Federal Register / Vol. 77, No. 79 / Tuesday, April 24, 2012 / Rules and Regulations 24375 

§ 801.4 Recordingkeeping requirements. 

In accordance with section 3104(b)(1) 

of title 22 of the United States Code, 

persons subject to the jurisdiction of the 

United States shall maintain any 

information which is essential for 

carrying out the surveys and studies 

provided for by the Act. 

§ 801.5 Confidentiality. 

Information collected pursuant to 

3104(c) of title 22 of the United States 

Code is confidential. 

(a) Access to this information shall be 

available only to officials and 

employees (including consultants and 

contractors and their employees) of 

agencies designated by the President to 

perform functions under the Act. 

(b) Subject to paragraph (d) of this 

section, the President may authorize the 

exchange of information between 

agencies or officials designated to 

perform functions under the Act. 

(c) Nothing in this part shall be 

construed to require any Federal agency 

to disclose information otherwise 

protected by law. 

(d) This information shall be used 

solely for analytical or statistical 

purposes or for a proceeding under 

§ 801.6. 

(e) No official or employee (including 

consultants and contractors and their 

employees) shall publish or make 

available to any other person any 

information collected under the Act in 

such a manner that the person to whom 

the information relates can be 

specifically identified. 

(f) Reports and copies of reports 

prepared pursuant to the Act are 

confidential and their submission or 

disclosure shall not be compelled by 

any person without the prior written 

permission of the person filing the 

report and the customer of such person 

where the information supplied is 

identifiable as being derived from the 

records of such customer. 

§ 801.6 Penalties. 

(a) Civil penalties. Whoever fails to 

furnish any information required by the 

Act or to comply with any rule, 

regulation, order or instruction 

promulgated under the Act shall be 

subject to a civil penalty of not less than 

$2,500, and not more than $25,000, and 

to injunctive relief commanding such 

person to comply, or both (see 22 U.S.C. 

3105(a) and (b)). These civil penalties 

are subject to inflationary adjustments 

(15 CFR 6.4.). 

(b) Criminal penalties. Whoever 

willfully fails to submit any information 

required by the Act or willfully violates 

any rule, regulation, order or instruction 

promulgated under the Act, upon 

conviction, shall be fined not more than 

$10,000 and, if an individual, may be 

imprisoned for not more than one year, 

or both. Any officer, director, employee, 

or agent of any corporation who 

knowingly participates in such 

violations, upon conviction, may be 

punished by a like fine, imprisonment 

or both (see 22 U.S.C. 3105(c)). 

PART 806—[REMOVED AND 

RESERVED] 

■ 2. Under the authority of 5 U.S.C. 301, 

part 806 is removed and reserved. 

PART 807—[REMOVED AND 

RESERVED] 

■ 3. Under the authority of 5 U.S.C. 301, 

part 806 is removed and reserved. 

[FR Doc. 2012–9849 Filed 4–23–12; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Parts 133 and 151 

[USCBP–2012–0011; CBP Dec. 12–10] 

RIN 1515–AD87 

Disclosure of Information for Certain 

Intellectual Property Rights Enforced 

at the Border 

AGENCIES: U.S. Customs and Border 

Protection, Department of Homeland 

Security; Department of the Treasury. 

ACTION: Interim rule; solicitation of 

comments. 

SUMMARY: This document amends, on an 

interim basis, the U.S. Customs and 

Border Protection (CBP) regulations 

pertaining to importations of 

merchandise bearing recorded 

trademarks or recorded trade names. 

The interim amendments, effective 

upon publication in the Federal 

Register, allow CBP, subject to 

limitations, to disclose to an intellectual 

property right holder information 

appearing on merchandise or its retail 

packaging that may comprise 

information otherwise protected by the 

Trade Secrets Act, for the purpose of 

assisting CBP in determining whether 

the merchandise bears a counterfeit 

mark. Such information will be 

provided to the right holder in the form 

of photographs or a sample of the goods 

and/or their retail packaging in their 

condition as presented to CBP for 

examination and alphanumeric codes 

appearing on the goods. The 

information will include, but not be 

limited to, serial numbers, universal 

product codes, and stock keeping unit 

(SKU) numbers appearing on the 

imported merchandise and its retail 

packaging, whether in alphanumeric or 

other formats. These changes provide a 

pre-seizure procedure for disclosing 

information about imported 

merchandise suspected of bearing a 

counterfeit mark for the limited purpose 

of obtaining the right holder’s assistance 

in determining whether the mark is 

counterfeit or not. 

DATES: Effective April 24, 2012; 

comments must be received on or before 

June 25, 2012. 

ADDRESSES: You may submit comments, 

identified by docket number, by one of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

via docket number USCBP 2012–0011. 

• Mail: Trade and Commercial 

Regulations Branch, Office of 

International Trade, Regulations and 

Rulings, U.S. Customs and Border 

Protection, 799 9th Street NW. (Mint 

Annex), Washington, DC 20229–1179. 

Instructions: All submissions received 

must include the agency name and 

docket number for this interim 

rulemaking. All comments received will 

be posted without change to http:// 

www.regulations.gov, including any 

personal information provided. For 

detailed instructions on submitting 

comments and additional information 

on the rulemaking process, see the 

‘‘Public Participation’’ heading of the 

SUPPLEMENTARY INFORMATION section of 

this document. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov. Submitted 

comments may also be inspected during 

regular business days between the hours 

of 9 a.m. and 4:30 p.m. at the Trade and 

Commercial Regulations Branch, Office 

of International Trade, Regulations and 

Rulings, U.S. Customs and Border 

Protection, 799 9th Street NW., 5th 

Floor, Washington, DC. Arrangements to 

inspect submitted comments should be 

made in advance by calling Joseph Clark 

at (202) 325–0118. 

FOR FURTHER INFORMATION CONTACT: Paul 

Pizzeck, Intellectual Property Rights 

Branch, Regulations and Rulings, Office 

of International Trade, (202) 325–0020. 

SUPPLEMENTARY INFORMATION: 

Public Participation 

Interested persons are invited to 

participate in this rulemaking by 

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24376 Federal Register / Vol. 77, No. 79 / Tuesday, April 24, 2012 / Rules and Regulations 

submitting written data, views, or 

arguments on all aspects of the interim 

rule. CBP also invites comments that 

relate to the economic, environmental, 

or federalism effects that might result 

from this rule. If appropriate to a 

specific comment, the commenter 

should reference the specific portion of 

the rule, explain the reason for any 

recommended change, and include data, 

information, or authority that support 

such recommended change. 

Background 

Purpose of the Interim Amendments 

CBP is responsible for border 

enforcement of intellectual property 

rights laws and regulations. One of the 

primary purposes of CBP’s efforts to 

interdict counterfeit imported goods is 

to protect the public from unsafe and 

substandard products, which, in some 

cases, can be a threat to public health 

and safety, and also a threat to the 

national security. In particular, 

counterfeit integrated circuits and 

electronic components can find their 

way into critical manufacturing, 

military, infrastructure, and consumer 

product applications. In fact, inquiries 

conducted by Congress and the 

Department of Defense (DoD) have 

revealed that counterfeit electronic 

components, including counterfeit 

integrated circuits, have entered 

military and government supply chains, 

posing a serious threat to our military 

and government personnel and 

infrastructure. 

Due to the development of 

sophisticated techniques of some 

counterfeiters and the highly technical 

nature of some imported goods, it has 

become increasingly difficult for CBP to 

determine whether some goods 

suspected of bearing counterfeit marks 

in fact bear counterfeit marks. The 

current regulation pertaining to goods 

bearing counterfeit marks does not 

provide a procedure for disclosing 

information to right holders to assist 

CBP in its efforts to identify goods 

bearing infringing marks, prior to CBP’s 

making a determination to seize. 

In this document, CBP is making 

several changes to subpart C of part 133 

of the CBP regulations (19 CFR part 133) 

regarding the detention of suspect 

merchandise and the disclosure of 

information to right holders during 

detention of goods bearing potentially 

counterfeit marks and after seizure of 

goods bearing counterfeit marks. These 

changes, made on an interim basis and 

effective on the date of their publication 

in the Federal Register, include a 

clarifying revision of the current 

regulation’s definition of ‘‘counterfeit 

trademark’’ and an addition of a 30-day 

detention period relative to goods 

suspected of bearing counterfeit marks. 

These changes will enhance CBP’s 

enforcement capability against 

increasingly sophisticated counterfeit 

products that threaten the public health 

and safety and national security. 

The Trade Secrets Act and Disclosure 

Under the Current Regulation 

The Trade Secrets Act (18 U.S.C. 

1905) bars the unauthorized disclosure 

by government officials of any 

information received in the course of 

their employment or official duties 

when such information (also referred to 

collectively as ‘‘protected information’’) 

‘‘concerns or relates to the trade secrets, 

processes, operations, style of work, or 

apparatus, or to the identity, 

confidential statistical data, amount or 

source of any income, profits, losses, or 

expenditures of any person, firm, 

partnership, corporation, or 

association.’’ Case law interpreting the 

statute states that the Act ‘‘appears to 

cover practically any commercial or 

financial data collected by any Federal 

employee from any source’’ and that the 

‘‘comprehensive catalogue of items’’ 

listed in the Act ‘‘accomplishes 

essentially the same thing as if it had 

simply referred to ‘all officially 

collected commercial information’ or 

‘all business and financial data 

received.’ ’’ See CNA Fin. Corp. v. 

Donovan, 830 F.2d 1132, 1140 (D.C. Cir. 

1987). 

Specifically, the Trade Secrets Act 

protects those required to furnish 

commercial or financial information to 

the government by shielding them from 

the competitive disadvantage that could 

result from disclosure of that 

information by the government. In turn, 

this protection encourages those 

providing information to the 

government to furnish accurate and 

reliable information that is useful to the 

government. 

The protection afforded by the Trade 

Secrets Act, however, must be balanced 

against the important and legitimate 

interests of government. The Trade 

Secrets Act permits those covered by the 

Act to disclose confidential information 

when the disclosure is otherwise 

‘‘authorized by law,’’ which includes 

both statutes expressly authorizing 

disclosure and properly promulgated 

substantive agency regulations 

authorizing disclosure based on a valid 

statutory interpretation. See Chrysler v. 

Brown, 441 U.S. 281, 294–316 (1979). 

The National Defense Authorization Act 

for Fiscal Year 2012 

Section 818(g) of the National Defense 

Authorization Act for Fiscal Year 2012 

(NDAA) (Pub. L. 112–81) provides: 

If United States Customs and Border 

Protection suspects a product of being 

imported in violation of section 42 of the 

Lanham Act, and subject to any applicable 

bonding requirements, the Secretary of the 

Treasury may share information appearing 

on, and unredacted samples of, products and 

their packaging and labels, or photographs of 

such products, packaging, and labels, with 

the rightholders of the trademarks suspected 

of being copied or simulated for purposes of 

determining whether the products are 

prohibited from importation pursuant to such 

section. 

The NDAA enhances CBP’s capability 

to enforce laws protecting marks by 

authorizing the agency to disclose 

certain information to right holders to 

assist CBP officers in determining 

whether suspect merchandise bears 

counterfeit marks. 

Further Statutory Analysis Concerning 

Disclosure of Commercial Information 

Under the NDAA, CBP is authorized 

by law to make certain disclosures. One 

reading of the language of the NDAA, 

however, is that disclosure is limited to 

trademarks and does not include other 

marks noted under the Lanham Act 

(certification, collective, and service 

marks). Moreover, some have suggested 

that the legislative history of the Act 

indicates that certain legislators 

intended that the exception to the Trade 

Secrets Act created by the NDAA is to 

apply only to military sales. 

Consequently, CBP, in publishing this 

interim rule, is exercising regulatory 

authority to remove any ambiguity 

about CBP’s authority to disclose 

information with regard to certification, 

collective, and service marks, as well as 

trademarks, and to further clarify that 

the disclosure authority extends to all 

imports and not just those associated 

with military sales. 

As noted above, the Secretary of the 

Treasury (the Secretary) has authority to 

disclose information otherwise 

protected under the Trade Secrets Act 

when such disclosures are authorized 

by law. Disclosures meeting the 

‘‘authorized by law’’ standard of the 

Trade Secrets Act include those made 

under regulations that are (1) in 

compliance with the provisions of the 

Administrative Procedure Act (5 U.S.C. 

551 et seq.) and (2) based on a valid 

statute. Regarding CBP’s statutory 

authority to disclose certain importation 

information to right holders, various 

provisions in titles 15 and 19 of the 

United States Code (U.S.C.) authorize 

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Federal Register / Vol. 77, No. 79 / Tuesday, April 24, 2012 / Rules and Regulations 24377 

CBP to promulgate regulations to 

enforce prohibitions against the 

importation of merchandise that 

infringes intellectual property rights. 

Section 42 of the Lanham Act 

(15 U.S.C. 1124) prohibits the 

importation of merchandise bearing a 

mark which copies or simulates a 

registered mark. In order to aid CBP in 

enforcing this prohibition, section 42 

provides for the recordation of 

registered marks under such regulations 

as the Secretary of the Treasury shall 

prescribe. Sections 526(e) and 595a(c) of 

the Tariff Act of 1930, as amended (19 

U.S.C. 1526(e), and 

19 U.S.C. 1595a(c)), prohibit the 

importation of merchandise bearing a 

counterfeit mark and the introduction or 

attempted introduction into the United 

States of merchandise or packaging in 

which, inter alia, trademark or trade 

name protection violations are involved, 

including, but not limited to violations 

of sections 1124, 1125 and 1127 of Title 

15 (sections 42, 32 and 45 of the 

Lanham Act). Moreover, section 526(e) 

of the Tariff Act of 1930, as amended, 

(19 U.S.C. 1526(e)) requires CBP to 

notify the owner of the trademark when 

merchandise bearing a counterfeit mark 

within the meaning of section 1127 of 

Title 15 and imported in violation of 

section 1124 of Title 15 is seized. 

Section 624 of the Tariff Act of 1930, as 

amended (19 U.S.C. 1624), authorizes 

the Secretary of the Treasury to 

promulgate regulations to carry out the 

provisions of the Tariff Act of 1930, as 

amended. Collectively, these statutes 

authorize the Secretary of the Treasury, 

in instances where identification of 

suspected violative merchandise 

requires the assistance of right holders 

for the specific and limited purpose of 

determining whether imported 

merchandise bears a counterfeit mark, to 

provide for the disclosure of certain 

information to right holders upon 

importation. 

The interim rule is intended to 

support the statutory enforcement 

scheme discussed above and to allow 

CBP officers, without violating the 

Trade Secrets Act, to disclose 

information that might reveal otherwise 

confidential commercial or financial 

information in order to assist CBP in 

identifying merchandise bearing 

counterfeit marks at the time of 

detention. 

Notice Provision To Prevent Economic 

Harm to Legitimate Importers 

In addition, CBP is putting in place a 

procedure that provides the importer 

the opportunity to demonstrate to CBP, 

within seven (7) days (exclusive of 

weekends and holidays) of a notice of 

detention, that the article in question 

does not bear a counterfeit mark, before 

releasing information to the right 

holder. Only absent such a 

demonstration by the importer will 

information, images, or samples be 

shared with the right holder. This 

procedural safeguard is intended to 

achieve the policy goals of the NDAA in 

a manner consistent with maintaining 

the flow of information to the 

government, fostering competition, 

keeping prices low, and maintaining 

consumer choice. 

Information that is covered by the 

Trade Secrets Act and obtained from an 

importer, including the importer’s name 

and place of business, manufacturer’s 

identity, supply chain, and other 

confidential commercial or financial 

information, if disclosed, could provide 

insights into the importer’s business 

operations, processes, style of work, and 

income, all inuring to the importer’s 

competitive disadvantage. For example, 

product coding, such as serial numbers, 

and SKUs often incorporates 

information about where and when a 

product was manufactured, as well as 

other information that could allow one 

to identify information about the 

manufacture of the product. It is 

likewise possible that such information 

could directly or indirectly reveal the 

identity of wholesalers, exporters, or 

other parties in the importer’s supply 

chain and the timing and pricing of the 

transactions involving those entities. 

Such confidential commercial or 

financial information, if not properly 

protected, could be used by competitors 

to an importer’s economic disadvantage, 

potentially resulting in reduced 

competition and consumer choice with 

attendant increases in prices. 

Interim Amendments Concerning PreSeizure Disclosure of Information 

This document is amending the CBP 

regulations to allow CBP to provide 

right holders, for the limited purpose of 

assisting CBP in making infringement 

determinations, with any information 

appearing on merchandise and/or its 

retail packaging, or a sample of the 

merchandise including its retail 

packaging, when CBP reasonably 

suspects that such merchandise and/or 

packaging may bear a counterfeit mark 

(see § 133.21(b)(1) of this rule). This 

disclosure of information, which 

includes images (photographs) or 

samples, as appropriate, could 

potentially disclose confidential 

commercial or financial information 

otherwise protected under the Trade 

Secrets Act. The interim regulation also 

includes a procedure that allows an 

importer, prior to release of the 

information, the opportunity to 

establish, within seven (7) days 

(excluding weekends and holidays) of a 

notice of detention, that the marks are 

not counterfeit. Only absent such a 

demonstration by the importer will the 

disclosure be made to the right holder. 

In conjunction with the interim rule’s 

procedure outlined above, CBP is 

adding to the regulation a 30-day period 

(and an extension, if requested by the 

importer for good cause) to commence 

upon presentation of the goods for 

examination, within which a 

determination with respect to 

admissibility will be made (see 

§ 133.21(b) of this rule). Under the 

interim regulation, CBP will issue the 

notice of detention within five days of 

its detention decision, starting the 

seven-day period within which the 

importer may demonstrate that the 

goods do not bear a counterfeit mark. 

Only if such demonstration is untimely 

or insufficient will CBP release 

information to the right holder. 

In brief summation, this change to the 

regulations concerning counterfeit 

marks, in principal part, allows CBP, 

prior to seizure, to release to right 

holders information appearing on goods 

(and/or their retail packaging), and on 

images and samples, that are not 

redacted, i.e., images showing the 

merchandise (and/or its retail 

packaging) in its condition as presented 

for examination and samples (and/or its 

retail packaging) in their condition as so 

presented. This allows the right holder 

to assist CBP in its enforcement effort to 

prevent the entry of goods bearing 

counterfeit marks. However, in certain 

circumstances, DHS criminal 

investigators may provide right holders 

such information or samples without 

notifying the importer, for example to 

obtain from the right holder evidence 

that will assist the investigators in 

demonstrating probable cause when 

they seek a judicial order in the course 

of a criminal or national security 

investigation. 

Other Interim Amendments To Clarify 

and Maintain Consistency With the 

Current Regulations 

As mentioned previously, CBP is also 

making a clarifying amendment to the 

definition of ‘‘counterfeit trademark.’’ 

The amended definition of ‘‘counterfeit 

mark’’ uses the term ‘‘mark’’ instead of 

‘‘trademark’’ (see § 133.21(a) of this 

rule). 

In addition, CBP is amending the 

regulations pertaining to goods bearing 

copying or simulating marks and 

restricted gray market goods to correct 

an inconsistency in the regulatory 

scheme for such goods (19 CFR 133.22(f) 

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24378 Federal Register / Vol. 77, No. 79 / Tuesday, April 24, 2012 / Rules and Regulations 

and 133.23(f), respectively). The 30-day 

detention period for these goods is set 

forth in § 133.25 of the CBP regulations, 

and this procedure provides for 

extension of the detention period 

applicable to these goods upon good 

cause shown. Therefore, CBP is 

removing from §§ 133.22(f) and 

133.23(f) inconsistent language that 

appears to restrict the respective 

detention periods to only 30 days. 

Lastly, CBP is amending the 

provisions of 19 CFR 151.16(a) 

regarding detention of merchandise to 

make them consistent with the interim 

regulations in this rulemaking. The 

regulations pertaining to detention of 

merchandise exclude from their 

applicability imported articles 

suspected of being infringing copies or 

phonorecords, imported goods bearing 

marks which are confusingly similar to 

recorded trademarks, and imported 

restricted gray market merchandise. The 

interim amendment to section 151.16(a) 

excludes imports of goods suspected of 

bearing counterfeit marks from the 

applicability of the regulations 

pertaining to detention of merchandise. 

Inapplicability of Notice and Delayed 

Effective Date Requirements 

As explained previously in this 

document (see ‘‘Purpose of the Interim 

Amendments’’ subsection in the 

Background section), CBP is responsible 

for enforcement of intellectual property 

rights laws and regulations at the 

border. An important goal of CBP efforts 

to interdict counterfeit imported goods 

is to protect the public from unsafe and 

substandard counterfeit products. In 

addition, counterfeit goods present a 

threat to national security and our 

critical infrastructure. Counterfeit 

integrated circuits and electronic 

components can be used in critical 

manufacturing, military, infrastructure, 

and consumer product applications. 

Inquiries conducted by Congress and 

the DoD have revealed that counterfeit 

electronic components, including 

counterfeit integrated circuits, have 

entered military and government supply 

chains, posing a serious threat to our 

military and government personnel and 

infrastructure. Moreover, interdiction of 

counterfeit goods has been made 

increasingly difficult due to the 

development of sophisticated 

techniques used by some counterfeiters 

and the highly technical nature of some 

imported goods. 

Because this rule addresses an 

immediate need to address without 

delay vulnerabilities in our military and 

government procurement processes, as 

well as an immediate need to interdict 

goods bearing counterfeit marks that 

pose health and safety risks to the 

American public, CBP has determined 

that it would be contrary to the public 

interest to delay the effective date of this 

rule. Therefore, CBP has determined 

that in accordance with the sections 

553(b)(B) and 553(c) of the 

Administrative Procedure Act (5 U.S.C 

553), good cause exists to dispense with 

the prior comment requirement and 

delayed effective date requirement. 

Subsection 818(g) of the NDAA was 

effective upon enactment, but the 

authority it provides the Secretary is 

discretionary and not mandatory. 

Accordingly, although some may 

interpret the statute to allow the 

Secretary to exercise his discretionary 

authority without amending CBP’s 

existing regulations, CBP believes that 

amending the existing, more restrictive 

regulations is consistent with the 

requirements of the Administrative 

Procedure Act and will eliminate any 

legal ambiguity. The interim regulations 

also promote transparency and provide 

an important opportunity to gather 

feedback and input from stakeholders 

regarding implementation of § 818(g) of 

the NDAA. 

Executive Orders 12866 and 13563 

Executive Orders 13563 and 12866 

direct agencies to assess costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated a ‘‘significant 

regulatory action’’ although not 

economically significant, under section 

3(f) of Executive Order 12866. 

Accordingly, the rule has been reviewed 

by the Office of Management and 

Budget. 

Regulatory Flexibility Act 

Because a notice of proposed 

rulemaking is not required under 

section 553(b)(3)(B) of the APA for the 

reasons described in the Inapplicability 

of Notice and Delayed Effective Date 

Requirements section of this document, 

the provisions of the Regulatory 

Flexibility Act, as amended (5 U.S.C. 

601 et seq.), do not apply to this 

rulemaking. Accordingly, this interim 

rule is not subject to the regulatory 

analysis or other requirements of 5 

U.S.C. 603 and 604. 

Signing Authority 

This rulemaking is being issued in 

accordance with 19 CFR 0.1(a)(1), 

pertaining to the authority of the 

Secretary of the Treasury (or that of his 

or her delegate) to approve regulations 

concerning trademark enforcement. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3507), 

the collections of information for this 

document are included in an existing 

collection for Notices of Detention 

(OMB control number 1651–0073). An 

agency may not conduct, and a person 

is not required to respond to, a 

collection of information unless the 

collection of information displays a 

valid control number assigned by OMB. 

The burden hours related to the 

Notices of Detention for OMB control 

number 1651–0073 are as follows: 

Number of Respondents: 1,350. 

Number of Responses: 1,350. 

Time per Response: 2 hours. 

Total Annual Burden Hours: 2,700. 

There is no change in burden hours 

under this collection with this rule. 

List of Subjects 

19 CFR Part 133 

Copying or simulating trademarks, 

Copyrights, Counterfeit trademarks, 

Customs duties and inspection, 

Detentions, Reporting and 

recordkeeping requirements, Restricted 

merchandise, Seizures and forfeitures, 

Trademarks, Trade names. 

19 CFR Part 151 

Customs duties and inspection, 

Examination, Imports, Penalties, 

Reporting and recordkeeping 

requirements, Sampling and testing. 

Amendments to the CBP Regulations 

For the reasons stated above in the 

preamble, CBP is amending parts 133 

and 151 of title 19 of the Code of 

Federal Regulations (19 CFR parts 133 

and 151) to read as follows: 

PART 133—TRADEMARKS, TRADE 

NAMES, AND COPYRIGHTS 

■ 1. The general authority citation for 

part 133 and the specific authority 

citation for § 133.21 through 133.25 are 

revised, to read as follows: 

Authority: 15 U.S.C. 1124, 1125, 1127; 17 

U.S.C. 101, 601, 602, 603; 19 U.S.C. 66, 1202, 

1499, 1526, 1624; 31 U.S.C. 9701; 

* * * * * 

Sections 133.21 through 133.25 also issued 

under 18 U.S.C. 1905; Sec. 818(g), Pub. L. 

112–81. 

* * * * * 

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Federal Register / Vol. 77, No. 79 / Tuesday, April 24, 2012 / Rules and Regulations 24379 

■ 2. The heading for subpart C is revised 

to read as follows: 

Subpart C—Importations Bearing 

Recorded Marks or Trade Names 

■ 3. Section 133.21 is revised to read as 

follows: 

§ 133.21 Articles suspected of bearing 

counterfeit marks. 

(a) Counterfeit mark defined. A 

‘‘counterfeit mark’’ is a spurious mark 

that is identical with, or substantially 

indistinguishable from, a mark 

registered on the Principal Register of 

the U.S. Patent and Trademark Office. 

(b) Detention. CBP may detain any 

article of domestic or foreign 

manufacture imported into the United 

States that bears a mark suspected of 

being a counterfeit version of a mark 

that is registered with the U.S. Patent 

and Trademark Office and is recorded 

with CBP pursuant to subpart A of this 

part. The detention will be for a period 

of up to thirty days from the date on 

which the merchandise is presented for 

examination. The 30-day time period 

may be extended for up to an additional 

thirty days for good cause shown by the 

importer. In accordance with 19 U.S.C. 

1499, if after the detention period and 

any authorized extensions the article is 

not released the article will be deemed 

excluded for the purposes of 19 U.S.C. 

1514(a)(4). 

(1) Notice to importer of detention 

and possible disclosure. Within five 

days (excluding weekends and holidays) 

from the date of a decision to detain, 

CBP will notify the importer in writing 

of the detention. The notice will inform 

the importer that a disclosure of 

information concerning the detained 

merchandise may be made to the owner 

of the mark to assist CBP in determining 

whether any marks are counterfeit, 

unless the importer presents 

information within seven days of the 

notification (excluding weekends and 

holidays) establishing to CBP’s 

satisfaction that the detained 

merchandise does not bear a counterfeit 

mark. CBP may disclose information 

appearing on the merchandise and/or its 

retail packaging, images (including 

photographs) of the merchandise and/or 

its retail packaging in its condition as 

presented for examination, or a sample 

of the merchandise and/or its retail 

packaging in its condition as presented 

for examination. The release 

(disclosure) of a sample is subject to the 

bond and return requirements of 

paragraph (c) of this section. Where the 

importer does not timely provide 

information or the information provided 

is insufficient for CBP to determine that 

the merchandise does not bear a 

counterfeit mark, CBP may proceed with 

the disclosure to the owner of the mark, 

and will so notify the importer. 

Disclosure under this section may 

include any serial numbers, dates of 

manufacture, lot codes, batch numbers, 

universal product codes, or other 

identifying marks appearing on the 

merchandise or its retail packaging, in 

alphanumeric or other formats. 

(2) Notice to owner of the mark and 

disclosure of information. From the time 

merchandise is presented for 

examination until the time a notice of 

detention is issued, CBP may disclose to 

the owner of the mark any of the 

following information in order to obtain 

assistance in determining whether an 

imported article bears a counterfeit 

mark. Once a notice of detention is 

issued, CBP will disclose to the owner 

of the mark the following information, 

if available, within thirty days 

(excluding weekends and holidays) 

from the date of detention: 

(i) The date of importation; 

(ii) The port of entry; 

(iii) The description of the 

merchandise from the entry; 

(iv) The quantity involved; and 

(v) The country of origin of the 

merchandise. 

(3) Redacted images and samples 

made available to the owner of the 

mark. Notwithstanding the notice and 

seven-day response procedure of 

paragraph (b)(1) of this section, CBP 

may, at any time after presentation of 

the merchandise for examination, 

provide to the owner of the mark images 

or a sample of the detained merchandise 

or its retail packaging, provided that 

identifying information has been 

removed, obliterated, or otherwise 

obscured. Identifying information 

includes, but is not limited to, serial 

numbers, dates of manufacture, lot 

codes, batch numbers, universal product 

codes, the name or address of the 

manufacturer, exporter, or importer of 

the merchandise, or any mark that could 

reveal the name or address of the 

manufacturer, exporter, or importer of 

the merchandise, in alphanumeric or 

other formats. CBP will release to the 

owner of the mark a sample under this 

paragraph when the owner furnishes 

CBP a bond in the form and amount 

specified by the port director, 

conditioned to hold the United States, 

its officers and employees, and the 

importer or owner of the imported 

article harmless from any loss or 

damage to the sample resulting from the 

furnishing of a sample by CBP to the 

owner of the mark. CBP may demand 

the return of the sample at any time. 

The owner of the mark must return the 

sample to CBP upon demand or at the 

conclusion of any examination, testing, 

or similar procedure performed on the 

sample. In the event that the sample is 

damaged, destroyed, or lost while in the 

possession of the owner of the mark, the 

owner must, in lieu of return of the 

sample, certify to CBP that: ‘‘The sample 

described as [insert description] and 

provided pursuant to 19 CFR 

133.21(b)(3) was (damaged/destroyed/ 

lost) during examination, testing, or 

other use.’’ 

(c) Unredacted samples made 

available to the owner of the mark prior 

to seizure. A sample of the imported 

merchandise may be released prior to 

seizure to the owner of the mark in 

accordance with paragraph (b)(1) of this 

section. CBP will release to the owner 

of the mark a sample under this 

paragraph when the owner furnishes 

CBP a bond in the form and amount 

specified by the port director, 

conditioned to hold the United States, 

its officers and employees, and the 

importer or owner of the imported 

article harmless from any loss or 

damage to the sample resulting from the 

furnishing of a sample by CBP to the 

owner of the mark. CBP may demand 

the return of the sample at any time. 

The owner of the mark must return the 

sample to CBP upon demand or at the 

conclusion of any examination, testing, 

or similar procedure performed on the 

sample. In the event that the sample is 

damaged, destroyed, or lost while in the 

possession of the owner of the mark, the 

owner must, in lieu of return of the 

sample, certify to CBP that: ‘‘The sample 

described as [insert description] and 

provided pursuant to 19 CFR 133.21(c) 

was (damaged/destroyed/lost) during 

examination, testing, or other use.’’ 

(d) Seizure. Upon a determination by 

CBP, made any time after the 

merchandise has been presented for 

examination, that an article of domestic 

or foreign manufacture imported into 

the United States bears a counterfeit 

mark, CBP will seize such merchandise 

and, in the absence of the written 

consent of the owner of the mark, forfeit 

the seized merchandise in accordance 

with the customs laws. When 

merchandise is seized under this 

section, CBP will disclose to the owner 

of the mark the following information, 

if available, within thirty days 

(excluding weekends and holidays) 

from the date of the notice of seizure: 

(1) The date of importation; 

(2) The port of entry; 

(3) The description of the 

merchandise from the entry; 

(4) The quantity involved; 

(5) The name and address of the 

manufacturer; 

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24380 Federal Register / Vol. 77, No. 79 / Tuesday, April 24, 2012 / Rules and Regulations 

(6) The country of origin of the 

merchandise; 

(7) The name and address of the 

exporter; and 

(8) The name and address of the 

importer. 

(e) Samples made available to the 

owner of the mark after seizure. At any 

time following a seizure of merchandise 

bearing a counterfeit mark under this 

section, CBP may provide a sample and 

its retail packaging, in its condition as 

presented for examination, to the owner 

of the mark for examination, testing, or 

other use in pursuit of a related private 

civil remedy for trademark 

infringement. To obtain a sample under 

this paragraph, the owner of the mark 

must furnish CBP a bond in the form 

and amount specified by the port 

director, conditioned to hold the United 

States, its officers and employees, and 

the importer or owner of the imported 

article harmless from any loss or 

damage to the sample resulting from the 

furnishing of a sample by CBP to the 

owner of the mark. CBP may demand 

the return of the sample at any time. 

The owner of the mark must return the 

sample to CBP upon demand or at the 

conclusion of the examination, testing, 

or other use in pursuit of a related 

private civil remedy for infringement. In 

the event that the sample is damaged, 

destroyed, or lost while in the 

possession of the owner of the mark, the 

owner must, in lieu of return of the 

sample, certify to CBP that: ‘‘The sample 

described as [insert description] and 

provided pursuant to 19 CFR 133.21(e) 

was (damaged/destroyed/lost) during 

examination, testing, or other use.’’ 

(f) Consent of the mark owner; failure 

to make appropriate disposition. The 

owner of the mark, within thirty days 

from notification of seizure, may 

provide written consent to the importer 

allowing the importation of the seized 

merchandise in its condition as 

imported or its exportation, entry after 

obliteration of the mark, or other 

appropriate disposition. Otherwise, the 

merchandise will be disposed of in 

accordance with § 133.52 of this part, 

subject to the importer’s right to petition 

for relief from forfeiture under the 

provisions of part 171 of this chapter. 

§ 133.22 [Amended] 

■ 4. Section 133.22(f), first sentence, is 

amended by removing the words 

‘‘within the 30-day period of detention’’ 

and adding in their place the words 

‘‘within the period of detention as 

provided in § 133.25 of this subpart’’. 

§ 133.23 [Amended] 

■ 5. Section 133.23(f), first sentence, is 

amended by removing the words 

‘‘within the 30-day period of detention’’ 

and adding in their place the words 

‘‘within the period of detention as 

provided in § 133.25 of this subpart’’. 

§ 133.26 [Amended] 

■ 6. Section 133.26 is amended by 

removing from the first sentence the 

words ‘‘subject to the restrictions of 

§ 133.22 or § 133.23 of this subpart’’ and 

adding in their place the words ‘‘subject 

to the restrictions of § 133.21, § 133.22 

or § 133.23 of this subpart’’. 

PART 151—EXAMINATION, SAMPLING 

AND TESTING OF MERCHANDISE 

■ 7. The general authority citation for 

part 151 continues to read as follows: 

Authority: 19 U.S.C. 66, 1202 (General 

Note 3(i) and (j), Harmonized Tariff Schedule 

of the United States (HTSUS), 1624; 

* * * * * 

■ 8. Section 151.16(a) is revised to read 

as follows: 

§ 151.16 Detention of merchandise. 

(a) Exemptions from applicability. 

The provisions of this section are not 

applicable to detentions effected by CBP 

on behalf of other agencies of the U.S. 

Government in whom the determination 

of admissibility is vested and to 

detentions arising from possibly 

piratical copies (see part 133, subpart E, 

of this Chapter), imports of articles 

bearing counterfeit marks or suspected 

counterfeit marks, goods bearing marks 

which are confusingly similar to 

recorded trademarks, or restricted gray 

market merchandise (see part 133, 

subpart C, of this chapter.) 

* * * * * 

David V. Aguilar, 

Acting Commissioner, U.S. Customs and 

Border Protection. 

Approved: April 18, 2012. 

Timothy E. Skud, 

Deputy Assistant Secretary of the Treasury. 

[FR Doc. 2012–9762 Filed 4–23–12; 8:45 am] 

BILLING CODE 9111–14–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9585] 

RIN 1545–BI41 

Treatment of Gain Recognized With 

Respect to Stock in Certain Foreign 

Corporations Upon Distributions 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

regulations relating to the 

characterization of gain recognized with 

respect to stock in certain foreign 

corporations upon distributions. The 

regulations finalize proposed 

regulations and remove temporary 

regulations that characterize gain 

recognized with respect to stock in 

foreign corporations upon distributions 

as a deemed dividend in certain 

situations. The regulations affect certain 

persons that recognize gain with respect 

to stock in connection with the receipt 

of a distribution of property from a 

foreign corporation. 

DATES: Effective Date: These regulations 

are effective on April 24, 2012. 

Applicability Date: These regulations 

apply to distributions occurring on or 

after February 10, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Ryan A. Bowen, (202) 622–3860 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

On February 11, 2009, the IRS and the 

Department of the Treasury (the 

Treasury Department) published 

temporary and proposed regulations in 

the Federal Register (REG–147636–08, 

74 FR 6824; TD 9444, 2009–1 CB 603) 

(the temporary or proposed regulations, 

as applicable, and collectively, the 2009 

regulations). The 2009 regulations, in 

part, provide that for purposes of 

section 1248(a), gain recognized under 

section 301(c)(3) in connection with the 

receipt of a distribution of property from 

a foreign corporation with respect to its 

stock shall be treated as gain from the 

sale or exchange of the stock of such 

foreign corporation (2009 section 1248 

regulations). 

The 2009 regulations also addressed 

the application of section 367 to certain 

related party stock transactions that are 

recharacterized under section 304. As 

described in Notice 2012–15 (2012–9 

IRB 495 (February 27, 2012)) (see 

§ 601.601(d)(2)(ii)(b) of this chapter), the 

IRS and the Treasury Department intend 

to amend the regulations under section 

367 to provide that the section 351 

exchange that is deemed to occur in a 

section 304 transaction is subject to 

section 367(a) and (b), as applicable. 

Accordingly, this Treasury decision 

does not finalize the portions of the 

2009 regulations that address the 

interaction of sections 304 and 367. 

Those portions of the 2009 regulations 

will be withdrawn in separate published 

guidance (REG–104400–12). 

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