Trade Facilitation and Trade Enforcement Act Enhances U.S. Intellectual Property Protections

Substantive changes to IP protection in the recently signed Trade Facilitation and Trade Enforcement Act of 2015 (the Act) may be advantageous to U.S. IP owners. However, many of the Act's enforcement tools still need to be implemented by the relevant agencies, so it is unclear how the legislation will affect current practice.

Background

President Obama signed the Trade Facilitation and Trade Enforcement Act of 2015 into law on February 24, 2016. The Act is a culmination of negotiations on trade priorities and Customs procedures that have been discussed in Congress since last summer. President Obama was quick to sign the Act into law and has touted it as an important tool for U.S. intellectual property protection. It covers a wide range of topics from duty evasion to modernizing and streamlining procedures at U.S. Customs and Border Protection (CBP), as well as changes to IP protection.

Key IP Provisions

These key provisions of the Act may enhance intellectual property protections for imported goods:

1. Collaboration with Rights Holders. CBP is now authorized to provide intellectual property owners with samples and unredacted images of detained and seized merchandise for examination and testing, if, in CBP's discretion, it would assist the agency in determining whether intellectual property is being infringed. CBP may only provide such samples under the Act if:
    
   1. The owner registers the intellectual property with CBP (in addition to registering with the U.S. patent and trademark office)
   2. The IP owner complies with any bond requirements of CBP
   3. Providing the samples would not compromise any ongoing law enforcement investigation or U.S. national security interests
   
   The Act requires CBP to adopt regulations to implement these changes within 180 days of February 24, 2016. To implement the new regulations, CBP may have to provide more comprehensive information about the detained or seized merchandise in the notice to the intellectual property rights holder than it currently provides. However, CBP regulations already allow the agency to share samples and unredacted images of potentially counterfeit merchandise with the intellectual property owner at time of detention or seizure, so it is unclear whether this enforcement mechanism will result in a discernible change from current practices.


2. Required Importer Registration and Risk Assessment Program. The Act requires importers to register with CBP for an importer of record number. CBP will develop the criteria importers must meet to receive such a number. The Act also requires CBP to create an importer risk assessment program to increase oversight of importers of record and to ensure enforcement of priority trade issues, such as the protection of intellectual property. Customs brokers must also disclose to CBP the identities of the importers for which they work. CBP must adopt regulations to implement these changes within 180 days of February 24, 2016.
   
   The importer of record and importer risk assessment programs could potentially provide additional protection for intellectual property holders. For example, it is possible that CBP could adopt a policy to deregister importers of record who repeatedly attempt to import infringing products and become the subject of repeated import seizures. It is currently unclear how the importer of record registration, the importer risk assessment program and the intellectual property protections of the Act may intersect.


3. National Intellectual Property Rights Coordination Center. The Act also formalizes the existence of the National Intellectual Property Rights Coordination Center within U.S. Immigration and Customs Enforcement of the Department of Homeland Security (the Center). The Center's duties include coordinating investigations of sources of infringing merchandise, training law enforcement agencies on investigation best practices, supporting the interdiction of infringing merchandise destined for the U.S., and collecting and disseminating information regarding intellectual property infringement. Although the Center already exists, the Act provides a statutory mandate for the Center.


4. Creation of New U.S. Trade Representative Post. The Act establishes a new post at the Office of the U.S. Trade Representative called the “Chief Innovation and Intellectual Property Negotiator.” This officer will conduct trade negotiations, enforce trade agreements relating to intellectual property, and take actions to address acts, policies and practices of foreign governments that have a significant adverse impact on the value of U.S. innovation.

Anticipated Impact

The Act may have a significant effect on protecting U.S. intellectual property rights against infringing goods, especially in the U.S. market. Through implementation of the Act, the Obama administration and its counterparts have made a significant effort to improve protections for U.S. consumers in reducing the inflow of counterfeit and adulterated products to consumer markets. Faegre Baker Daniels and FaegreBD Consulting will be monitoring implementation to assess the real-world impact of this legislation.

Read a signing statement from President Obama on signing H.R.644 into law.