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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 2018 (October 2017 through September 2018). The total number of IPR seizures fell by 9.8 percent from 34,143 to 33,810 following growth of 8.2 percent in FY 2017, 9.3 percent in FY 2016 and 24.7 percent in FY 2015. The value of IPR seizures in terms of the manufacturer’s suggested retail price rose 15.7 percent from US$1.21 billion to US$1.40 billion, following a 12.8 percent drop in FY 2017 as well as growth of 2.2 percent in FY 2016 and 10.0 percent in FY 2015.

Express shipment seizures accounted for 64.0 percent (21,632) of all seizures in FY 2018, up from 59.8 percent (20,417) in FY 2017, 55.0 percent (17,363) in FY 2016 and 51.6 percent (14,897) in FY 2015, while mail seizures represented 28.5 percent (9,643) of all seizures during this past fiscal year, down from 29.3 percent (9,992) in FY 2017, 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 39.2 percent of all seizures in MSRP terms (US$549.2 million) in FY 2018, up from 35.6 percent (US$429.3 million) in FY 2017 but down from 44.4 percent (US$614.5 million) in FY 2016.

While cargo seizures represented only 4.9 percent of all seizures in FY 2018 at 1,673, they accounted for 32.0 percent of the total value of seized merchandise in MSRP terms at US$447.9 million. By comparison, there were 2,628 cargo seizures valued at US$397.5 million in FY 2017 as well as 1,621 cargo seizures valued at US$457.7 million in FY 2016.

Watches and jewellery remained the most seized commodity by value in FY 2018 while wearing apparel continued to be the most seized item. Watches and jewellery topped the seizure list in terms of estimated MSRP with 44.2 percent of the total or US$618.2 million, up from 38.1 percent or US$460.2 million in FY 2017 but down from 47.3 percent or US$653.6 million in FY 2016. Handbags and wallets ranked second with a 16.2 percent share or US$226.5 million, down from 19.4 percent or US$234.5 million in FY 2017 and 16.9 percent or US$234.1 million in FY 2016. Pharmaceuticals and personal care products ranked third with a 9.4 percent share or US$131.5 million in FY 2018, followed by wearing apparel and accessories with an 8.2 percent share or US$115.2 million, and consumer electronics with a 6.4 percent share or US$89.6 million.

Wearing apparel and accessories remained atop the rankings in terms of the total number of seizures with 6,098 in FY 2018, up from 5,223 in FY 2017 but down from 6,406 in FY 2016. Footwear ranked second with a total of 4,728 seizures in FY 2018, up from 4,224 in FY 2017 and 3,630 in FY 2016. Following at a distance were watches and jewellery with 4,291 seizures in FY 2018 (down slightly from 4,297 in FY 2017 but up from 3,407 in FY 2016),  handbags and wallets with 3,593 (up from 3,266 in FY 2017 and 3,184 in FY 2016), consumer electronics with 3,388 (down from 4,137 in FY 2017 and 5,043 in FY 2016) and consumer products with 2,816 (down from 3,912 in FY 2017).

Mainland China again topped the list of IPR infringers in FY 2018, accounting for 54.4 percent of the MSRP of seized goods at US$761.1 million, up from 46.0 percent or US$554.6 million in FY 2017, 44.6 percent or US$616.9 million in FY 2016, and 51.5 percent or US$697.1 million in FY 2015, but down from 63.0 percent or US$772.6 million in FY 2014 and 67.7 percent or US$1,180.9 million in FY 2013. Hong Kong remained in second place with a 31.5 percent share or US$440.3 million in FY 2018, down from 32.0 percent or US$386.2 million in FY 2017, 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, and 25.1 percent or US$437.5 million in FY 2013.

India remains the third largest source of seized goods with a total MSRP value of US$20.0 million in FY 2018, up from US$8.3 million in FY 2017 and US$14.7 million in FY 2016, while South Korea ranks fourth with US$10.1 million (up from US$4.2 million), Canada ranks fifth with US$7.8 million (up from US$3.0 million), Turkey ranks sixth with US$5.8 million (up from US$5.0 million) and Vietnam ranks seventh with US$5.2 million (up from US$4.4 million).

Mainland China also topped the list of IPR infringers terms of total seizures, with the number of seizures at 15,674 in FY 2018. This was down from 16,538 in FY 2017 and 16,417 in FY 2016 but up from 14,164 in FY 2015 and 10,493 in FY 2014. Hong Kong ranked second with a total of 13,785 seizures in FY 2018, up from 13,357 in FY 2017, 11,462 in FY 2016, 9,724 in FY 2015 and 8,667 in FY 2014. Turkey ranked third with 618 seizures in FY 2018, followed by India with 439 and Taiwan with 408.

Other statistics of note include the following.

  • There were 381 arrests (down from 457), 296 indictments (up from 288) and 260 convictions (up from 242) for intellectual property crimes.
  • CBP completed 203 exclusion order enforcement actions (shipments seized and excluded), up from 115 in FY 2017, with an estimated MSRP of US$968,803, down from US$1.87 million.
  • CBP’s Integrated Trade Targeting Network conducted 26 national-level IPR trade special operations (up from 12) and 103 local operations targeting high-risk shipments at seaports, airports, international mail facilities and express carrier hubs, resulting in 4,891 seizures (up from 1,845) with an estimated MSRP of US$94 million, up by 104 percent from FY 2017.
  • CBP’s Centers of Excellence and Expertise initiated 24 of 26 national operations, up from 6 of 27 in FY 2017.
  • More than 90 percent of IPR-related seizures occurred in the international mail and express environments and a majority of those fell under the US$800 de minimis threshold.
  • The voluntary abandonment pilot programme conducted in partnership with the Express Association of America and its members was officially concluded.
Content provided by Picture: HKTDC Research
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