Last week a federal court judge in Savannah, Georgia denied the request by a Houston-based customhouse brokerage to transfer a case from Savannah to Atlanta, where the broker maintains an office that prepared entry documentation for an import that arrived at the Port of Savannah. While the denial of that motion to transfer seems irrelevant enough, the plaintiff in the case is Nike, Inc. And the case does not involve an error or omission that the broker made when entering a shipment for Nike. Instead, the lawsuit against the broker is for trademark infringement and counterfeiting.
Nike filed its lawsuit earlier this year, seeking a preliminary and permanent injunction, damages, costs, and attorney fees due to the broker’s alleged infringing conduct. According to the complaint, the broker received a call from a person identifying himself as a vice president of an importing company that did not do any prior business with the broker. The broker received a signed POA from that person, who actually was not a representative of the supposed importer. The POA lacked a notary or corporate seal. Based on the POA, the broker filed an entry for what was described as “ladies cotton woven pants.” The shipment, as it turned out, actually consisted of more than 4,000 pairs of counterfeit Nike shoes valued by CBP at over $180,000. The shipment also included more than 5,000 counterfeit Chanel, Coach, and Louis Vuitton handbags.
Nike alleges that the broker filed fraudulent entry documents and that in order to file any entry documents, the broker had to show that it had a “sufficient interest” in the goods and that it had exercised due diligence in obtaining the POA. The lawsuit alleges that the broker did not confirm with the supposed importer that it was aware of the entry or that it had a vice president by the name of “Michael Mai.” The broker also did not confirm that the supposed importer used a generic yahoo.com email account that it received from “Michael Mai” before attempting to enter the shipment in the Port of Savannah. In other words, the broker failed to use “reasonable care” in its handling of the shipment.
In the lawsuit, Nike requests injunctive relief, as well as monetary damages under the Lanham Act that could include between $1,000 and $200,000 per trademark per type of goods sold, and up to $2,000,000 if the court finds the broker’s “use” of the counterfeit mark was willful.
Whether Nike gets a slam dunk judgment in the case remains to be seen. But Nike is certainly sending a strong message to customs brokers – pay attention and exercise the same reasonable care that legitimate importers are required to exercise or Nike will sue the cotton woven pants off of you.
Showing posts with label CBP. Show all posts
Showing posts with label CBP. Show all posts
10 November 2010
14 September 2010
CBP “Clarifies” Impact of Forms 28/29 on Prior Disclosures
In response to a February 24, 2010 request from the American Association of Exporters and Importers (AAEI), U.S. Customs and Border Protection (CBP) has attempted to clarify whether a CBP Form 28 (Request for Information) and CBP Form 29 (Notice of Action) affect an importer’s ability to make a valid prior disclosure.
In the response, CBP referred to T.D. 98-49 (63 Fed. Reg. 29126, May 28, 1998) in which it disagreed with a commenter that CBP Forms 28 and 29 could not be considered written evidence of commencement of a formal investigation. In T.D. 98-49, CBP explained that it would consider “the substance of the information contained” in the 28/29s and that it would treat each matter on a case-by-case basis, examining the specific facts and circumstances of each case.
CBP’s response to AAEI’s request made clear that as “a matter of law” CBP Forms 28/29 “may be considered a ‘commencement document’ for prior disclosure purposes.” It went on to state that, as a matter of policy, Form 29 will be used as evidence that a formal investigation has been commenced and giving notice to the importer of the investigation. CBP further stated that, as a matter of policy, Form 28 “alone should not be routinely considered a ‘commencement document’” under the prior disclosure regulations. CBP also stated it would be issuing clarifying guidelines setting out the circumstances under which a Form 28 may be used as a “commencement document.”
In its response, CBP clarified that importers should never treat a Form 28 lightly. Instead, as this firm has always advised, importers receiving a CBP Form 28 should stop, analyze, investigate, and thoroughly consider what information is being requested and assess the importer’s potential entire exposure before responding. In this way, the importer and its counsel can determine whether a valid prior disclosure can be and should be made to CBP.
In light of CBP’s response to the AAEI’s request, importers should be even more cautious when receiving CBP Forms 28/29 and more deliberative in the response and decision of whether to submit a prior disclosure.
In the response, CBP referred to T.D. 98-49 (63 Fed. Reg. 29126, May 28, 1998) in which it disagreed with a commenter that CBP Forms 28 and 29 could not be considered written evidence of commencement of a formal investigation. In T.D. 98-49, CBP explained that it would consider “the substance of the information contained” in the 28/29s and that it would treat each matter on a case-by-case basis, examining the specific facts and circumstances of each case.
CBP’s response to AAEI’s request made clear that as “a matter of law” CBP Forms 28/29 “may be considered a ‘commencement document’ for prior disclosure purposes.” It went on to state that, as a matter of policy, Form 29 will be used as evidence that a formal investigation has been commenced and giving notice to the importer of the investigation. CBP further stated that, as a matter of policy, Form 28 “alone should not be routinely considered a ‘commencement document’” under the prior disclosure regulations. CBP also stated it would be issuing clarifying guidelines setting out the circumstances under which a Form 28 may be used as a “commencement document.”
In its response, CBP clarified that importers should never treat a Form 28 lightly. Instead, as this firm has always advised, importers receiving a CBP Form 28 should stop, analyze, investigate, and thoroughly consider what information is being requested and assess the importer’s potential entire exposure before responding. In this way, the importer and its counsel can determine whether a valid prior disclosure can be and should be made to CBP.
In light of CBP’s response to the AAEI’s request, importers should be even more cautious when receiving CBP Forms 28/29 and more deliberative in the response and decision of whether to submit a prior disclosure.
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