and article 57 of the GATT Agreement on Trade-Related

Aspects of Intellectual Property Rights, Customs is publishing a

revised notice of proposed rulemaking and solicits public comments. As

the background information previously published in the August 23, 1993,

proposed rule continues to be applicable to this revised proposed rule,

it is incorporated herein by reference. In summary, the background

stated that certain changes to part 133 of the Customs Regulations (19

CFR part 133) were being proposed to codify the rules for disclosure of

information to certain parties at interest in import transactions

involving infringement of trademarks and copyrights. Among the reasons

stated for the proposed rule were the current haphazard availability of

such information to parties at interest through the lengthy and

cumbersome Freedom of Information Act (FOIA) process; Customs interest

in facilitating the parties' private remedies for trademark and

regulations for notification in situations of detention or seizure of

trademark and copyright infringing merchandise.

In addition to the changes required because of provisions contained

in the NAFTA and GATT Agreement, Customs has revised the language of

the proposed regulations in an effort to improve their clarity.

Analysis of Comments

In response to the August 23, 1993 rulemaking proposal, Customs

received 65 comments: 53 in favor of the proposal, 5 against the

proposal, 5 in favor with a specific qualification or suggestion, and 2

suggested changes to the proposal without taking a position either for

or against it.

Each of the 53 responses in favor of the proposal had several

elements in common. Most commenters noted the losses to private

business each year due to the importation of infringing merchandise,

and the private litigation required to deter such infringement. These

commenters further noted the lack of information which is provided to

IPR owners under the current regulations, and were in favor of

additional information being disclosed to facilitate private

enforcement actions. Commenters also noted that the proposal would

facilitate communication between IPR owners and Customs personnel when

the assistance of the IPR owner is required to determine whether or not

an imported article is genuine.

Specific qualifications, suggestions and/or concerns are addressed

below.

Comment: One commenter requested that in addition to information

provided when importers deny piracy of a recorded copyright (19 CFR

133.43), Customs disclose information when an importer does not deny

piracy.

Response: In those cases where an importer does not deny

infringement under the procedures provided for in Sec. 133.43 of the

Customs Regulations (19 CFR 133.43) the merchandise is seized. As set

forth in this revised proposal, Sec. 133.42 would be amended to make

mandatory the disclosure of the requested information to the IPR owner

in such a seizure circumstance.

Comment: One commenter was in favor of disclosure only when a

seizure action is indicated, and opposed to disclosure when merchandise

is merely ``suspected'' of infringement. In contrast, another commenter

requested that an importer's identity be released when goods are

detained as well as seized.

Response: Customs only detains that merchandise for which there are

reasonable grounds to believe that an infringement of IPR has occurred,

or when in the words of the commenter ``firm evidence'' is present to

suspect infringement. At the time of detention, Customs tries to

determine whether sufficient grounds exist to believe that a

substantive violation has occurred such that further action is

warranted. In many cases Customs cannot without the assistance of the

IPR owner determine whether or not the imported article in fact bears

genuine or infringing marks. Customs expects that the proposed

regulations will provide Customs personnel with the authority to

consult IPR owners, thereby resulting in more accurate decisions

regarding infringement. Further, given that, at the time of detention,

Customs has not yet determined whether a violation has occurred,

Customs believes that the premature release of an importer's identity

would be inappropriate. In addition, the constraints of the disclosure

laws suggest that the importer's rights against the release of such

information make disclosure inappropriate. The proposal is structured

to limit the disclosure of information in instances of detention in

order to protect the rights of importers.

Comment: Several commenters suggested that more information should

be released than was proposed. Specifically, various commenters

requested that information pertaining to the country of origin, the

identity of the shipper, the means of transport, the identity of the

broker (if any), dates of export/import, the port(s) of entry, and a

description of the goods all be made available.

Response: Regarding country of origin information, Customs agrees

that this information, when available, should be disclosed to IPR

owners. Accordingly, to the extent that country of origin information

is available from the documents submitted to Customs in the normal

course of business, that information will be disclosed. For the

purposes of the proposed regulation, country of origin is defined at 19

CFR 134.1(b). Also, the latter three types of information (dates of

importation, the port of entry, and a description of the merchandise)

will be included in every detention and seizure notification as a

matter of course.

However, regarding the other types of information (the identity of

the shipper, the means of transport, and the date of export), in

balancing the desires of the IPR owner against the disclosure

limitations of the Freedom of Information Act (5 U.S.C. 552) and the

Trade Secrets Act (18 U.S.C. 1905) and the potential workload of

Customs personnel in providing such additional information, Customs

considers such disclosure inappropriate.

Regarding disclosure of the identity of the broker (if any),

Customs response is set forth below in the response regarding the use

of the term ``importer.''

Comment: One commenter requested clarification on the timing of

notices; i.e., when during the entry-detention-and-seizure process the

notice would be provided.

Response: Although the IPR provisions contained in the NAFTA and

the GATT do not specify a minimum time frame for notification to IPR

owners, Customs believes that notification within a 30-day time period

provides notice in a manner consistent with the purpose of these

commitments.

Comment: Several commenters addressed the condition of sample

merchandise provided under the proposed regulations.

[[Page 36251]]

Response: The condition of samples sent to IPR owners will be as

allowed under applicable disclosure laws. Thus, where no part of seized

or detained merchandise comes within an exemption from disclosure, the

sample provided the IPR owner will be as received by Customs.

Comment: Comments were received with regard to the use of the term

``importer'' and the concern that an importer may in fact be a broker

rather than ``the party who actually caused the importation.'' As a

result, rights holders could be notified of the identity of a broker

acting as importer rather than ``the party who actually caused the

importation.''

Response: Customs recognizes that the term ``importer'' may include

a broker under certain circumstances. However, Customs does not intend

that nominal consignees should be included for the purposes of this

regulation.

Comment: One commenter suggested that the term ``mark'' should be

defined by specific reference to section 5 of the Lanham Act (15 U.S.C.

1127).

Response: While this comment is not relevant to the proposed

regulations, Customs notes that Sec. 133.1 of the Customs Regulations

(19 CFR 133.1) provides for the recordation of trademarks registered

under ``the Trademark Act of March 3, 1881, the Trademark Act of

February 20, 1905, or the Trademark Act of 1946 (15 U.S.C. 1501, et

seq.) except those registered on the supplemental register,'' and

further provides that a ``status copy of the certificate of

registration'' shall be provided to Customs at the time of recordation.

Because these various Acts incorporate the definition of ``mark'' found

at 15 U.S.C. 1127, which is referenced in provisions in Part 133 of the

Customs Regulations, Customs believes that no further change to the

proposed regulations is required.

Comment: One commenter opposed to the regulations suggested that

the proposal would delay Customs in the clearing of shipments.

Response: Customs disagrees that the proposed regulations will

result in extended periods of detention, given the revised operating

requirements mandated by the Customs Modernization provisions (Title VI

of the Act, the Mod Act). Because of the Mod Act, Customs must now

provide for a formal decision and notice of detention, and for either

the subsequent seizure or release of those goods within a specified

time frame. In the event that Customs does not act in accordance with

the statute, the goods are treated as excluded from entry, and

importers acquire by operation of law certain rights of action with

regard to protest against the exclusion.

Comment: Most of the comments in opposition suggested that the

information released by Customs will be used by rights owners to

obstruct or otherwise interfere with legitimate shipments, initiate

spurious litigation, restrict legitimate parallel imports, and

constitute the release of protected business confidential information.

Response: Customs does not intend to provide domestic rights owners

open access to the Customs and/or shipping documents associated with

either detained or seized merchandise. To the contrary, the proposed

regulation is intended to define clearly the scope of permissible

disclosure and to provide guidelines for the timely and necessary

release of information. Customs sees no prolonged delays associated

with such disclosure. One of Customs purposes in making such

information available is to facilitate rights owners' pursuit of legal

remedies for infringement. However, rights owners are not expected to

institute frivolous litigation, nor does Customs expect that legitimate

trade, in parallel goods or otherwise, would be restricted under the

current statutes and regulations which clearly make provision for such

legitimate goods.

Several commenters state that the effect of the regulatory change

would be to ``hand over'' importers of parallel goods, thereby

emasculating the regulatory provisions for such goods. To the contrary,

Customs expects that limited, direct contact with IPR owners regarding

detained goods will allow the more timely and accurate identification

of parallel imports, and that where the importation of such goods is

allowed, the goods will be released more rapidly without additional

disclosure. All parties with an interest in the parallel goods issue

should be aware that Customs has no intention of allowing disclosure

beyond that which is legally allowed, and no objective other than the

quick and accurate identification of legitimate goods. When rights

owners can assist Customs in that task, every effort will be made to

avail Customs of the opportunity.

Conclusion

Based on the comments received and the subsequent entry into force

of the NAFTA and GATT provisions regarding the notification rights of

IPR owners (article 1718 of the NAFTA and section 101(d)(15) of the

URAA), Customs has decided to revise the amendments to part 133 of the

Customs Regulations that were initially proposed on August 23, 1993, as

follows: to make mandatory the disclosure of certain information

concerning detained and seized merchandise; to make specific a thirty-

day time frame within which Customs will notify IPR owners of detention

and seizure activities; and, to allow for the disclosure of country of

origin information and other items enumerated.

Comments

Before adopting this proposal as a final rule, consideration will

be given to any written comments timely submitted to Customs. Comments

submitted will be available for public inspection in accordance with

the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4 of the Treasury

Department Regulations (31 CFR 1.4), and Sec. 103.11(b) of the Customs

Regulations (19 CFR 103.11(b)), on regular business days between the

hours of 9 a.m. and 4:30 p.m. at the Regulations Branch, U.S. Customs

Service, 1099 14th Street, NW--Suite 4000, Washington, DC.

The Regulatory Flexibility Act

Pursuant to the provisions of the Regulatory Flexibility Act (5

U.S.C. 601 et seq.), it is certified that, if adopted, the proposed

amendments will not have a significant economic impact on a substantial

number of small entities. The amendments more fully carry out the

intent of the law and confer a benefit on IPR owners in the enforcement

of such rights. Accordingly, the proposed amendments are not subject to

the regulatory analysis or other requirements of 5 U.S.C. 603 and 604.

Executive Order 12866

This document does not meet the criteria for a ``significant

regulatory action'' as defined in E.O. 12866.

Drafting Information

The principal author of this document was Gregory R. Vilders,

Attorney, Regulations Branch. However, personnel from other offices

participated in its development.

List of Subjects in 19 CFR Part 133

Imports, Reporting and recordkeeping requirements, Restricted

merchandise, Trademarks, Trade names.

Proposed Amendments to the Regulations

For the reasons stated above, it is proposed to amend part 133,

Customs Regulations (19 CFR part 133), as set forth below:

[[Page 36252]]

PART 133--TRADEMARKS, TRADE NAMES, AND COPYRIGHTS

1. The general authority citation for part 133 would continue to

read as follows:

Authority: 17 U.S.C. 101, 601, 602, 603; 19 U.S.C. 66, 1624; 31

U.S.C. 9701.

2. It is proposed to amend Sec. 133.22 by revising the section

heading; adding a new paragraph (b); redesignating current paragraphs

(b) and (c) as paragraphs (c) and (d); and revising the heading of new

paragraph (c). The addition and revision to read as follows:

Sec. 133.22 Procedure on detention of articles subject to restriction.

* * * * *

(b) Notice of detention and disclosure of information. When

merchandise is detained, in order to obtain assistance in determining

whether the item bears an infringing mark, Customs officers shall

disclose to the owner of the trademark that merchandise has been

detained and provide the following information regarding the detained

merchandise, if available, within thirty days, excluding weekends and

holidays, of the date of detention:

(1) a sample of the item bearing a suspected mark;

(2) the quantity involved;

(3) the name and address of the manufacturer; and

(4) the country of origin of the merchandise if known.

* * * * *

3. It is proposed to amend Sec. 133.23a by adding a new paragraph

(c); redesignating current paragraph (c) as paragraph (d); and revising

the section heading of and removing the first sentence in newly

designated paragraph (d). The addition and revision to read as follows:

Sec. 133.23a Articles bearing counterfeit trademarks.

* * * * *

officers shall disclose to the owner of the trademark that merchandise

has been seized and provide the following information regarding the

seized merchandise within thirty days, excluding weekends and holidays,

of the date of seizure:

(1) a sample of the item bearing the counterfeit mark;

(2) the quantity involved;

(3) the name and address of the manufacturer;

(4) the country of origin of the merchandise if known;

(5) the name and address of the exporter; and

(6) the name and address of the importer.

(d) Failure to make appropriate disposition. * * *

* * * * *

4. It is proposed to amend Sec. 133.42 by adding a new paragraph

(d); and by redesignating current paragraph (d) as new paragraph (e).

The revision to read as follows:

Sec. 133.42 Infringing copies or phonorecords.

* * * * *

(d) Disclosure. When merchandise is seized under this section,

Customs officers shall disclose to the owner of the copyright that

merchandise has been seized and provide the following information

within thirty days, excluding weekends and holidays, of the date of

seizure:

(1) a sample of the piratical copy;

(2) the quantity involved;

(3) the name and address of the manufacturer;

(4) the country of origin of the merchandise if known;

(5) the name and address of the exporter; and

(6) the name and address of the importer.

* * * * *

5. It is proposed to amend paragraph (b) of Sec. 133.43 by revising

the introductory text of paragraph (b); by adding new subparagraphs

(b)(1) through (b)(4); and by redesignating current subparagraphs

(b)(1) and (b)(2) as (b)(4)(i) and (b)(4)(ii). The addition and

revision to read as follows:

Sec. 133.43 Procedure on suspicion of infringing copies.

* * * * *

(b) Notice to copyright owner. If the importer of the suspected

infringing copies or phonorecords files a denial as provided in

paragraph (a) of this section, the district director shall furnish to

the copyright owner within thirty days, excluding weekends and

holidays, of the receipt of the importer's denial:

(1) a sample of the suspected piratical item;

(2) the quantity involved;

(3) the name and address of the importer; and

(4) notice that the imported article will be released to the

importer unless, within thirty days from the date of the notice, the

* * * * *

George J. Weise,

Commissioner of Customs.

Approved: June 20, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95-17065 Filed 7-13-95; 8:45 am]

BILLING CODE 4820-02-P

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