The Administration’s 2013 Joint Strategic Plan on Intellectual Property Enforcement identifies “protection of public health and safety” as one of its “primary concerns.” A press release issued by the Department of Homeland Security (DHS) on March 24, 2014, concerning its intellectual property seizures in fiscal year 2013 suggests that its IP enforcement efforts are largely targeted at preventing the importation of counterfeit products that threaten health and safety. The actual statistics, however, reveal a somewhat different story: that DHS is either exaggerating the danger posed by counterfeit goods to health and safety, or it is not taking that danger seriously enough.
The press release was jointly issued by two DHS divisions, U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE). In the press release, R. Gil Kerlikowske, the CBP Commissioner, stated that “CPB continues to guard the nation’s borders against counterfeit products” that are “unsafe and dangerous to consumers.” While praising the hard work of the men and women of the DHS, ICE’s Principal Deputy Assistant Secretary Thomas S. Winkowski observed that “a great deal more needs to be done to protect the public from the health and safety threat that counterfeits pose to our society.”
The DHS report for IP seizures for 2012 contains statistics for seizures of counterfeit goods harmful to safety and security. In 2012, this category contained only 11.5% of counterfeit goods seized, measured by estimated MSRP of the goods. The safety and security category likewise represented just 14.8 % of the number of seizures. In 2011, 17.5% of the counterfeit goods seized fell within the safety and security category, and 17.6% of the number of seizures.
Although the March 24, 2014 press release focuses on health and safety, the actual report for 2013 seizures does not contain a breakdown for the safety and security category, unlike the report for 2012. Using the same methodology as the 2012 report, the safety and security category in 2013 can be estimated to contain less than 10% of the value of good seized, and under 14% of the number of seizures.
In short, for the past three years, counterfeit goods threatening safety and security represent significantly less than 20% of the goods seized, measured either by the value of the goods or the number of seizures. Moreover, the percentage of dangerous counterfeit goods is decreasing.
The decreasing share of dangerous goods seized could be a positive sign – it could indicate that fewer dangerous counterfeit goods are being imported into the country, perhaps in part as a result of previous DHS efforts. The value of the seized safety and security goods in fact dropped from $196 million in 2011 to $146 million in 2012, before increasing to an estimated $155 million in 2013.
At the same time, the decreasing share of dangerous goods could indicate that DHS is devoting fewer resources to intercepting such goods. Indeed, even if DHS is devoting the same or higher resources to the safety and security category as in the past, the small share of this category at a time when DHS officials proclaim that “a great deal more needs to be done to protect the public from the health and safety threat that counterfeits pose” suggests that DHS has the wrong IP enforcement priorities. In 2013, fully 40% of the value of seized goods fell in the handbags/wallets category. Another 30% was in the watches/jewelry category. As noted above, less than 10% of the value related to safety and security. Similarly, 35% of the number of seizures involved wearing apparel/accessories, while under 14% of the number of seizures concerned safety and security goods.
It certainly is possible that some consumers are deceived when they purchase counterfeit handbags, watches, and accessories. But most consumers know exactly what they’re getting when they purchase “luxury” items at a deep discount on Canal Street. In contrast, no consumer intentionally buys fake pharmaceuticals that could kill him. Any dollar spent on intercepting a counterfeit Louis Vuitton handbag or Rolex watch is a dollar not spent protecting U.S. consumers from counterfeit drugs and automotive parts.
There is one other possible interpretation of the small and decreasing share of safety and security seizures: that the threat of counterfeit products dangerous to health and safety has been grossly exaggerated by rights holders and the government to justify DHS’s IP enforcement budget. In other words, protecting public health and safety has largely been a pretext for government spending on protecting the commercial interests of corporate rights holders – many of which are foreign owned.
In sum, DHS’s own statistics show that it either is overstating the danger posed by counterfeit goods to health and safety, or it is not taking that danger seriously enough.