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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 2017 (October 2016 through September 2017). The total number of IPR seizures rose 8.2 percent from to 34,143 following growth of  9.3 percent to 31,560 in FY 2016 and 24.7 percent to 28,865 in FY 2015. The value of IPR seizures in terms of the manufacturer’s suggested retail price fell by 12.8 percent to US$1.21 billion, however, following a 2.2 percent gain to US$1.38 billion in FY 2016 as well as growth of ten percent to US$1.35 billion in FY 2015. The average value per seizure fell again, down by 19.4 percent to US$35,333.

Express shipment seizures accounted for 59.8 percent (20,417) of all seizures in FY 2017, up from 55.0 percent (17,363) in FY 2016 and 51.6 percent (14,897) in FY 2015, while mail seizures represented 29.3 percent (9,992) of all seizures during this past fiscal year, down from 35.9 percent (11,326) in FY 2016 and 37.5 percent (10,834) in FY 2015. Express shipment seizures accounted for a more modest but still quite substantial 35.6 percent of all seizures in MSRP terms (US$429.3 million) in FY 2017, down from 44.4 percent (US$614.5 million) in FY 2016 but up from 32.2 percent (US$436.6 million) in FY 2015. While cargo seizures represented only 7.7 percent of all seizures in FY 2017 at 2,628, they accounted for 33.0 percent of the total value of seized merchandise in MSRP terms at US$397.5 million. By comparison, there were 1,621 cargo seizures valued at US$457.7 million in FY 2016 as well as 1,287 cargo seizures valued at US$495.6 million in FY 2015.

Watches and jewellery remained the most seized commodity by value in FY 2017 while wearing apparel continued to be the most seized item. Watches and jewellery topped the seizure list in terms of estimated MSRP with 38.1 percent of the total or US$460.2 million, down from 47.3 percent or US$653.6 million in FY 2016 and 42.9 percent or US$580.8 million in FY 2015. Handbags and wallets ranked second with a 19.4 percent share or US$234.5 million, up from 16.9 percent or US$234.1 million in FY 2016 and 15.4 or US$208.4 million in FY 2015. Consumer electronics ranked third with a 7.1 percent share or US$85.1 million, down from 8.9 percent or US$122.9 million in FY 2016 and 9.8 percent or US$132.5 million in FY 2015, while labels and tags ranked fourth with a 6.7 percent share or US$81.0 million, up markedly from a 1.2 percent share or US$17.1 million in FY 2016.

Wearing apparel and accessories remained atop the rankings in terms of the total number of seizures with 5,223 in FY 2017, down from 6,406 in FY 2016 and 6,232 in FY 2015. Watches and jewellery ranked second with a total of 4,297 seizures in FY 2017, up from 3,407 in FY 2016 and 2,754 in FY 2015. Following at a close distance were footwear with 4,224 seizures in 2017 (up from 3,630 in FY 2016 and 2,818 in FY 2015), consumer electronics with 4,137 (down from 5,043 in FY 2016 and 5,326 in FY 2015), consumer products with 3,912 (this is a new category, so there is no data for earlier fiscal periods), handbags and wallets with 3,266 (up from 3,184 in FY 2016 and 2,149 in FY 2015), and pharmaceuticals and personal care products with 2,209 (down from 2,401 in FY 2016 and from 2,301 in FY 2015).

Mainland China again topped the list of IPR infringers in FY 2017, accounting for 46.0 percent of the MSRP of seized goods at US$554.6 million, up slightly from 44.6 percent or US$616.9 million in FY 2016 but down 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 32.0 percent share or US$386.2 million, down from 43.4 percent or US$599.8 million in FY 2016 and 34.9 percent or US$472.3 million in FY 2015, but up from 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 remains the third largest source of seized goods with a total MSRP value of US$8.3 million in FY 2017, down from US$14.7 million in FY 2016, while Singapore ranks fourth with US$5.0 million, down from US$7.7 million. These suppliers were followed by Turkey (US$5.0 million), Taiwan (US$4.9 million), Vietnam (US$4.4 million), South Korea (US$4.2 million), Canada (US$3.0 million) and Thailand (US$1.9 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, 16,417 in FY 2016 and 16,538 in FY 2017. Hong Kong ranked second with a total of 13,357 seizures in FY 2017, up from 11,462 in FY 2016, 9,724 in FY 2015 and 8,667 in FY 2014. Turkey ranked third with 587 seizures in FY 2017, followed by Canada with 581 and Taiwan with 472.

Other statistics of note include the following.

  • There were 457 arrests (up from 451), 288 indictments (down from 304) and 242 convictions (down from 272) for intellectual property crimes.
  • CBP completed 115 exclusion order enforcement actions (shipments seized and excluded), down from 165 in FY 2016, with an estimated MSRP of US$1.87 million, down from US$3.25 million.
  • Two hundred and ninety-seven shipments of circumvention devices were seized for violation of the Digital Millennium Copyright Act, up markedly from 70 in FY 2016.
  • Components of CBP’s Integrated Trade Targeting Network conducted 12 national level IPR-mitigating trade operations targeting high-risk shipments at seaports, airports, international mail facilities and express carrier hubs and resulting in 1,845 seizures with an estimated MSRP of US$44 million.
  • Eight of these operations were conducted by mobile intellectual property enforcement teams (down from 11 in FY 2016), which made 1,687 seizures of goods (down 37.1 percent) with a combined estimated MSRP of US$34.6 million and 67 abandonments.
  • The voluntary abandonment pilot programme conducted in partnership with the Express Association of America and its members resulted in 5,588 voluntary abandonments of detained goods and significant interdiction cost savings to the government.
Content provided by Picture: HKTDC Research
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