Tim Warren

Representatives from the National Customs Brokers & Forwarders Association of America are scheduled to meet with the FCC this week about their concerns about the agency's elimination of Form 740 filing requirements for imported RF devices (see 1707130032). NCBFAA is pleased the requirements went away, but worries about what's seen as new liabilities for customs brokers included in the order, said Alan Klestadt, a lawyer with Grunfeld Desiderio, who represents the NCBFAA. “The new regulations talk about customs brokers being responsible to validate FCC compliance,” Klestadt said during an NCBFAA conference Monday. “There isn't a person in this room who's qualified to do that, and I say that without any disrespect. There's just no way.” Naming customs brokers as “one of the parties with responsibility to validate” is a “huge additional burden,” he said.

Customs and Border Protection is starting a Commercial Customs Operations Advisory Committee Emerging Technologies Working Group that will examine the technology underpinning virtual currencies, acting CBP Commissioner Kevin McAleenan said during a COAC meeting last week in San Diego. "Initially, one of the things that this working group will tackle is the emerging field of blockchain and how that applies to global supply chains," he said. It's a "technology that we think could be very promising for harmonizing key aspects of the global supply chain as we move goods across multiple borders."

Cellphone cases that include space to store credit cards or IDs are classifiable as containers and subject to a 20 percent duty rate, Customs and Border Patrol ruled. Unlike the standard cellphone cases that don't have storage space, inclusion of a slot for cards is a meaningful difference, CBP found. Classification of cellphone cases faced litigation, most recently with the U.S. Court of Appeals for the Federal Circuit affirming an overturned CBP classification of OtterBox standard cellphone cases as “similar containers.” CBP's ruling last week responded to a request from Pelican Products.

Customs and Border Protection again said a redesign of network switches imported by Arista Networks falls outside of an International Trade Commission limited exclusion order, Arista said in an SEC filing. Arista is in litigation with Cisco over patent infringement allegations (see 1701170063). The ruling, sent to Arista April 7, is a reversal for CBP, after the agency revoked a similar finding in January. "CBP has issued instructions to the U.S. ports to permit entry of the Company’s redesigned products for consumption and sale," Arista said Tuesday. The ruling followed an "inter partes process" that included "extensive briefing by both parties and a hearing during which both parties presented their arguments," Arista emailed.

Despite the enthusiasm for a U.S. free trade agreement with the U.K. after the latter voted to leave the EU (see 1606280024), a formal free trade agreement would be at least two years off, witnesses said during a Wednesday hearing of the House Foreign Affairs Trade and Europe subcommittees. Witnesses and lawmakers largely supported an eventual agreement, though intellectual property issues could arise. Rep. Darrell Issa, R-Calif., asked about harmonization of IP protections around the world, which have so far "failed." Harmonization is tougher on a bilateral basis because it's done "one on one," as opposed to with many countries, which can lead to many agreements that say "slightly different things," said Cato Institute Trade Policy Analyst Simon Lester. The U.S. could push harder on such an issue since it has more leverage, he said. Issa noted that in the U.K., terrestrial radio plays result in royalties for the artists, but not in the U.S., and asked whether that could be something "on the table" for possible alignment between the countries. "Everything is on the table" and alignment on an issue could also be used as a "precedent" for discussions with other countries, Lester said.

Customs and Border Protection revoked its ruling that a redesign of network switches by Arista Networks kept the merchandise beyond the scope of an International Trade Commission limited exclusion order (see 1611300020), Cisco said in a Saturday blog post. Cisco, litigating over patent issues with Arista in multiple venues, sought the ruling revocation in December. The CBP notice to Cisco's lawyers on the revocation doesn't provide details. Cisco said it means "Arista has lost the authorization to import or continue selling its products in the U.S., or to import components to build those products." Arista disagreed. "CBP has not ruled that Arista’s products infringe," the company said. "Instead, CBP has expressed concern that its original ruling was incorrect, based on input provided by Cisco." Arista said it's "working to engage with CBP to respond to those arguments as soon as possible."

Customs and Border Protection ruled a redesign of network switches imported by Arista Networks falls outside of an International Trade Commission limited exclusion order (LEO). The CBP ruled in favor of Arista, which is in litigation with Cisco over patent infringement allegations. The ITC began a formal Tariff Act Section 337 enforcement investigation in October after Cisco filed a complaint that Arista ignored the LEO, which prohibits imports of patent-infringing products (see 1610040060). Based on CBP's highly technical review of the Arista switches and the patents at issue, the agency said "the infringing functionality has been removed and that Arista has carried its burden to establish that the articles in question are not covered by the patents at issue and therefore do not, on this basis, fall within the scope of the LEO." The decision "validates our good-faith efforts to address the ITC’s findings," said Arista General Counsel Marc Taxay in an emailed statement. "We look forward to resuming the importation of our redesigned products.” CBP "issued instructions to the U.S. ports to permit entry of the Company’s redesigned products for consumption and sale in the United States," Arista said in a Nov. 21 SEC filing. This week, Cisco said it remains concerned with redesigned products imported by Arista, noting the first company's CBP complaint said "'the claim of a workaround is a thin veil to cover Arista’s ongoing infringement and convince its customers, many of whom have strongly supported protection of intellectual property rights, that they are buying a product that is non-infringing,'” emailed a spokesman. "The enforcement case continues with an initial ruling expected in June 2017 and the ITC is not bound by the customs decision.”

CANCUN, Mexico -- The nature of e-commerce includes several features -- high velocity, hyper high volume and low value -- that makes "a recipe for a lot of risks" from a customs perspective, said Rich DiNucci, executive director-Cargo and Conveyance Security at Customs and Border Protection, speaking May 12 at a World Customs Organization conference. E-commerce moves "at a rate that's going to demand changes to our processes," he said. The industry is also "highly competitive," which makes collaboration difficult now, he said. "Every time I think that I have a handle on e-commerce mentally, I realize that I don't," he said.

Companies increasingly will limit supply chain relationships to suppliers that participate in authorized economic operator supply chain security programs, said industry members in Cancun at a World Customs Organization conference. James Lockett, Huawei head-trade facilitation, said Tuesday he expects AEO status to someday be a prerequisite for all the company's suppliers. While it's still too early to make that requirement, it seems to be where the company is headed, he said. AEO programs are voluntary supply chain security programs administered by customs regimes which can help speed up customs processing, and such arrangements are sometimes recognized by national governments.

Intellectual property rights seizures in FY 2015 rose 25 percent to 28,865 from the previous fiscal year, Customs and Border Patrol and Immigration and Customs Enforcement statistics show. Total manufacturer's suggested retail price of the seized goods also rose about 8.3 percent to $1.3 billion, a CBP news release said. Increasingly, seized goods are coming through the express mode of transport, coinciding with a drop in seized cargo. China remains the primary source country for counterfeit and pirated goods, with 52 percent of all IPR seizures by MSRP, down from FY 2014, when it was 63 percent of the total MSRP value of seized goods. China's MSRP value fell to $697 million from $773 million last year. The number of seized goods originating in Hong Kong increased about 52 percent to $472 million, now at 35 percent of the seized goods. Consumer electronics/parts were 10 percent or $132 million of the MSRP of seizures in FY 2015.