Figure 2: Selected responses From Section 337 Surveya,b Firms indicating that counterfeit/infringing goods continued to enter the country after "Figures do not include firms indicating they had no basis to judge. The level of damage to consumer confidence in the product was not assessed in this survey. Several firms complained that Customs' inability to enforce their exclusion orders undermined the effectiveness of section 337 as a trade remedy. One firm commented that: [For the time and money involved for a small firm like Another stated that: "[W]e believe that the efforts and money expended to " Because of the lack of enforcement and high cost, firms commented that they would not use section 337 again to deal with imports of other types of counterfeit or infringing products. One stated that: "There are now many of our products being copied Customs' performance reportedly improves when it is assisted by Over 25 percent of the owner of the intellectual property right. the firms receiving exclusion orders and 35 percent of the firms that had recorded trademarks and copyrights undertook independent investigations and provided the results to Customs. Such information could include the names of companies importing counterfeit or infringing goods or information on particular shipments of such goods. Nearly 80 percent of the firms that provided information to Customs and expressed an opinion were satisfied with Customs' response to the information provided. One firm commented that: "Customs is most cooperative and efficient when placed erratic." Another stated that: "Customs usually must be informed and prodded to be Survey Respondents Point to Staff Limitations As Foremost Problem Respondents to both surveys expressed high regard for the work of port inspectors and generally noted the competence and helpfulness of port personnel. Reflecting these comments, one firm stated that it has "been impressed with the cooperative spirit and willingness to help exhibited by the Customs Service personnel." Respondents' comments pointed to staffing as the primary limitation on Customs' ability to protect intellectual property rights. One firm wrote that "individuals at the Customs service are most cooperative . but shortage of manpower has resulted Another stated that in less than satisfactory results overall." "it appears that the Customs Service may do what it can but with recommended that "we need more trained import specialists at ports of entry; need more trained inspectors at the major ports." Finally, one firm commented that "the only impediment to even better enforcement of the laws by Customs is the lack and shortage of personnel." Survey Respondents Suggest Ways to Strengthen Customs Efforts Survey respondents supported three proposals, two of which they volunteered, for enhancing the ability of Customs' present staff to protect U.S. intellectual property rights from counterfeit and infringing imports. Over 90 percent of our survey respondents who expressed an opinion believed that authorizing the International Trade Commission to direct Customs to seize goods and cause them to be forfeited would improve Customs' ability to enforce section 337 exclusion orders. In our August 1986 report--International Trade: Strengthening Trade Law Protection of Intellectual Property Rights (GAO/NSIAD-86-150)--we recommended that Congress give the International Trade Commission such authority, which would be intended to strengthen the deterrent effect of the exclusion order. If such a proposal were to become law, infringers would not only face the prospect of losing shipping costs but also the possibility that Customs would seize and dispose of their entire shipments. Several survey respondents suggested that Customs needs to shorten the 2 to 3 months it takes to inform the ports of a newly recorded trademark or copyright. A number of firms cited this delay as a major problem. One stated that "In my experience, it takes about 2-3 months to register a [copyright] with Customs. That is too long . . piratical copies slip by Customs." During this period, counterfeit and infringing goods may continue to enter the country even though the intellectual property right is legally protected from the time Customs approves the application for recordation. Until port inspectors are notified, they have no knowledge that they are to protect a particular trademark or copyright from infringing imports. In some cases, 3 months may constitute a significant portion of the entire market life of a product. Some consumer goods, such as those marketed in conjunction with newly released movies, have very short market lives. The survey responses also indicated that Customs could improve its performance by intensifying its efforts to elicit the support of intellectual property rights owners in identifying shipments containing counterfeit or infringing goods. This could be accomplished by providing an informational brochure or similar document to firms obtaining Customs assistance. Under current procedures, there is no formal mechanism for firms initiating section 337 proceedings to obtain any information from Customs. Firms recording trademarks or copyrights with Customs receive only confirmation letters and copies of the notices sent to the ports. As a result, they may not have realistic expectations of Customs' abilities or appreciate the need to provide assistance. |