Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
Learn the Basics of Customs and International Trade Policy and Procedure
Posts Tagged "refurbished cell phones"
In the past we wrote an article about importing remanufactured or refurbished cellular phones here. Based on frequent phone calls pertaining to this issue there is some additional information for importers of such products to know. Best to explain with the following fact pattern:
A U.S. company exports broken Apple and Samsung phones to a China factory for repairs. The phones may have various issues including failed battery, cracked screens, scratched or damaged housing i.e. backplate and front plate of the phone, or defective camera. These phones are then repaired to working condition and then imported back into the U.S. where they are intended to be sold in the secondary cell phone market. Unfortunately, U.S. Customs and Border Protection (“CBP”) detained the shipment based on reviewing the Intellectual Property Rights (“IPR”) of the cell phones. After thirty (30) days, if the importer does not provide sufficient evidence proving the authenticity of such cell phones CBP seizes said cell phones for violating Apple and Samsung’s IPR; specifically their trademarks. The importer is left confused as to why this happened with the understanding that these are used cell phones.
The most common reason for CBP’s seizure is the authenticity of the cell phones housing. When phones with housing issues are sent to China for repair the factories in China do not repair the same housing (e.g. buff the scratches out, fix cracks to the plastic, etc) or replace the housing with housing from another phone that was manufactured under a Samsung or Apple license. Rather, these factories manufacture their own housing without a trademark license or purchase the housing from factories who do not have a trademark license from the trademark holder. Consequently, all trademarks on the these housings are considered counterfeit by CBP. Here are examples of such trademarks:
Thus, for a company to legally import remanufactured or refurbished phones (1) read Part I; and (2a) the housing must come from an phone that was originally licensed by the trademark holder; or (2b) a factory that is licensed to manufacture housing parts to be used for repair. Alternatively, the housing must be generic i.e. contains none of the trademarks noted above like so:
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs attorney at (800) 549-5099 or (212) 202-0542. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into CBP seizures — about your company’s import situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.
There is a big market for used cell phones around the world. Accordingly, we come into contact with many entrepreneurs who are involved in the secondary cell phone market. As a result, we have handled many cases involving refurbished or remanufactured cell phones.
Your typical fact pattern involves a U.S. company that would export broken cell phones to a refurbishing center in a foreign country. Depending on the nature of repair, the cell phones would undergo a thorough repairing process before they are considered to be back in good working order. Subsequently, the cell phones are shipped back to the United States.
Prior to delivery to the importer, these now remanufactured or refurbished cell phones must clear through customs. U.S. Customs and Border Protection (“CBP” or “Customs”) is the responsible federal agency for determining the admissibility of such products. When it comes to investigation and delays for remanufactured or refurbished cell phones we have seen that questions involving intellectual property rights are most notably at issue. Specifically, Section 526(e) of the Tariff Act of 1930, as amended, provides that merchandise bearing a counterfeit mark within the meaning of Section 1127 of Title 15, that is imported in violation of Section 1124 of Title 15, shall be seized and, absent the consent of the trademark owner, forfeited for violations of the Customs laws. 19 U.S.C. Section 1526(e).
The first prong of section 526(e) requires that the imported merchandise bear a counterfeit mark as defined by section 45 of the Act of July 5, 1946 (the “Lanham Act,” codified as amended at 15 U.S.C. Section 1127. Section 45 of the Lanham Act defines the term counterfeit as “a spurious mark that is identical with or substantially indistinguishable from, a registered mark.” 15 U.S.C. Section 1127.
The second prong requires that the merchandise, in addition to bearing a counterfeit mark, shall have been imported in violation of section 42 of the Lanham Act, which provides:
Except as provided in subsection 1526 (d) of Title 19 . . . no article of imported merchandise . . . which shall copy or simulate a trademark registered in accordance with the provisions of this chapter . . . shall be admitted to entry at any customhouse of the United States . . . .
15 U.S.C. Section 1124. A “copying or simulating” trademark or trade name is one which may so resemble a recorded mark or name as to be likely to cause the public to associate the copying or simulating mark or name with the recorded mark or name. 19 C.F.R. Section 133.22(a).
Questions arise as to whether there is a violation of a trademark when one is selling remanufactured or refurbished goods under the original manufacturer’s U.S. trademark. As a general matter, it is not a violation to sell such goods without deceiving consumers provided that one attempts so far as possible to restore the original condition of the goods and full disclosure is made about the true nature of the goods i.e. that they are remanufactured or refurbished goods. Nitro Leisure Products, L.L.C. v. Achushnet Co., 341 F.3d 1356, 1361 (Fed. Cir. 2003). Accordingly, there is information one can provide to CBP to prove that your goods do not violate any trademark laws. This depends on the nature of remanufacturing or refurbishing done to the product, how it was imported, and the documents one has regarding their purchase.
If you find yourself in a position where your remanufactured or refurbished goods are detained or seized by CBP contact an attorney who is familiar with Customs and International Trade laws and regulations as well as the secondary cell phone market business.
For more information about an importing remanufactured or refurbished cell phone products or for assistance with any of the issues noted above, contact Abady Law Firm, P.C., at 800.549.5099, to speak with a international trade attorney today!
Have you received a letter from Customs that looks like this http://twitpic.com/9j9rll ?
U.S. Customs and Border Protection is the agency responsible for protecting our borders. Accordingly, Customs officials at seaports, airports, and other border crossings all over the U.S. have the authority to examine, detain, and/or seize merchandise entering or exiting the country. More often than not, importers and exporters are surprised and intimidated when they find out that the government has intervened in their business. As a result, it is best to provide my readers some basic knowledge in an effort to appease any distress from Customs intervention.
Customs officials have a laundry list of “red flags” when targeting merchandise; they are looking for drugs, non-compliance with the Food and Drug Administration, counterfeit goods, and currency among many others. When Customs decides to detain a particular shipment the merchandise is transferred to a Centralized Examination Station where officials sort through and intensely examine the contents of the shipment. During the detention Customs must provide an explanation for the detention (see previous post for more detail). It is important to note that Customs explanation for the detention may have been provided under the advisement of another federal agency – as Customs is the “enforcer” for all other federal agencies relating to the import/export of products. Here is an example: Customs detained a shipment of T-shirts from Canada due to the failure to provide documentation that the importer has the authority to utilize a logo that is a registered trademark.
If Customs find a violation, they will seize it and transfer it from the Centralized Examination Station to an official warehouse. Throughout this process the importer is charged storage fees which must be paid if Customs agrees to release the goods. Seizures are handles by a department in Customs known as Fines, Penalties, and Forfeitures (FP&F). An FP&F paralegal reviews the case and issues a seizure notice to the alleged violator. The seizure notice will give information regarding the identity of the merchandise, the location of the seizure, and citations to legal authorities. Generally, the alleged violator is given options 1) abandon the goods; 2) file a petition with customs within 30 days of the issuance date on seizure notice; 3) file an offer in compromise (this option is beneficial in specific circumstances – best to speak with an attorney first to confirm whether an offer is the right strategy); or 4) take the matter directly to court for litigation (you need to fill out the seized asset claim form and post a cost bond equal to 10% of the value of the seized merchandise, or $5,000, whichever is lower).
At this time it is highly recommended to contact a Customs attorney regarding your best options and strategy moving forward. If an attorney is hired, he/she would notify Customs that the alleged violator is being represented by counsel. Thereafter, generally, the attorney would make what is called a Freedom of Information Act Request (FOIA). This formal request is sent in order to gain access to records that customs has regarding the alleged violation.
If the petition option is chosen, the alleged violator is given an opportunity to explain to customs why the goods should be released. It is important to hire an attorney who knows the policies, procedures, and practices that customs has in place in order to convince customs to release your goods. Thereafter, customs will render a decision on the case and either grant or deny the petition. If denied, the alleged violator is given an opportunity to file a supplemental petition to which must state additional information not before provided to customs. Alternatively, the alleged violator can choose to file an offer in compromise whereby one can make an attempt to negotiate with customs by offering a monetary sum to settle the matter and release the goods.
As discussed, there are various options offered to the alleged violator under the law. It is best to consult with an attorney experienced in these matters to explain these options as they relate to a particular set of facts. TIME IS OF THE ESSENCE!
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs attorney at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into the Notice of Seizure — about your company’s import situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.