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Mainland China and Hong Kong Continue to Account for Vast Majority of IPR Seizures

U.S. Customs and Border Protection recently released statistics regarding the volume and value of its seizures of intellectual property rights infringing articles during fiscal year 2016 (October 2015 through September 2016). The total number of IPR seizures rose 9.3 percent to 31,560 following growth of 24.7 percent to 28,865 in FY 2015 and a five percent drop to 23,140 in FY 2014. The value of IPR seizures in terms of the manufacturer’s suggested retail price increased 2.2 percent to US$1.38 billion following a ten percent gain to US$1.35 billion in FY 2015 and a 30 percent plunge to US$1.22 billion in FY 2014. The average value per seizure fell again, down by 6.5 percent to US$43,818.

Express shipment seizures accounted for 55.0 percent (17,363) of all seizures in FY 2016, up from 51.6 percent (14,897) in FY 2015 and 54.6 percent (12,623) in FY 2014, while mail seizures represented 35.9 percent (11,326) of all seizures during this past fiscal year, down from 37.5 percent (10,834) in FY 2015 but up from 31.5 percent (7,300) in FY 2014. Express shipment seizures accounted for a more modest but still very substantial 44.4 percent of all seizures in MSRP terms (US$614.5 million) in FY 2016, up significantly from 32.2 percent (US$436.6 million) in FY 2015 and 26.1 percent (US$319.9 million) in FY 2014. While cargo seizures represented only 5.1 percent of all seizures in FY 2016 at 1,621, they accounted for 33.1 percent of the total value of seized merchandise in MSRP terms at US$457.7 million. By comparison, there were 1,287 cargo seizures valued at US$495.6 million in FY 2015 as well as 1,421 cargo seizures valued at US$592.5 million in FY 2014.

Watches and jewellery remained the most seized commodity by value in FY 2016 while wearing apparel continued to be the most seized item. Watches and jewellery topped the seizure list in terms of estimated MSRP with 47.3 percent of the total or US$653.6 million, up from 42.9 percent or US$580.8 million in FY 2015 and 30.6 percent or US$375.4 million in FY 2014. Handbags and wallets ranked second with a 16.9 percent share or US$653.6 million, up from 15.4 or US$208.4 million in FY 2015 but down markedly from 27.9 percent or US$342.0 million in FY 2014. Consumer electronics and parts ranked third with an 8.9 percent share or US$122.9 million, down from 9.8 percent or US$132.5 million in FY 2015 and 13.2 percent or US$162.2 million in FY 2014, while wearing apparel and accessories ranked fourth with an 8.0 percent share or US$110.8 million, down from 11.6 percent or US$157.2 million in FY 2015 and 9.3 percent or US$113.7 million in FY 2014.

Wearing apparel and accessories remained atop the rankings in terms of the total number of seizures with 6,406 in FY 2016, up from 6,232 in FY 2015 and 5,948 in FY 2014. Consumer electronics ranked second with a total of 5,043 in FY 2016, down from 5,326 in FY 2015 and 5,432 in FY 2014. Following at a distance were footwear with 3,630 seizures in FY 2016 (up from 2,818 in FY 2015 and 1,276 in FY 2014), watches and jewellery with 3,407 (up from 2,754 in FY 2015 and 1,330 in FY 2014), handbags and wallets with 3,184 (up from 2,149 in FY 2015 and 1,260 in FY 2014), and pharmaceuticals and personal care products with 2,401 (up from 2,301 in FY 2015 and 1,841 in FY 2014).

Mainland China again topped the list of IPR infringers in FY 2016, accounting for 44.6 percent of the MSRP of seized goods, although this was down significantly from 51.5 percent or US$697.1 million in FY 2015, 63.0 percent or US$772.6 million in FY 2014, 67.7 percent or US$1,180.9 million in FY 2013 and 71.8 percent or US$906.2 million in FY 2012. Hong Kong remained in second place with a 43.4 percent share or US$599.8 million, up noticeably from 34.9 percent or US$472.3 million in FY 2015, 25.3 percent or US$310.4 million in FY 2014, 25.1 percent or US$437.5 million in FY 2013 and 12.4 percent or US$156.3 million in FY 2012. India rose from fourth to third position with US$.14.7 million in the MSRP of seized goods, while Singapore fell to fourth place with US$7.7 million. These suppliers were followed by Cambodia (US$7.0 million), Pakistan (US$4.8 million), Bangladesh (US$4.6 million), Colombia (US$4.2 million), South Korea (US$3.6 million) and Mexico (US$3.6 million).

Mainland China also topped the list of IPR infringers terms of total seizures, with the number of seizures growing from 10,493 in FY 2014 to 14,164 in FY 2015 and 16,417 in FY 2016. Hong Kong ranked second with a total of 11,462 seizures in FY 2016, up from 9,724 in FY 2015 and 8,667 in FY 2014. Singapore ranked third with 583 seizures in FY 2016, down from 1,395 a year earlier, followed by Germany with 396 and Turkey with 309.

Also worth mentioning is the fact that CBP completed 165 exclusion order enforcement actions (shipments seized and excluded) in FY 2016, up from 152 in FY 2015 and 53 in FY 2014, with an estimated MSRP of US$3.25 million, down from US$8.74 million a year earlier. Seventy shipments of circumvention devices were seized for violation of the Digital Millennium Copyright Act, up from 62 in FY 2015. There were also 451 arrests (down from 538), 304 indictments (down from 339) and 272 convictions (down from 357) for intellectual property crimes.

Moreover, components of CBP’s Integrated Trade Targeting Network conducted 17 national level IPR-mitigating trade operations targeting high-risk shipments at seaports, airports, international mail facilities and express carrier hubs and resulting in nearly 3,000 tactical seizures with an MSRP of more than US$99 million. Eleven of these operations were conducted by mobile intellectual property enforcement teams (up from five in FY 2015), which made 2,680 seizures of goods (up 98.7 percent) with a combined estimated MSRP of more than US$85 million (up nearly 300 percent). These teams are a special task force comprised of top IPR enforcement experts from a range of offices within the agency. Additionally, the voluntary abandonment pilot programme conducted in partnership with the Express Association of America and its members resulted in 3,763 voluntary abandonments of detained goods and more than US$3 million in estimated interdiction cost savings to the government.

CBP adds that it conducted a month-long joint operation in April 2016 with the General Administration of China Customs that focused on automobile parts, ID tags and labels, consumer electronics and certain pharmaceuticals and resulted in over 1,400 seizures. Meanwhile, the ICE-led National IPR Coordination Center, along with representatives from CBP, Hong Kong Customs and Mexico’s Servicio de Administración Tributaria, conducted Operation Team Player prior to Super Bowl 50 to jointly address the illegal importation of counterfeit sports-related merchandise.

Also worth mentioning is a separate CBP press release highlighting a recent IPR enforcement operation conducted with Hong Kong Customs that resulted in the seizure of 140 shipments containing counterfeit consumer electronic goods such as cell phones, adaptors, speakers and headsets. The seized merchandise would have had an estimated MSRP of US$1.1 million if genuine. Conducted in November 2016, the operation was led by a mobile intellectual property enforcement team and focused on stopping shipments of these IPR-infringing products from entering U.S. commerce.

CBP conducted three bi-lateral or multi-lateral joint operations with Hong Kong Customs in 2016. According to Michael Walsh, IPR and e-commerce division director for the agency, CBP is looking to co-operate further with Hong Kong Customs this year “and identify new opportunities to address areas of common concern involving the rise of e-commerce and its effect on small businesses.”

Content provided by Picture: HKTDC Research
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