Trends In International Litigation : International Business Lawyer & Attorney : Ed Joffe : Joffe & Joffe Law Firm : Miami, Florida Global Customs & Trade Issues

 
In a suit brought in Savannah, Georgia, Nike alleges that a customs broker made entry for 4,624 pairs of counterfeit Nike shoes valued by U.S. Customs at $183,157 by falsely identifying the goods as "ladies cotton woven pants". Nike further alleged that the broker identified MTC Marketing, Inc. of 11272 Leo Lane, Dallas TX 75229, as the importer of record and ultimate consignee of the counterfeit shoes, although MTC had never authorized that entry.

The complaint alleges that prior to filing the Entry documents, the broker’s sole knowledge concerning the Entry was the information it received via a phone call from an individual who identified himself as "Michael Mai", the "Vice President" of MTC. In fact, Michael Mai had no relationship of any kind with MTC. The customs power of attorney signed by Michael Mai was fraudulent and lacked both a notarization and/or corporate certificate attesting to the validity of the grant of the power of attorney. Moreover, the telephone contact number and email addresses provided by Michael Mai to D.L. Bynum were not connected to MTC.

Nike concluded that the Broker failed to use "reasonable care" in determining the nature of the goods covered by the Entry documents, and that the Broker’s actions represented acts in furtherance of the distribution and ultimate sale of the counterfeit shoes. Damages and injunctive relief were sought under the Lanham Act. The customs broker has not responded to the allegations.

Nike has filed a similar case in Newark, NJ against another customs broker who also acted as importer of record. Here too no response has been filed.
 

These actions exemplify a dangerous trend. Although customs brokers have some due diligence requirements, the law places the onus on the importer, not the broker, and the broker’s nominal fee for performing its services does not support the broader responsibilities, which Nike seeks to impose.
 

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Chanel, Inc. brought suit against Zhong Zhibing, a/k/a Zhong Zhiping under the federal trademark laws for illegally promoting, advertising, selling, offering for sale, and distributing products bearing exact copies of Chanel-registered trademarks in the Western District of Tennessee through various fully interactive commercial internet websites

After filing suit, Chanel hired several investigators to learn Defendant's name, physical address, electronic mail address, and other identifying information. One investigator purchased a Chanel-branded handbag, which was processed entirely online, which order included shipping and billing information, payment, and confirmation. The only contact information gleaned were several email addresses. Another investigator working in China was able to find the defendant through a telephone number, but never a physical address. As a result of its inability to find the defendant’s physical location, Chanel asked the court for leave to serve by email.

The Court noted that under Fed. R. Civ. Pro. 4(f), a plaintiff was required to use the Hague Convention for service of process in China. However, the Hague Convention did not apply if
a physical address did not exist. Rule 4(f) provides that a party may use an alternative means to affect service if two conditions are met: (1) the party obtains the permission of the court, and (2) an international agreement does not otherwise prohibit the means of service approved. See Fed.R.Civ.P. 4(f)(3)

Here, the court noted that service by e-mail did not appear to violate Chinese law. Article 84 of the Civil Procedure Law of the People's Republic of China states that “[i]f the whereabouts of a recipient ... is unknown ... the document shall be served by public announcement.”
Likewise, use of email under the facts of the case met the constitutionally mandated due process requirements of “notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”

Under all of those circumstances, the court allowed service by email.

Practice Pointer:  Counsel for Chanel  did its due diligence, including using a Chinese investigator,  in trying to find a physical address for the defendant and only then asked the court for leave to serve by email.  Absent a strong record of these efforts, the court it is unlkely the court would have granted the request.
 

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 In just four weeks, U.S. Customs and Border Protection officials at the Los Angeles/Long Beach seaport seized six shipments of counterfeit sunglasses arriving from China with a combined manufacturer’s suggested retail price of more than $18.6 million.

Louis Vuitton, Versace and Coach are among the Counterfeit Trademarks

“Stopping the importation of counterfeit and pirated merchandise continues to be a top priority for CBP,” said Christopher Perry, CBP acting director of Field Operations, Los Angeles. “These seizures are fine examples of the hard work the men and women of CBP perform to protect the American consumer and the economic vitality of our country.”

CBP officials seized a total 156,900 pairs of sunglasses in violation of Versace, Louis Vuitton, Dolce Gabbana, Lacoste, Coach, Emporio Armani and Bvlgary trademarks with a total domestic value of $151,564. The infringing merchandise was discovered on six different shipments during the period of March 13 to April 14.

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The 8th round of negotiations on the proposed Anti-Counterfeiting Trade Agreement (ACTA) was held in Wellington, New Zealand from April 12-16,  2010, hosted by New Zealand.

Participants in the negotiations included Australia, Canada, the European Union, represented by the European Commission, the EU Presidency (Spain) and EU Member States, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States of America.

The Participants have reported that good progress was made toward narrowing existing differences, in the areas of Civil Enforcement, Border Measures, Criminal Enforcement and Special Measures for the Digital Environment. In addition the participants held constructive discussions regarding the scope of intellectual property rights covered in ACTA.

In agreeing to release publicly this draft text in the particular circumstances of this negotiation, participants reaffirmed the importance of maintaining the confidentiality of their respective positions in trade negotiations.

ACTA will not interfere with a signatory’s ability to respect its citizens’ fundamental rights and liberties, and will be consistent with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) and will respect the Declaration on TRIPS and Public Health.

There is no proposal to oblige ACTA participants to require border authorities to search travellers’ baggage or their personal electronic devices for infringing materials. In addition, ACTA will not address the cross-border transit of legitimate generic medicines.

While the participants recognise the importance of responding effectively to the challenge of Internet piracy, they confirmed that no participant is proposing to require governments to mandate a ‘graduated response’ or ‘three strikes’ approach to copyright infringement on the Internet.

The participants agreed that the next meeting would be hosted by Switzerland in June 2010. They also reaffirmed their commitment to continue their work with the aim of concluding ACTA as soon as possible in 2010.

The draft is available  on the trade.ec.europa.eu website.
 

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 Vuitton, the proprietor of the Community trade mark ‘Vuitton’ and of a number of French national trade marks became aware that the entry, by internet users, of terms constituting its trade marks into Google’s search engine triggered the display, under the heading ‘sponsored links’, of links to sites offering imitation versions of Vuitton’s products and to sites of its competitors. Google offers a paid referencing service called ‘AdWords’. That service enables any business, by reserving one or more keywords, to obtain the placing of an advertising link to its site, accompanied by a commercial message. That advertising link appears under the heading ‘sponsored links’, which is displayed either on the right-hand side of the screen, to the right of the natural results, or on the upper part of the screen, above those results.
Vuitton brought an action against Google before a French court asking whether it is lawful to use, as keywords in the context of an internet referencing service, signs which correspond to trade marks, where consent has not been given by the proprietors of those trademarks.
The Cour de cassation (French Court of Cassation),referred these questions to the European Court of Justice, which ruled on March 23, 2010 that Google had not infringed. The decision is available at the European Court of Justice website.  

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As reported by John MacKenzie, an intellectual property attorney at the UK law firm, Pinsent Masons, a British court has held that UK authorities lack authority to seize counterfeit goods passing through the UK.

A haul of 400 fake Nokia phones was seized by Her Majesty's Revenue and Customs (HMRC) as they passed through Heathrow Airport. Nokia confirmed that they were fakes and asked HMRC to impound them under the Counterfeit Goods Regulations. The phones, though, were only in transit, travelling from Hong Kong to Colombia, both outside of the EU. HMRC refused to impound the phones because trade mark infringement could only have taken place if trading had taken place, and that was only possible if the goods had been put on the market.When Nokia sued, the High Court backed HMRC.
"Infringement of registered trade mark requires goods to be placed on the market and that goods in transit and subject to suspensive customs procedures do not, without more, satisfy this requirement," said Mr Justice Kitchin in the ruling. "A mere risk that the goods may be diverted is not sufficient to justify a conclusion that the goods have been or will be put on the market."
The High Court said that the Regulations did allow the impounding of goods if there was a risk that they would end up on the open market in the EU, but said that this was clearly not the case here.
The UK Regulations are derived from an EU regulation. Nokia has appealed the High Court ruling and the Court of Appeal has asked the EU's highest court, the Court of Justice, to decide whether or not fake goods in transit through the EU from one non-EU country to another can be seized by customs authorities.

This approach is in sharp contract with the practice of the US courts and the US Customs and Border Protection both of which consistently  have upheld the seizing of counterfeit goods even if only being transshipped through the US.
 

Surely the EU will correct this regulatory misstep. Until then Heathrow Airport will continue to be a funnel for the trafficking of counterfeit goods worldwide.
 

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As reported earlier today by Stephen Adams, Arts Correspondent of the Daily Telegraph, fans of Pink Floyd will be unable to buy their songs individually on websites like iTunes after lawyers for the rock band won a British High Court ruling against EMI.

Band members took the record label to court on Tuesday arguing it had broken a 1999 contract which expressly “ prohibits the sale of albums in any configuration other than the original configuration".  Robert Howe, QC, for Pink Floyd, had said this applied to all recordings including those distributed online. He said the band had wanted to maintain artistic control over their "seamless" albums, in all formats.

Elizabeth Jones, QC, for EMI, had argued the ban was limited to physical records. 
 

Earlier today Sir Andrew, Chancellor of the High Court, agreed with Mr Howe, and granted Pink Floyd the declaration they sought preventing  EMI from allowing the band's albums – including Dark Side of the Moon and The Wall – from being chopped up for sale as individual track downloads, a process known as 'unbundling'. The Pink Floyd case is thought to be the first time a band has succeeded in obtaining a court ruling preventing a label from selling its albums as individual online tracks. Sir Andrew said the purpose of the clause was to "preserve the artistic integrity of the albums".
 

This decision causes problems for record companies because iTunes, the biggest online music retailer, prefers artists to allow their albums to be sold as individual tracks. 
 

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A U.S. District Court Judge declined to find that  the registration prerequisite for statutory damages under the U.S. Copyright laws was preempted by the Berne Convention.

Elsevier B.V., Elsevier Inc., and Mosby, Inc. (collectively “Elsevier”) own or exclusively license copyrights in scientific books and journals which they offer to subscribers to their on-line database, ScienceDirect ®. A large percentage of those publications are created abroad and their foreign copyrights have not been registered in the United States. Elsevier alleged that Defendant Ingenix, Inc. (“Ingenix”) violated the terms of its subscriber agreement with Elsevier by allowing unauthorized access to the ScienceDirect ® database. In seeking statutory damages in a case filed in the US District Court for the Southern District of New York, Elsevier assered  that Article Five of the Berne Convention for the Protection of Literary and Artistic Works (the “Berne Convention”) conflicts with § 412 of theUS Copyright laws  to the extent that it conditions an award of statutory damages and attorney's fees for infringement of a Berne Convention copyright on the registration of that copyright in the United States.

Article Five of the Berne Convention provides that “the enjoyment and the exercise of [rights under the Convention] shall not be subject to any formality.” Elsevier argues that the Berne Convention superseded § 412 of the Copyright Act of 1976 because statutory damages and attorney's fees are integral to the enjoyment and exercise of foreign copyrights.

The US District Court noted that that argument requires a finding that the Berne Convention was self-executing and became law upon ratification. However, in adopting the Berne Convention Implementation Act of 1988 (the “Implementation Act”), Congress declared that the Berne Convention was “not self-executing under the Constitution and laws of the United States”; that “[t]he obligations of the United States under the Berne Convention may be performed only pursuant to appropriate domestic law”; and that “[t]he amendments made by this Act ..., together with the law as it exists on the date of the enactment of this Act [October 31, 1988], satisfy the obligations of the United States in adhering to the Berne Convention and no further rights or interests shall be recognized or created for that purpose.” Berne Convention Implementation Act of 1988, Pub.L. No. 100-568 § 2, 102 Stat. 2853 (codified as amended at 17 U.S.C. § 101 et seq.)

The court concluded that since the Berne Convention is not self-executing, it cannot serve as the basis for a claim of preemption under Article VI of the United States Constitution.

This decision, although correct on the law, highlights a bias in our copyright laws. We cannot complain about inequities in other countries' IP rights unless we address this issue in our own laws.

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In 1976 Andrew Ainsworth was hired to make helmets for the Imperial storm troopers in the classic Star Wars films. . Mr Ainsworth made 50 helmets, for which he was paid £20 each. He also made equipment for other characters, earning about £30,000 from the Star Wars films. Aware of the demand for Star Wars memorabilia, in 2004 Ainsworth starting making and selling these helmets from the original molds.

Lucasfilm sued him in the United States. He did not defend the and a California court awarded $20million in damages against him. When Lucasfilm tried to enforce its judgment in Britain, the trial court ruled that the models were not sculptures and so did not have copyright protection, which would extend 70 years beyond the death of their creator. Instead he ruled that the models were industrial designs, which could be protected for only 15 years.

On December 17, 2009, The British High Court dismissed Lucasfilm’s appeal and said that the helmet and armor had a “utilitarian” rather than artistic purpose. They also ruled that Lucasfilm could not enforce its US copyright in Britain, but agreed that Mr Ainsworth did not own the copyright.

When asked how he might celebrate, Mr Ainsworth said: “Maybe we’ll go and find another galaxy.” Lucasfilms is considering an appeal to the new British Supreme Court.

This is a bad decision. Under U.S. law, the copyrightability of sculptural works is subject to a requirement that the work itself be a work of art, that is, a work of some minimal—but not necessarily meritorious—creative or artistic authorship.
 

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Matthew Saltmarch reported in the New York Times that a French court ruled on Friday that Google infringed copyrights by digitizing books and putting extracts online without authorization, dealing a setback to its embattled book project.The court in Paris ruled against Google after a publishing group, La Martinière, backed by publishers and authors, argued that the industry was being exploited by Google’s Book Search program, which was started in 2005.The court ordered Google to pay over 300,000 euros, or $430,000, in damages and interest and to stop digital reproduction of the material. The company was also ordered to pay 10,000 euros a day in fines until it removed extracts of some French books from its online database.

Google said it believed that it had complied with French copyright law and that it planned to appeal the decision."We believe that displaying a limited number of short extracts from books complies with copyright legislation both in France and the U.S. — and improves access to books,” said Philippe Colombet, who is responsible for Google’s books partnership in France.Mr. Colombet said he did not know whether the company would immediately remove the excerpts or pay the fine; Google’s lawyers were still examining the ruling. He also said there would be no impact on Google’s settlement with publishers and authors in the United States, an agreement that would allow the company the right to digitize, catalog and sell millions of books online that are under copyright protection.

La Martinière, based in Paris, first filed the suit in 2006 claiming damages against its publishing houses: Editions du Seuil of France, Delachaux & Niestlé of Switzerland and Harry N. Abrams of the United States.Those publishers, supported by the French Publishers’ Association and an authors’ group, had argued that scanning books was an act of reproduction that Google should pay for. They had demanded that Google be fined millions of euros.They accused Google of letting users browse the content without paying for it, and of reaping revenue from advertisers but not adequately compensating the creators and original publishers of the works.

Yann Colin, a lawyer for La Martinière, expressed his satisfaction with the result and said his client hoped that the level of the fine would be increased.The court, he said, had been “a bit rapid” in its assessment of damages, given that the three publishing houses claim that about 10,000 of their works were infringed.

Google has so far scanned 10 million books through partnerships with libraries in its project to put the world’s literature online. Over half of the books are in languages other than English.Those include books under copyright, of which only extracts can be previewed free. In these cases, Google directs users to sites where they can buy books or libraries where they can borrow them. Other books are in the public domain and can be read and downloaded free.

The project has proved especially controversial in France. Here, politicians including President Nicolas Sarkozy have pushed for a broader public digitization program, apparently wary of offering Google the chance to capitalize on the country’s cultural heritage.Mr. Sarkozy pledged nearly 750 million euros earlier this month toward the computer scanning of French literary works, audiovisual archives and historical documents, an announcement that underscored his government’s desire to maintain control over France’s cultural heritage in an era of digitization.The settlement in the United States outlined a plan to create a database of in-print and out-of-print works. It includes measures to find and compensate authors but covers only books published in North America, Britain and Australia, and any books registered with the United States Copyright Office.

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Trademark owners must carefully adhere to any license agreements with Chinese companies.  Kathrin Hille, Taipei correspondent for the Financial Times reported from Beijing that on November 18, a Chinese court ruled that Microsoft infringed a Chinese software maker's intellectual property rights.   Microsoft’s use of two Chinese fonts developed by Zhongyi Electronic, a Beijing-based software company, was not covered by a license agreement between the two, the Beijing No 1 Intermediary People's Court said in a verdict. Once the ruling takes effect, Microsoft must stop selling all PC operating systems that use the fonts including the Chinese language editions of the second edition of Windows 98, Windows 2000, Windows XP and Windows Server 2003.

Hille reported that  Zhongyi said the verdict had highlighted that every Chinese-language Windows operating system included Chinese intellectual property rights because the Chinese character database and Chinese language input system were developed by locals. "It can be said that the support from the Chinese character database and the input system are a pillar for the windfall profits Microsoft is extracting from China. Microsoft, which has always presented itself as a forceful protector of intellectual property rights and blamed the Chinese people for 'piracy', has actually been infringing Chinese intellectual property rights," Zhongyi said.

  Aaron Back of  Dow Jones Newswires  reported that Microsoft spokeswoman Joanna Li didn't directly comment on whether the company had halted sales of the operating systems in China, but said, "we do not expect the ruling to impact product sales."   Microsoft plans to appeal it.  "We believe our license agreements with the plaintiff cover our use of the fonts," Microsoft said in the statement.

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