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Joint Strategic Plan on Intellectual Property Enforcement FIG. 20: Real Ingredients and Consequences of Counterfeit Personal Care Products. Counterfeit Item Sunscreen Cosmetics (eyeliner, mascara, lipstick, foundation) Perfume Danger(s)/Containments Detected No SPF protection Carcinogens like arsenic, aluminum, lead, bacteria Urine, contaminated water, carcinogens FIG. 21: Working Conditions of a Counterfeit Perfume Factory Exposed. including, for example, under the Federal Food, Drug and Cosmetic Act (FD&C Act). 77 These products have been found to contain substandard and dangerous substances, or otherwise fail to perform as advertised, causing adverse physical reactions such as rashes, acne, psoriasis, and eye infections, 78 burning, and ineffectual family planning protection to the consumer. 79 While counterfeiters may have targeted “highend” products in the past, seizure data and criminal prosecutions confirm that counterfeit personal care products have evolved to include everyday health and beauty items. 80 Counterfeits within this product category pose significant dangers to consumer health and safety, and also undermine consumer trust in the quality and safety of branded products in the marketplace. Example: Counterfeit Consumer Electronics & Electrical Products. Counterfeit electrical products pose high risks to public health and safety as these products are often manufactured with inferior materials through sub-standard processes, without regard for any labeled ratings, certifications, or customer safety requirements, leading to increased risk of malfunctions that may cause serious injuries, including electrical shock and death. According to recent CBP figures, counterfeit electrical products have grown to now represent 18 percent of all seizures, with approximately $135 million in seized fake products destined to consumers in the U.S. market. 81 From personal electronics such as headphones to smartphones and related accessories like power adapters and charging cords and devices, consumers are unknowingly at increasing risk of bringing home dangerous devices. 82 SECTION 1 8, 2015 to May 4, 2015, resulted in the seizure of more than 31,000 counterfeit personal care products, with a combined manufacturer’s suggested retail price of $541,000. 76 Counterfeit personal care products are reported as being produced in highly unsanitary conditions (FIG. 21), with little regard for the safety of the consumer. Unlike authentic personal care products that go through rigorous development and testing procedures, counterfeit personal care items are not subject to the same strict safety and effectiveness requirements as genuine articles, FIG. 22: Overheated Counterfeit Extension Cord. Source: Underwriters Laboratories (UL) (Fake cord caught on fire when plugged in and put under a heavy electrical load) 34
Office of the Intellectual Property Enforcement Coordinator One technical investigation administered by Underwriters Laboratories (UL) subjected 400 counterfeit mobile phone adapters to safety testing, and the results were literally shocking. 83 The overall failure rate exceeded 99 percent, and the counterfeit adapters were found to present significant fire and shock hazards. 84 Indeed, 22 samples were immediately damaged during the tests, and 12 additional samples were found to be so poorly designed and constructed that they presented a risk of lethal electrocution to the user. 85 This fast-growing criminal trade in counterfeit electronic components has resulted in millions of counterfeit electrical products entering supply chains the world over, including recent examples of: circuit breakers that did not trip when overloaded; extension cords with undersized wiring that overheated; batteries and chargers without a safety device in the circuitry to prevent overcharging; holiday lights that posed fire hazards; small appliances that lacked ground-fault circuit interrupters that protect users against electrical shock; and ineffective surge protectors. 86 The diverse avenues through which counterfeit electronics can reach consumers is particularly worrisome. Sometimes, a counterfeit reaches the consumer in the form of a complete counterfeit product, while other times they enter the supply chain as fraudulent component parts that are inadvertently incorporated into legitimate goods. 87 For example, as of June 2016, CBP had facilitated the seizure of over 100,000 hoverboards, valued at $45 million, following reports of fires caused by substandard and counterfeit lithium ion batteries used to power the hoverboards (FIG. 23). 88 FIG. 23: Overheated Counterfeit Hover Board. Manufacturers of counterfeit electrical products have their sights set on the attractive U.S. market. As an example of the scale of the issue, a single joint operation between Chinese and U.S. customs offices during a one-month period resulted in the seizure of a quarter of a million counterfeit electronics, including globally known legitimate brands. 89 Criminal enterprises exploit these and other popular, legitimate brands to further their illicit enterprises. Counterfeiters are becoming sufficiently sophisticated that even complex technologies are successfully manufactured, falsely branded, and sold into the U.S. supply chain. Example: Counterfeit Pharmaceuticals. Among all counterfeit goods, counterfeit pharmaceuticals pose one of the most serious and pervasive health and safety threats. As noted by The Economist, “[s]alesmen have peddled worthless cures for millennia. But the 21st century is turning into a golden age for bad drugs.... For criminals, fake pharma is lucrative and the penalties are usually low. Indeed, the drug supply-chain is a cheat’s paradise.” 90 Counterfeit drugs circumvent all of the standards and protections built into the regulated closed system of distribution for genuine pharmaceuticals in the United States. They may contain too little, too much, or no active primary ingredients, or various dangerous contaminants. 91 Counterfeit drugs are not produced under safe manufacturing conditions, nor are they inspected by regulatory authorities. Reports confirm that many counterfeit drugs include ingredients that are toxic to patients and processed under poorly controlled and unsanitary conditions. 92 Organizations and independent traffickers often acquire counterfeit oxycodone and other pharmaceutical drugs through the darkweb. Consequently, these drugs resemble actual pharmaceutical drugs including the marking on the pills. However, lab results often determine these purported pharmaceutical drugs contain other illicit drugs such as heroin. SECTION 1 Source: U.S. Consumer Product Safety Commission 35
Page 1: U.S. JOINT STRATEGIC PLAN ON INTELL
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3 SECURE AND FACILITATE LEGITIMATE
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INTRODUCTION U.S. and international
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ACKNOWLEDGEMENTS With thanks to, an
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