Copyright/Trademark/Trade Name Protection; Disclosure of Information

Federal RegisterMar 12, 1998

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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 133

[T.D. 98-21]

RIN 1515-AB28

Information

AGENCY: Customs Service, Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations to allow Customs

to provide to intellectual property rights (IPR) owners sample

merchandise and to disclose to IPR owners certain information regarding

the identity of persons involved with importing merchandise that is

detained or seized for infringement of the IPR owner's registered

assist Customs in making infringement determinations and enable

concerned IPR owners to more expeditiously proceed to enforce their

property rights by means of instituting appropriate judicial remedies

against the parties identified as being involved with infringement of

the rights of the IPR owner.

EFFECTIVE DATE: April 13, 1998.

FOR FURTHER INFORMATION CONTACT: The Intellectual Property Rights

Branch, Office of Regulations and Rulings, (202) 927-2330.

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 identity

of persons involved with importing merchandise that is either detained

or seized for infringing copyright, trademark, or trade name rights.

Sixty-five comments were received pursuant to this notice.

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. The URAA contains the Agreement on Trade-

Related Aspects of Intellectual Property Rights (TRIPs) (19 U.S.C.

3511) of the Uruguay Round of the General Agreement on Tariffs and

Trade (GATT)--now the World Trade Organization (WTO).

On July 14, 1995, Customs published its analysis of the 65 comments

in a revised Notice of Proposed Rulemaking (60 FR 36249). The revised

Notice, in addition to making changes in response to the comments

received, proposed further regulatory changes to make the regulations

consistent with certain provisions of the NAFTA and the URAA and to

improve the clarity of the proposed regulations. Accordingly, the

Background information contained in the revised Notice regarding these

agreements remains applicable and is incorporated here by reference.

The comments received in response to the revised Notice of Proposed

Rulemaking published on July 14, 1995, and Customs responses to them

are set forth below.

[[Page 11997]]

Analysis of Comments

Twenty-two comments were received (21 in favor, including 8 with

suggested changes to the revised proposal, and 1 against) that raised 7

areas of concern:

(1) Disclosure of confidential business information would violate

both the Freedom of Information Act (FOIA) and the Trade Secrets Act;

(2) Disclosure of confidential importer information to the IPR

holder is contrary to the intent of both NAFTA and GATT;

(3) The 30-day notification period does not allow the IPR owner to

act expeditiously;

(4) Disclosure should include country of origin information;

(5) Disclosure should include the date(s) of importation, the port

of entry, and a description of the merchandise;

(6) Disclosure should include the identity of the importer; and

(7) IPR owners should be allowed to retain samples sent for

inspection, and Customs should clarify its position regarding the

testing of samples, since testing may result in the destruction of a

sample.

1. Disclosure of Confidential Business Information Would Violate Both

the FOIA and the Trade Secrets Act

Comment: Stating that commercial information is ``confidential''

and, therefore, not subject to public disclosure, one commenter asserts

that the proposed disclosure of information would contravene both the

Freedom of Information Act (FOIA) (5 U.S.C. 552) and the Trade Secrets

Act (18 U.S.C. 1905). Citing the FOIA as providing that confidential

information is not subject to public disclosure if it would cause

substantial harm to the competitive position of the source of the

information and the Trade Secrets Act as providing that sensitive

business information should not be disclosed unless otherwise provided

by law, the commenter states that Customs is bound not to disclose such

confidential information as the names and addresses of importers,

exporters, and manufacturers, and recommends that Customs withdraw its

revised notice.

Customs' Response: Customs disagrees with these interpretations of

the cited Acts.

Regarding the FOIA, its basic objective is to disclose official

information, making available to the public federal agency records (5

U.S.C. 552(a)), except to the extent that such records (or portions

thereof) are specifically exempt from disclosure (5 U.S.C. 552(b)).

Thus, contrary to the commenter's position, the FOIA does not mandate

nondisclosure, but rather seeks to establish workable standards for

determining whether particular material may be withheld or must be

disclosed.

Regarding the Trade Secrets Act, this Act specifically prohibits

the disclosure of confidential information, except as is authorized by

law, under penalty of fine and/or imprisonment (see also, Sec. 103.34

of the Customs Regulations (19 CFR 103.34)). As explained below,

Customs has revised Sec. 133.22(b) so that no trade secret information

will be disclosed at the detention stage. However, at the seizure

stage, Customs believes that statutory authority exists to provide

Customs with the authority to disclose the information specified.

Therefore, Customs believes that substantive agency regulations,

promulgated pursuant to such statutory authority and published in

compliance with the Administrative Procedure Act (5 U.S.C. 551 et

seq.), are not in conflict with the Trade Secrets Act.

Concerning Customs' statutory authority to disclose certain

importation information to IPR holders, numerous provisions in titles

15, 17, and 19 of the U.S. Code authorize the Secretary of the Treasury

(the Secretary) to promulgate regulations to enforce their prohibitions

against the importation of IPR-infringing merchandise. The Copyright

Act of 1976 (17 U.S.C. 602 et seq.) (the Copyright Act) prohibits the

importation of infringing copies and authorizes the Secretary to

prescribe a procedure whereby a person with an interest in the work may

be entitled to notification of the importation. Further, section 603 of

the Copyright Act authorizes the Secretary to enforce the Copyright

Act's provisions by prohibiting such importations, and provides that

(1) a court order may be obtained enjoining an importation and (2) a

claimant seeking exclusion of an importation may establish proof that

an importation would violate section 602. Such order or proof would

necessarily entail the availability of certain transaction information

to the person claiming an interest in the copyright.

Under the Lanham Trademark Act (15 U.S.C. 1124), the Secretary is

authorized to make regulations regarding trademarks and to aid Customs

officers in enforcing theprohibitions against importation. Also,

sections 526 and 595a(c) of the Tariff Act of 1930, as amended (19

U.S.C. 1526 and 1595a(c)), prohibit the importation or introduction of

merchandise with unauthorized trademarks or merchandise or packaging in

which copyright, trademark, or trade name protection violations are

involved and under the provisions of section 624 of the Tariff Act of

1930, as amended (19 U.S.C. 1624), the Secretary is authorized to

promulgate regulations to carry out those provisions. Section 526 of

the Tariff Act of 1930, as amended, further provides for the

notification of trademark owners when merchandise bearing a counterfeit

mark is seized. Customs believes that these statutes may be reasonably

interpreted to permit Customs to provide for the disclosure of certain

import information, and where the identification of such violative

merchandise requires the assistance of IPR owners, relevant information

may be made available.

Since the purpose of these disclosure regulations is to further the

statutory enforcement scheme by allowing Customs to release certain

commercial information so that Customs can more timely and accurately

identify legitimate merchandise, pursuant to the regulations

promulgated herein, Customs is authorized by law to disclose such

information without violating the Trade Secrets Act. Accordingly, since

the regulations do not provide for the disclosure of either the

manufacturer's or importer's identity at the detention stage, no trade

secrets are being divulged. As stated in the revised Notice of Proposed

Rulemaking, it is Customs policy to avail itself of any opportunity to

gather information quickly and accurately so that decisions concerning

imported merchandise can be correctly and timely made. Accordingly, the

provisions of Secs. 133.22 and 133.43, which pertain to detention, do

not provide for the disclosure of any manufacturer or importer

information, while the provisions of Secs. 133.23a and 133.42, which

pertain to seizure, are revised to allow for the disclosure of the name

and address information pertaining to the manufacturer and importer.

Further, to make clear when Customs officers will be required to

disclose importation information and provide sample merchandise to IPR

owners and when Customs officers may, on an ad hoc basis, disclose such

information, i.e., to solicit an IPR owner's assistance in determining

whether a particular importation should be detained in the first

instance, the provisions of Sec. 133.22(b) are revised to better

reflect Customs detention notice policies. Accordingly, Sec. 133.22(b)

has been amended to provide that once a notice of detention is issued,

Customs officers are required to disclose the importation information

to IPR owners, within the 30-day time limitation imposed by the

detention statute, in order to more quickly determine whether the marks

are restricted or prohibited. But during the time between presentation

of the

[[Page 11998]]

goods for Customs examination and issuance of a formal detention notice

Customs officers have the authority to disclose such importation

information where the circumstances warrant. Customs expects that such

disclosure will allow Customs officers, in many cases, to determine

immediately whether a formal detention should be initiated or whether

the goods should be released, thereby avoiding lengthy delays and

demurrage charges.

For the above reasons, Customs will not withdraw its revised

notice.

2. Disclosure of Confidential Importer Information to the IPR Holder Is

Contrary to the Intent of Both the NAFTA and the GATT

Comment: The same commenter suggested that the proposed disclosure

was contrary to the intent of both the NAFTA and the GATT. Citing the

NAFTA as providing that it does not affect U.S. law or practice

relating to parallel importation of products protected by intellectual

property rights and the GATT as stating that measures and procedures to

enforce property rights should not themselves become barriers to

legitimate trade, the commenter states that the proposed changes cannot

be said to be consistent with the stated objectives of these two

agreements. The commenter states that Customs' proposal is principally

directed at changing established law and practice relating to parallel

imports and will inevitably serve as a barrier to legitimate trade.

Accordingly, the commenter recommends that Customs withdraw its revised

notice.

Customs' Response: Inasmuch as the proposed regulations provide for

disclosure as authorized by law, Customs does not believe that such

disclosure is inconsistent with either the NAFTA or the GATT TRIPs

Agreement. The border enforcement provisions of these Agreements

contemplate the prosecution of suspect importations by IPR owners. To

that end, each Agreement provides for the disclosure of information to

IPR owners sufficient to substantiate claims of infringement. Article

1718 of the NAFTA and Article 57 of the GATT TRIPs Agreement do not, as

the commenter suggests, give blanket nondisclosure benefit to the

importer. Customs believes that the references in these Agreements to

the ``protection of confidential information'' require only that the

disclosure of information comply with the respective signatory party's

laws and regulations regarding disclosure. For the reasons discussed

above in the previous response, the proposed regulations have been

issued pursuant to valid statutory authority.

Accordingly, Customs will not withdraw its revised notice.

3. The 30-day Notification Period Does Not Allow the IPR Owner To Act

Expeditiously

Comment: Another commenter urged that the 30-day notification

period should be reduced to 10 days so that an IPR owner could be in a

position to act more expeditiously, and recommends that Customs change

the time period accordingly.

Customs' Response: Aside from the permissive disclosure situation

described above, Customs believes that the 30 business day time limit

for required disclosure of importation information affords IPR owners

sufficient time to act expeditiously. Customs must consider the

workload placed on its employees and regulate manageable time frames

for their compliance with the relevant disclosure rules.

Accordingly, Customs will not change the time period as proposed in

Secs. 133.22(b), 133.23(c), 133.42(d), and 133.43(b).

4. Disclosure Should Include Country of Origin Information

Comment: Several comments were received noting that country of

origin information should be included in the revision of 19 CFR 133.43,

as it was in the other sections revised.

Customs' Response: Customs agrees that the regulations should be

consistent and has added country of origin information as information

to be disclosed under 19 CFR 133.43.

5. Disclosure Should Include the Date(s) of Importation, the Port of

Entry, and a Description of the Merchandise

Comment: In the Background section of the revised Notice of

Proposed Rulemaking Customs indicated that certain information, namely

dates of importation, port of entry and description of the merchandise,

would be included in every notification as a matter of course. One

commenter requested that these items be specifically set forth to

insure that this information is released.

Customs' Response: Customs agrees and has added this information

concerning the dates of importation, port of entry, and a description

of the merchandise as information to be disclosed under

Secs. 133.22(b), 133.23(c), 133.42(d), and 133.43(b).

6. Disclosure Should Include the Identity of the Importer

Comment: Comments were received requesting that the identity of the

importer be provided under 19 CFR 133.22 when goods are detained for

suspicion of trademark counterfeiting. These commenters argue that such

disclosure would then parallel the release of an importer's identity

under 19 CFR 133.43 when goods are detained for suspicion of copyright

counterfeiting.

Customs' Response: The identity of an importer is provided under

the provisions of 19 CFR 133.43 (suspected copyright counterfeiting)

because of the broad bonding provisions contained in that section. The

bonding requirements applicable to goods detained for suspicion of

trademark counterfeiting are much narrower, only providing security for

samples. Although the NAFTA and the GATT TRIPs Agreement each provides

that the competent authorities may require such a security for all

detentions of goods suspected of IPR infringement, Customs has not

implemented such a requirement for trademarked goods.

Customs' objective of making timely and accurate determinations on

counterfeiting requires that the unauthorized application of a mark be

readily ascertained. To that end, Customs has determined that the

identity of the manufacturer is important because the mark is typically

applied by the manufacturer. Until Customs institutes a similar, broad

bonding procedure for suspected counterfeit trademark goods, it has

decided that the importer's identity shall not be released at the time

of detention.

7. IPR Owners Should Be Allowed To Retain Samples Sent for Inspection,

and Customs Should Clarify Its Position Regarding the Testing of

Samples, Since Testing May Result in the Destruction of a Sample

Comment: A comment was received suggesting that IPR owners be

permitted to retain samples forwarded by Customs for examination.

Another comment noted that certain testing may result in the

destruction or partial destruction of a sample, and requested

clarification of Customs position on the testing of samples.

Customs' Response: Customs recognizes that testing may be required

to determine whether a sample bears a counterfeit trademark or

constitutes a piratical copy. Customs' intention is to allow for the

manipulation of samples provided to IPR owners, including the

[[Page 11999]]

destruction of the sample if required during the testing procedure.

However, Customs has determined that samples may not be retained by IPR

owners, and Customs will require either the return of samples, the

remains of tested sample, or assurances to Customs' satisfaction that

the article has been destroyed. Accordingly, the regulations as set

forth below have been modified to provide that where Customs has

provided sample merchandise to an IPR owner for examination, testing,

or any other use in pursuit of a related private civil remedy, the IPR

owner must return the sample to Customs upon demand or at the

conclusion of the examination, testing, or use in pursuit of a related

private civil remedy. In the event the sample is damaged, destroyed, or

lost while in the custody of the IPR owner, the owner shall certify

this fact to Customs. The regulations also require that the IPR owner

post a bond conditioned to indemnify the importer and to hold harmless

Customs, in the event that the sample is destroyed.

In the August 23, 1993, notice of proposed rulemaking, and the July

14, 1995, revised notice of proposed rulemaking on these regulations,

Customs proposed furnishing samples of imported goods bearing

trademarks to IPR owners to determine whether infringement has

occurred. Customs has determined that in some instances samples may be

furnished to IPR owners under the proposed rules where subsequently it

is determined that no infringement has occurred. It logically flows

that in some of these instances importers may suffer damages as a

result of the furnishing of samples to the IPR owner (for example,

samples may be lost or destroyed). To provide protection to importers

in this eventuality, Customs has determined to require IPR owners to

provide Customs with a bond as a precondition to obtaining samples.

Specifically, Customs has revised Secs. 133.22(c), 133.23a(d),

133.42(e), and 133.43(b) and (c) to require that a bond be posted by

the IPR owner to indemnify the importer and hold-harmless Customs from

any loss or damage resulting from Customs furnishing a sample to the

IPR owner, in the event that the sample merchandise provided is

subsequently determined not to bear an infringing mark.

Conclusion

After analysis of the comments and further consideration of the

matter, Customs has decided to adopt the proposed amendments to part

133 of the Customs Regulations with the modifications discussed above

in the analysis of comments.

The Regulatory Flexibility Act

Based on the reasons set forth above and because the regulatory

burden falls primarily on Customs to notify IPR holders of infringing

imported merchandise, pursuant to the provisions of the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.), it is certified that the

amendments to the regulations will not have a significant economic

impact on a substantial number of small entities. Accordingly, the

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.

List of Subjects in 19 CFR Part 133

Imports, Reporting and recordkeeping requirements, Restricted

merchandise, Seizures and forfeitures, Trademarks, Trade names.

Amendments to the Regulations

For the reasons stated above, part 133 of the Customs Regulations

(19 CFR part 133), is amended as set forth below:

PART 133--TRADEMARKS, TRADE NAMES, AND COPYRIGHTS

1. The general authority citation for part 133 is revised 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. Section 133.22 is amended by revising the section heading;

revising the text of paragraph (a); redesignating paragraphs (b) and

revising the heading of newly redesignated paragraph (d). The additions

and revisions are to read as follows:

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

(a) In general. Articles subject to the restrictions of Sec. 133.21

shall be detained for 30 days from the date on which the merchandise is

presented for Customs examination. The importer shall be notified of

the decision to detain within 5 days of the decision that such

restrictions apply. The importer may, during the 30-day period,

establish that any of the circumstances described in Sec. 133.21(c) are

applicable. Extensions of the 30-day time period may be freely granted

for good cause shown.

(b) Notice of detention and disclosure of information. From the

time merchandise is presented for Customs examination until the time a

notice of detention is issued Customs may disclose to the owner of the

trademark or trade name any of the following information in order to

obtain assistance in determining whether an imported article bears an

infringing trademark or trade name. Customs shall disclose this same

information (if available) to the owner of the trademark or trade name

within 30 days (excluding weekends and holidays) of the date of

detention:

(1) The date of importation;

(2) The port of entry;

(3) A description of the merchandise;

(4) The quantity involved; and

(5) The country of origin of the merchandise.

time following presentation of the merchandise for Customs examination

but prior to seizure, Customs may provide a sample of the suspect

merchandise to the owner of the trademark or trade name for examination

or testing to assist in determining whether the article imported bears

an infringing trademark or trade name. To obtain a sample under this

section, the trademark/trade name owner must furnish Customs a bond in

the form and amount specified by the port director, conditioned to hold

the United States, its officers and employees, and the importer or

owner of the imported article harmless from any loss or damage

resulting from the furnishing of a sample by Customs to the trademark

owner. Customs may demand the return of the sample at any time. The

owner must return the sample to Customs upon demand or at the

conclusion of the examination or testing. In the event that the sample

is damaged, destroyed, or lost while in the possession of the trademark

or trade name owner, the owner shall, in lieu of return of the sample,

certify to Customs that: ``The sample described as [insert description]

and provided pursuant to 19 CFR 133.22(c) was (damaged/ destroyed/lost)

during examination or testing for trademark infringement.''

(d) Form of notice. * * *

* * * * *

3. Section 133.23a is amended by redesignating paragraph (c) as

paragraph (e); adding new paragraphs (c) and (d); and revising the

heading and removing the first sentence of newly designated paragraph

(e). The additions and revisions are to read as follows:

Sec. 133.23a Articles bearing counterfeit trademarks.

* * * * *

[[Page 12000]]

this section, Customs shall disclose to the owner of the trademark the

following information, if available, within 30 days, excluding weekends

and holidays, of the date of the notice of seizure:

(1) The date of importation;

(2) The port of entry;

(3) A description of the merchandise;

(4) The quantity involved;

(5) The name and address of the manufacturer;

(6) The country of origin of the merchandise;

(7) The name and address of the exporter; and

(8) The name and address of the importer.

(d) Samples available to the trademark owner. At any time following

seizure of the merchandise, Customs may provide a sample of the suspect

merchandise to the owner of the trademark for examination, testing, or

other use in pursuit of a related private civil remedy for trademark

infringement. To obtain a sample under this section, the trademark/

trade name owner must furnish Customs a bond in the form and amount

specified by the port director, conditioned to hold the United States,

its officers and employees, and the importer or owner of the imported

article harmless from any loss or damage resulting from the furnishing

of a sample by Customs to the trademark owner. Customs may demand the

return of the sample at any time. The owner must return the sample to

Customs upon demand or at the conclusion of the examination, testing,

or other use in pursuit of a related private civil remedy for trademark

infringement. In the event that the sample is damaged, destroyed, or

lost while in the possession of the trademark owner, the owner shall,

in lieu of return of the sample, certify to Customs that: ``The sample

described as [insert description] and provided pursuant to 19 CFR

133.23a(d) was (damaged/destroyed/lost) during examination, testing, or

other use.''

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

4. Section 133.42 is amended by redesignating paragraph (d) as

paragraph (f) and adding new paragraphs (d) and (e) to read as follows:

Sec. 133.42 Infringing copies or phonorecords.

* * * * *

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

Customs shall disclose to the owner of the copyright the following

information, if available, within 30 days, excluding weekends and

holidays, of the date of the notice of seizure:

(1) The date of importation;

(2) The port of entry;

(3) A description of the merchandise;

(4) The quantity involved;

(5) The name and address of the manufacturer;

(6) The country of origin of the merchandise;

(7) The name and address of the exporter; and

(8) The name and address of the importer.

(e) Samples available to the copyright owner. At any time following

seizure of the merchandise, Customs may provide a sample of the suspect

merchandise to the owner of the copyright for examination, testing, or

any other use in pursuit of a related private civil remedy for

specified by the port director, conditioned to hold the United States,

its officers and employees, and the importer or owner of the imported

article harmless from any loss or damage resulting from the furnishing

of a sample by Customs to the copyright owner. Customs may demand the

return of the sample at any time. The owner must return the sample to

Customs upon demand or at the conclusion of the examination, testing,

or other use in pursuit of a related private civil remedy for copyright

infringement. In the event that the sample is damaged, destroyed, or

lost while in the possession of the copyright owner, the owner shall,

in lieu of return of the sample, certify to Customs that: ``The sample

described as [insert description] provided pursuant to 19 CFR 133.42(e)

was (damaged/destroyed/lost) during examination, testing, or other

use.''

* * * * *

5. In Sec. 133.43, paragraphs (c) and (d) are redesignated as

paragraphs (d) and (e), and paragraph (b) is revised and a new

paragraph (c) is added to read as follows:

Sec. 133.43 Procedure on suspicion of infringing copies.

* * * * *

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

infringing copies or phonorecords files a denial as provided in

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

days, excluding weekends and holidays, of the receipt of the importer's

denial:

(1) The date of importation;

(2) The port of entry;

(3) A description of the merchandise;

(4) The quantity involved;

(5) The country of origin of the merchandise; and

(6) Notice that the imported article will be released to the

importer unless, within 30 days from the date of the notice, the

exclusion from entry of the detained imported articles.

presentation of the merchandise for Customs examination but prior to

seizure, Customs may provide a sample of the suspect merchandise to the

owner of the copyright for examination or testing to assist in

determining whether the article imported is a piratical copy. To obtain

a sample under this section, the copyright owner must furnish Customs a

bond in the form and amount specified by the port director, conditioned

to hold the United States, its officers and employees, and the importer

or owner of the imported article harmless from any loss or damage

resulting from Customs detention or seizure, or the furnishing of a

sample by Customs to the trademark owner, in the event that the

Commissioner of Customs, or his designee, or a federal court determines

that the article does not bear an infringing mark. Customs may demand

the return of the sample at any time. The owner must return the sample

to Customs upon demand or at the conclusion of the examination or

testing. In the event that the sample is damaged, destroyed, or lost

while in the possession of the copyright owner, the owner shall, in

lieu of return of the sample, certify to Customs that: ``The sample

described as [insert description] provided pursuant to 19 CFR 133.43(c)

was (damaged/destroyed/lost) during examination or testing for

* * * * *

Samuel H. Banks,

Acting Commissioner of Customs.

Approved: February 17, 1998.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 98-6183 Filed 3-11-98; 8:45 am]

BILLING CODE 4820-02-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.