WORLD TRADE  
ORGANIZATION   
 IP/C/W/570  
31 May 2012  
 (12-2881 ) 
  Council for Trade -Related Aspects of  
Intellectual Property Rights  Original:   English  
 
 
 
SECURING SUPPLY CHAI NS AGAINST COUNTERFE IT GOODS  
 
Communication from the United States  
 
 
 The f ollowing communication, dated 30 May 2012,  is being circulated at  the request of the 
delegation of the United States.  
 
_______________  
 
 
I. INTRODUCTION  
1. The United States offers this submission on enforcement of intellectual property rights and 
supply chain m anagement as a contribution to the constructive exchange of information, within the 
TRIPS Council, on the experiences of Members in implementing Part III of the TRIPS Agreement.  
The United States reiterates its view that enforcement -related challenges sur rounding infringement of 
intellectual property rights are of concern to all Members.  In this light, the TRIPS Council can 
continue to make a positive contribution to addressing these problems through a constructive 
exchange of views and experiences.  
2. Infringement of all intellectual property rights (IPR) is a concern to the United States, but 
trademark counterfeiting is considered to be particularly troubling, because in addition to the resulting 
negative economic consequences, counterfeit goods can pose a serious threat to the health and safety 
of consumers.  Additionally, globalization, the Internet, and advanced technology have made it easier 
for counterfeiters to infiltrate supply chains and increase the availability of these products in markets 
around t he world; thus, creating an additional challenge.  
3. In March of 2012, the United States Department of Commerce Economics and Statistics 
Administration and the United States Patent and Trademark Office published a report that described 
the importance of intel lectual property (IP) to the United States economy.1  The report identified 
75 industries (from among 313 total) as IP -intensive, but concluded that all industry rely upon IP to 
some extent.  Of those industries that were the most IP intensive, they direct ly accounted for 
27.1 million American jobs or 18.8 per  cent of all employment in the economy in 2010.  Furthermore, 
the report explains that a substantial share of IP -intensive employment in the United States was in the 
60 trademark -intensive industries, with 22.6 million jobs in 2010.  Although this report focuses on US 
industry, many of the industry sectors represented in the report are global or not specific to the United 
States.  A recent research report released by the Economy and Community Investigat ive Institute at 
Indonesia 's School of Economics (LPEM -FEUI) found that Indonesia lost up to Rp43.2 trillion in 
indirect tax income from counterfeit product sales in 2010. [About  $4 billion lost]2  In addition, the 
                                                      
1 Intellectual Property and the U .S. Economy: Industries in Focus, is available at: 
http://www.uspto.gov/news/publications/IP_Report_March_2012.pdf . 
2 http://www.thejakartapost.com/news/2011/11/04/fake -products -cost-ri-rp-432t-lost-taxes.html .   IP/C/W/570  
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  East African Community (Burundi, Kenya, R wanda, Uganda, and Tanzania) reports more than 
$500  million in unpaid taxes as a result of counterfeit goods.3  Tanzania in particular reports losing 
between $370 -617 million per year due to tax evasion related to counterfeit goods.4  So, although all 
industry sectors benefit from IPR protection, trademark protection is particularly important to industry 
around the world.  
4. Counterfeit goods pose a serious threat to health and safety.  Counterfeiters are not concerned 
with maintaining the quality standard of the brand owner; therefore, a counterfeit good is often made 
with inferior, unsuitable and sometimes dangerous substances.  If the product, among other things, is a 
consumable, a vehicle part, or involves a safety function, the consequences can be fatal.  For example, 
Bendix, a leading supplier of safety technology for vehicles has reported that millions of dollars of 
Bendix look -alike valve and brake products reach the automotive after -market.  They report that they 
have seen air dryers that were filled wi th kitty litter instead of desiccant (a hydroscopic substance that 
induces or sustains a state of dryness).  There have also been reports of brake pads made of 
compressed grass, sawdust and other materials completely inappropriate for use on brake pads.  
 
5. This paper provides recent data on the growing scale of IPR infringement detected in the 
United States, as measured by seizures of infringing imported goods by US customs authorities 
(US Customs and Border Protection).  The paper discusses national, bilater al and plurilateral 
initiatives, as well as industry -led initiatives, to address counterfeiting.  
 
II. RECENT DATA ON CUSTO MS SEIZURES OF IPR I NFRINGING GOODS  
6. US Customs and Border Protection (CBP) is the border agency within the Department of 
Homeland Securit y charged with management, control and protection of US borders.  CBP is charged 
with enforcing intellectual property rights (IPR) while facilitating the flow of legitimate trade across 
the border.  CBP devotes substantial resources to targeting, intercept ing, detaining, and seizing 
shipments at the border containing IPR infringing goods.  As part of these efforts, seizure data is 
collected and researched, and this data is used as a tool for future interdictions and for guiding efforts 
to improve internatio nal cooperation in the area of border enforcement.  
7. US Immigration and Customs Enforcement (ICE) is one of the primary US law enforcement 
agencies involved in investigating IPR violations involving the illegal production, smuggling, and 
distribution of coun terfeit or pirated products.  The ICE Homeland Security Investigations (HSI) 
directorate, identifies, disrupts, and dismantles criminal organizations and the complex systems used 
to launder funds generated from intellectual property rights violations.  The ICE HSI led National 
Intellectual Property Rights Coordination Center (IPR Center) stands at the forefront of the 
US Government 's response to global intellectual property theft. The IPR Center brings together 
20 partners, which includes 16 key federal age ncies, Interpol, Europol and the governments of Canada 
and Mexico in a task force setting.  The task force structure enables the IPR Center to effectively 
leverage the resources, skills, and authorities of each participating agency and provide a 
comprehens ive response to IP theft.  Among the many tools used by the IPR Center, seizure data is a 
major resource utilized in the IPR Center 's enforcement efforts.  
8. The Annex to this document is a selection of recent statistics and graph available from CBP 
and ICE.   As indicated in the Annex, the United States continues to confront IPR infringing products  
 
                                                      
3 http://www.a -cappp.msu.edu/files/AFRICABACKGROUNDER.pdf . 
4 http://www.a -cappp.msu.edu/files/AFRICABACKGROUNDER.pdf .  IP/C/W/570  
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  at the border, on a massive and increasing scale.  The following points, drawn from data for Fiscal 
Year (FY) 2011 (October 2010 -September 2011), are particularly  notable:  
 The value of infringing goods seized by CBP and ICE in FY2011 reached $178.3 million, 
and the number of seizures reached 24,792.  The total number of IPR seizures in FY2011 
increased by 24  per cent  compared to FY2010 and it is a 325  per cent  increase over the past 
decade.  The FY2011 number of seizures is the highest in the history of CBP.  
 
 Consumer electronics was the top commodity seized in FY2011, with the value of seizures 
increasing by 16  per cent  compared to FY2010.  Approximately one -third of the seized 
goods in this category were infringing cellular telephones.  
 
 Over the past five years, the trade in counterfeit goods has shown a marked shift towards 
using international mail and express courier services to transport this illegal merchandise . 
 
 An important factor contributing to the increased use of mail and express courier services is 
the continued growth of websites selling counterfeit merchandise directly to consumers.  
 
9. The significant increase in seizures recorded in FY2011 means that the  expanding scope of 
global counterfeiting activity will remain an important preoccupation for the United States 
Administration, Congress, business community, and consumer groups.  Additional information and 
statistics can be found on the CBP website.5   
III. US INITIATIVES TO SECUR E SUPPLY CHAINS  
A. US BORDER ENFORCEMENT – AUTHENTICATION AND RISK MODELLING  INITIATIVES  
10. As counterfeiters continue to improve their criminal enterprises by using increasingly 
sophisticated tools that make their counterfeit goods appear a uthentic, CBP requires advanced tools 
and technologies to improve its detection of counterfeit goods.  
Enforcement Tools And Technology Highlights  
 
 To improve targeting to focus inspections on imports that present a high risk for IPR 
infringement, CBP con tinually refines its innovative IPR predictive risk model for targeting 
ocean cargo.  The agency is currently developing a model for the express carrier environment 
as IPR risk has grown significantly for this mode of transport.   
 
 CBP recently acquired ha ndheld Raman analysers to enable officers to authenticate 
pharmaceuticals on -the-spot.  This on -the-spot authentication will improve CBP 's ability to 
prevent counterfeit pharmaceuticals from reaching consumers where they could pose 
significant danger to pu blic health.  CBP is currently working with rights holders to obtain 
reference libraries for pharmaceuticals to optimize the potential of these devices in 
deployment to the ports.  
 
 At least one other WTO Member, Nigeria, is also using a similar technology at their ports of 
entry.  CBP would like to partner with Nigeria by sharing information and experiences to 
                                                      
5  http://www.cbp.gov/linkhandler/cgov/trade/priority_trade/ipr/ipr_communications/  
seizure/ipr_seizures_fy2011.ctt/ipr_seizure_fy2011.pdf  
 
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  facilitate effective deploying and utilization of these tools to ensure that consumers of both 
Member  countries are not harmed by dangerous counterfe it pharmaceuticals.  
 
 CBP has deployed mobile smart phone devices that provide frontline officers with access to 
CBP targeting systems and other information.  Because of these devices, CBP frontline 
officers now receive real -time tactical targeting data whe n they are examining shipments 
away from desktop computers.  
 
 Right holders have traditionally provided customs officers with product identification guides 
when they provide training to customs officers in ports on their protected rights.  To better 
assist  CBP personnel with authenticating genuine articles and identifying counterfeit and 
pirated products, CBP now encourages right holders to submit product identification training 
guides electronically and posts these to its secure intranet website.  This mak es the guides 
readily available to CBP officers in ports throughout the country, including locations the right 
holder has not visited to conduct training.  
 
11. The methods used by CBP to identify counterfeit products are also being replicated in other 
countrie s.  In addition, other WTO Members have developed additional tools to reduce the market 
opportunities for counterfeits.  For example, Egypt promotes the legitimate trade of automotive parts 
by sponsoring a market for legitimate auto parts.  In addition, Ke nya provides training to 
pharmaceutical customs inspectors to curb trade in counterfeit pharmaceuticals.6 
B. IPR  CENTER - OPERATION CHAIN REACTION  
12. In furtherance of its mission, the IPR Center oversees Operation Chain Reaction, an initiative 
targeting counter feit items entering the Department of Defense (DoD) and US Government supply 
chains.  Counterfeiting is a continuously growing threat and can result in catastrophic outcomes.  In 
the area of defense, they can affect the integrity and reliability of weapons , endangering the safety of 
not only our service men and women but also the general public, and pose a risk to our national 
security.  This initiative is an effort among numerous US Government agencies, including the IPR 
Center, the US military and NASA.   
C. US PROCUREMENT – SECURING US GOVERNMENT PROCUREMENT SUPPLY CHAINS FROM 
COUNTERFEIT PRODUCTS  
13. As the purchaser of over $500 billion in goods and services per year, the US Government 
must ensure that it does not purchase counterfeit goods, secure its supply chain, and take the 
necessary steps to combat the evolving tactics of counterfeiters.  In 2010, the Office of the Intellectual 
Property Enforcement Coordinator (IPEC) introduced a Joint Strategic Plan on intellectual property.   
14. The Joint Strategic Plan es tablished a government -wide working group to prevent the 
purchase and use of counterfeit products.  The working group consists of subject matter experts to 
develop an anti -counterfeiting framework that is flexible enough to accommodate the wide variety of 
missions across the government and their different systems of procurement.  The Office of Federal 
Procurement Policy (OFPP), Department of Defense, Department of Justice, and NASA have 
assumed leadership roles within the working group based on their vast e xpertise with US Government 
procurement and anti -counterfeiting practices.  Other Member s include the Department of Commerce, 
                                                      
6 http://www.africasciencenews.org/en/index.php/health/63 -health/198 -interpol -partners -with-african -
celebrities -to-fight -counterfeit -medicine  
http://www.afriquejet.com/auto -parts -nigeria -expert -profers -solution -to-curb-fake-auto-parts -
2011052012714.html  
  IP/C/W/570  
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  Department of Energy, Health and Human Services, Department of Homeland Security, Department 
of Transportation, the Environmental Protection Agency, the Missile Defense Agency, the General 
Services Administration, the Small Business Administration, the Nuclear Regulatory Commission, 
and the National Reconnaissance Office.  
15. The main focus of this interagency working group is to ensure that the US Government has 
the neces sary tools to ensure that it does not purchase or use counterfeit products.  The working group 
is examin ing legislative authority, regulations, procurement policy and guidance, industry studies and 
reports, and interna tional anti -counterfeiting standards in order to identify areas where risk to the 
security of US Government supply chain from counterfeit parts can be reduced.  The working group 
developed six objectives to focus the group 's efforts to identify legislative , regulatory, or policy gaps 
and propose solutions to fill those gaps.  The six objectives are:   
 Counterfeit Risk Assessment  
 Supplier Requirements  
 Traceability  
 Testing and Evaluation of Goods  
 Counterfeit Training and Outreach  
 Enforcement Remedies  
16. The group is developing a government -wide strategy using tools that are already at the 
US Government 's disposal and creating new tools to combat the purchase or use of counterfeit goods 
by the US Government.  The strategy will focus on reducing the risk of c ounterfeit items entering the 
supply chain, dealing efficiently with any suspected counterfeit items that do enter the supply chain, 
and strengthening remedies against those who provide counterfeit items to the US Government.  
IV. THIRD COUNTRY CONSUM ER-BASED S OLUTIONS AND INNOVAT IVE 
SOLUTIONS  
17. The most commonly counterfeited automotive parts are brake shoes, brake pads, steering 
linkages, air filters, spark plugs, windshield wipers and interior parts.  In the United Arab Emirates, 
according to a brand protection  group, almost 70 per  cent of counterfeit products are automotive parts.  
These counterfeit products are understood to be responsible for about 50 per  cent of automotive 
accident fatalities in that country, as well as a number of other countries with signi ficant automotive 
part counterfeiting.7 
18. The automotive industry and government entities that are protecting consumers are fighting 
back with a number of initiatives.  The tools that are being used include education campaigns, radio 
frequency tags, serializ ation, smart phone technology, and other high tech tools.  These tools are 
reported to be helpful in the automotive parts industry, as well as a number of other industries, in 
fighting counterfeiting and in screening the supply chain to ensure that product s in the supply chain 
are legitimate.   
19. Educational campaigns alert consumers and customs officials to problems with counterfeit 
trademark products and instruct them as to how to identify counterfeit products.  For example, 
                                                      
7 http://www.havocscope.com/counterfeit -auto-parts  
 
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  legitimate auto parts makers can  provide customs officers with product identification guides when 
they provide training to customs officers in ports on their protected rights . 
20. Innovative technologies being used in a number of countries include:   
 Serialization:   This is the adding of ser ial numbers to a product – a standardized 
numerical identification for products, most frequently used for pharmaceuticals, 
blood products and biologics.  
 Bar code symbologies, such as GS1 -Databar, formerly called Reduced Space 
Symbology (RSS), and other gl obally recognized 2D Composite symbologies:  These 
are barcodes that can be scanned and are used on many types of consumer products 
(see example below).  
 
 Radio Frequency Identification (RFID) tags:  This is the use of a wireless non -contact 
system that us es radio -frequency electromagnetic fields to transfer data from a tag 
attached to an object for the purpose of automatic identification and tracking.  The tag 
contains electronically stored information which can be read from up to several 
meters away. Unli ke a barcode, the tag does not need to be within the line of sight of 
the reader and may be embedded in the tracked object.  
 Holograms and watermarks.  
 Anti-counterfeiting printing ink technologies:  These inks are used to invisibly mark 
surfaces of product s and documents.  
 Covert features on products:  These are hidden features included on a product or 
packaging and can only be exposed using special tools.  
 Smart phone technology:  By text messaging a unique code found on a product to a 
specific number, end customers can confirm at the point of sale that a product is 
genuine.  In addition, this technology can be used to provide frontline officers with 
access to targeting systems and other information.  Because of these devices, frontline 
officers now receive real-time tactical targeting data when they are examining 
shipments away from desktop computers.  This technology is being used in Ghana, 
India, Kenya and Nigeria and the United States, among others.  
 
V. INTERNATIONAL RESPON SES TO COUNTERFEITIN G 
21. Customs Autho rities are responsible for about 70  per cent  of counterfeit seizures globally.  In 
some instances, this percentage is even higher, e.g. in Europe the rate is 90  per cent .  In many cases, 
these authorities work together bilaterally and plurilaterally to add ress counterfeiting.  
A. BILATERAL EFFORTS  
22. Bilateral efforts to address counterfeiting can involve two countries working together to 
improve screening at their borders to reduce trade in counterfeit products between them.  One such  IP/C/W/570  
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  example is the Memorandum o f Cooperation signed in 2007 between the customs administrations of 
the United States and China.   
23. Bilateral agreements can also include technical assistance.  Another example of bilateral 
cooperation to address counterfeiting is a March 2011, Memorandum o f Understanding (MOU) 
between India and Nigeria.  According to press reports, pursuant to this MOU, Indian authorities will 
provide training and assistance to Nigeria 's National Agency for Food and Drug Administration and 
Control (NAFDAC).  In addition, th e MOU provides that India will pay for the costs of legal actions 
taken against counterfeiters linked to Indian manufacturers, assist Nigeria in confiscating assets from 
any Indian drug counterfeiters, and incentivize whistle blowing by paying an award for  tips that lead 
to the discovery of the source and producers of counterfeit drug products.8 
B. WORLD CUSTOMS ORGANIZATION  
24. The World Customs Organization (WCO) has a secure communications tool, Interface Public 
Members (IPM), that facilitates the exchange of information between the private sector and customs 
authorities, in order to improve the identification and seizure of counterfeit products.  The IPM 
provides trademark owners the opportunity to post product identification guides to the WCO website, 
making them accessible to WCO member customs authorities.   In addition, the IPM includes a 
genuine/fake database that highlights key aspects of elements such as brand name and product 
appearance, packaging and distribution routes, enabling trademark owners to gi ve customs officials 
valuable information to help them distinguish between genuine and fake products.  The genuine/fake 
database is easy for field customs officers to access using their own systems, in their own language.  
25. In April 2013, the WCO will host t he Global Congress on Combating Counterfeiting and 
Piracy in Turkey.  The Congress endeavors to establish a high level of public -private partnership to 
pursue collective enforcement action and to generate conditions which lead to greater investment of 
huma n and financial resources in enforcement measures.  
26. The WCO provides training/capacity building as requested by its members.  This capacity 
building promotes the exchange of views, experiences, research and best practices, and facilitates 
improved cooperati on between Customs administrations, the private sector and international 
organizations.  
C. INTERPOL  
27. Interpol has undertaken a number of activities to eliminate counterfeits from supply chains. 
Two examples of interventions include Operation Atlantique and Op eration Opson.9  These 
interventions show the range of products that are counterfeited, in the countries in which the 
interventions were taken, as well as in other countries.  
 Operation Atlantique:  This operation was held from April to June 2011 across fi ve countries 
in Western Africa.  This operation resulted in 16 arrests and the seizure of fake products 
                                                      
8 The Government of India's press release states that the bilateral effort will promote mutual trade in 
"good quality drugs, drugs testing and ana lysis, detection and prevention of supply of adulterated, fake, drugs.  
It will also enable education, training and capacity building of the personnel involved in this field. "  See 
http://meain dia.nic.in/mystart.php?id=530217428  See also:  
http://www.thisdaylive.com/articles/life -imprisonment -for-indians -shipping -fake-drugs -to-nigeria/88697/ ; 
http://www.newswatchngr.com/index.php?option=com_content&task=view&id=2984&Itemid=32 ; and  
http://www.biopharminternational.com/biopharm/News/Nigeria -Looks -to-Simple -Packaging -Controls -and-
Int/ArticleStandard/Article/detail/715623  
9 Interpo l website: http://www.interpol.int/Crime -areas/Intellectual -property -crime -and-
counterfeiting/Operations  IP/C/W/570  
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  worth more than $1.5 million.  Recovered products included soup cubes, computer supplies, 
African fabrics, plastic packaging used for food and water, ci garettes and CDs.  
 Operation Opson:  This operation focused exclusively on so -called everyday products.  The 
operation was held in November and December 2011 across ten European countries and 
hundreds of tons of fake and substandard food and drink were seiz ed during this operation.  
Among the products seized were substandard olive oil, tomato sauce, cheese, wine, fish, and 
confectionary . 
VI. CONCLUSION  
28. The United States has made it a priority to secure our supply chains in order to protect the 
welfare and intere sts of the American people.  Many other countries are doing the same.  
Governments must be one step ahead of the counterfeiters who are becoming more and more 
sophisticated in the way they manufacture and distribute their goods.  The techniques discussed i n this 
paper have been helpful in addressing the growing scale of IPR -infringing trade encountered in the 
United States.  In addition, the measures being undertaken by other country governments, as described 
above, are also reducing the market opportunitie s for counterfeit products.  These initiatives have 
been summarized here for the information of Members of the TRIPS Council with the aim to promote 
an exchange of information that can help eliminate counterfeits from the global supply chain.  
_____________ __ 
  IP/C/W/570  
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ANNEX 1  
 
 
Department of Homeland Security  
 
US Customs and Border Protection and US Immigration and Customs Enforcement  
FY 2011 Top IPR Commodities Seized  
 
 
Source : US Customs and Border Protection, Office of International Trade.  
 
 
__________  Consumer Electronics  Footwear  
Pharmaceuticals  
Optical Media  
Wearing Apparel  
Perfume/  
Cologne  All Other Commodities