[Federal Register Volume 60, Number 135 (Friday, July 14, 1995)]
[Proposed Rules]
[Pages 36249-36252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17065]



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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 133

RIN 1515-AB28


Copyright/Trademark/Trade Name Protection; Disclosure of 
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 
copyright, trademark, or trade name rights. The initial proposal is 
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 
copyright infringement; and, the disparity among the current 
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

    Copyright, Counterfeit goods, Customs duties and inspection, 
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.
    (c) Form of notice. * * *
* * * * *
    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.

* * * * *
    (c) Notice to trademark owner. When merchandise is seized, Customs 
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 
copyright owner files with the district director: * * *
* * * * *
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