GAO Report Identifies Challenges to Counterfeit and IP Enforcement

"The risks associated with the types of counterfeit goods we purchased can extend beyond the infringement of a company's intellectual property rights," the report says. "For example, a UL investigation of counterfeit iPhone adapters found a 99 percent failure rate in 400 counterfeit adapters tested for safety, fire, and shock hazards and found that 12 of the adapters posed a risk of lethal electrocution to the user."

A Government Accountability Office report released Feb. 27 examines challenges that changes in the market for counterfeit goods pose to two enforcement agencies, U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), as well as to the private sector. Increasing sophistication of counterfeits can make it difficult for law enforcement officers to distinguish between legitimate and counterfeit goods, and the report notes that, according to CBP officers, because the quality of counterfeits is improving, inspecting and processing a seizure can be time consuming and often requires working with private industry to test potential counterfeits.

Also, the increased variety and quantity of counterfeit goods crossing the border complicate federal enforcement efforts. "As the range of counterfeit goods expands, CBP has a wider variety of goods to screen, which requires CBP officials to have in-depth knowledge of a broad range of products and of how to identify counterfeits. The overall volume of goods entering the country—including more than 11 million maritime containers; 13 million containers carried over land borders by truck or rail; and 250 million cargo, mail, and express carrier packages annually—can also be difficult to manage, according to CBP officials," it says.

The report was prepared at the request of U.S. Sen. Orrin Hatch, R-Utah, who chairs the Senate Finance Committee.

As part of its review done from September 2016 to January 2018, GAO purchased four frequently counterfeited consumer products -- shoes, travel mugs, cosmetics, and phone chargers. Of the 47 products it bought from third-party sellers on popular consumer websites, 20 were counterfeit, according to testing by the products' rights holders.

"The risks associated with the types of counterfeit goods we purchased can extend beyond the infringement of a company's IPR [intellectual property rights]," the report says. "For example, a UL investigation of counterfeit iPhone adapters found a 99 percent failure rate in 400 counterfeit adapters tested for safety, fire, and shock hazards and found that 12 of the adapters posed a risk of lethal electrocution to the user. Similarly, counterfeits of common consumer goods, such as Yeti travel mugs, may contain higher-than-approved concentrations of dangerous chemicals such as lead, posing health risks to consumers. According to ICE, seized counterfeit cosmetics have been found to contain hazardous substances, including cyanide, arsenic, mercury, lead, urine, and rat droppings."

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