Counterfeit Goods Crackdown in 2010

The number of counterfeit-product seizures rose dramatically in 2010, reaching nearly 20,000, while seizure value dropped significantly, according to the latest data.

There were 19,959 counterfeit-product seizures in fiscal year 2010, up 34 percent from 14,841 in 2009, according to a new report this week from U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE). However, the domestic value dropped 27 percent.

The total domestic value of the fake goods seized was $188.1 million, down from $260.6 million in 2009. Had the products been authentic, the total value of goods would have been $1.4 billion, based on manufacturers’ suggested retail pricing. The average value of an intellectual property (IP) rights seizure dropped from $17,566 in 2009 to $9,425 last year.

Trade in counterfeit and pirated goods poses significant threats to the United States’ innovation-based economy, the competitiveness of the nation’s businesses, the livelihoods of U.S. workers and, in some cases, national security as well as the health and safety of consumers. Counterfeit goods can also be used unknowingly in manufacturing, infrastructure or military applications. (The proliferation of counterfeit bearings, which are used between rotating and stationary components for machinery, is an emerging safety issue; more than $600,000 in bearings were seized in 2010, representing a sevenfold increase in domestic value.)

“The risks of counterfeit products go beyond damaging the reputation of a name on a label; consumers can put their health, or even their lives, at risk when they purchase seemingly harmless items such as medicines, perfume and holiday lights,” CBP Commissioner Alan Bersin said in an announcement of the findings. “Ultimately, the cost of purchasing a fake product is much greater than the savings and may result in catastrophic consequences.”

Last year, there was a dramatic jump in consumer safety and critical technology seizures due to an increased emphasis on enforcement by the Department of Homeland Security. The number of consumer safety and critical tech seizures increased from 10 percent to 15 percent from 2009 to 2010. Seizures of products that could have harmed consumers, vital infrastructure and national security soared 97 percent over the previous year and accounted for 23 percent of all IP rights seizures by domestic value.

China continues to be the No. 1 source for counterfeit and pirated goods seized, accounting for 66 percent ($124.6 million) of the total domestic value of seizures. Earlier this year, China announced it would increase measures to improve IP rights enforcement in an effort to crack down on counterfeit products.

For the fifth consecutive year, footwear was the top product seized, representing more than 24 percent of the entire domestic value of IP rights-infringing goods. After footwear, the remaining top 10 categories of counterfeit products seized were consumer electronics, apparel, handbags/wallets, optical media, computers/hardware, cigarettes, watches/parts, jewelry and pharmaceuticals. The quantity of fake computer hardware increased fivefold from 2009 to 2010, including a $2.3 million ICE seizure that included counterfeit military-grade semiconductors.

Over the past decade, IP rights violations have surged, as reflected in the 400 percent rise in seizures. The first two months of FY2010 saw more seizures than all of FY2001.

In a separate report this week, the Office of the U.S. Intellectual Property Enforcement Coordinator laid out 20 legislative recommendations to Congress designed to improve intellectual property enforcement.

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