29
Oct/04

Homeland Security Agents Going After Infringing Goods?


Read this entire story below from The Oregonian, about Department of Homeland Security agents objecting to the sale of toys in a toy store in Oregon, on intellectual property grounds.  The article is a little vague about distingushing between Customs and non-Customs DHS agents and I’m a little puzzled as to what really happened.  U.S. Customs, which is now part of the Department of Homeland Security, does have an intellectual property division and does have the power to seize allegedly infringing items at the time of importation.  Federal marshalls are sometimes enlisted to aid in the seizure of counterfeit items which have already been imported.  This doesn’t appear to be either situation.  Also, it seems that the goods weren’t seized, merely taken off the shelf.  The story is odd: if you have additional information, please send it in.

Update: One seasoned litigator notes that if ‘Customs’ was substituted for ‘DHS’ in the article, then the story would merely be unusual.  Customs agents are sometimes involved in post-importation matters relating to counterfeits. 

Feds create puzzle not found on toy shelf

The owner of Pufferbelly Toys in St. Helens worries when Homeland Security agents show up on official business
Thursday, October 28, 2004

ASHBEL S. GREEN

Nothing about running a small store called Pufferbelly Toys prepared Stephanie Cox for a cryptic phone call from the U.S. Department of Homeland Security.

“It’s all very surreal, quite honestly,” Cox said Wednesday. “I thought it was a prank when I first heard. I couldn’t understand why Homeland Security would be investigating a tiny toy store in St. Helens.”

The call came in late July or early August. A man identifying himself as a federal Homeland Security agent said he needed to talk to Cox at her store.

Cox asked what it was all about.

“He said he was not at liberty to discuss that,” she said.

They agreed to meet in early August, but the agent later canceled. Cox thought the matter had blown over when the agent called back Sept. 9 to say he was coming out there.

“I was shaking in my shoes,” said Cox, who has owned Pufferbelly Toys for more than four years. “My first thought was the government can shut your business down on a whim, in my opinion. If I’m closed even for a day that would cause undue stress.”

The next day, two men arrived at the store and showed Cox their badges. The lead agent asked Cox whether she carried a toy called the Magic Cube. She said yes. The Magic Cube, he said, was an illegal copy of the Rubik’s Cube, one of the most popular toys of all time. He told her to remove the Magic Cube from her shelves, and he watched to make sure she complied.

The whole thing took about 10 minutes.

After the agents left, Cox called the manufacturer of the Magic Cube, the Toysmith Group, which is based in Auburn, Wash. A representative told her that the Homeland Security agents had it wrong. The Rubik’s Cube patent had expired, and the Magic Cube did not infringe on rival toy’s trademark.

John Ryan, corporate counsel for the Toysmith Group, said Homeland Security, which includes Customs, routinely blocks shipments of products from overseas that violate intellectual property rights, such as patents, copyrights and trademarks.

“That’s fine. That’s not an outrageous federal act by any means,” Ryan said. “But we certainly were surprised that a federal agent approached a toy store owner and frightened them.”

Virginia Kice, a spokeswoman for Immigration and Customs Enforcement, said agents went to Pufferbelly based on a trademark infringement complaint filed in the agency’s intellectual property rights center in Washington, D.C.

Kice also said Homeland Security officials routinely investigate such complaints and follow up if they determine they are valid.

“One of the things that our agency’s responsible for doing is protecting the integrity of the economy and our nation’s financial systems and obviously trademark infringement does have significant economic implications,” she said.

After gaining assurances from Toysmith officials, Cox put the Magic Cube back on the shelf soon after the agents left.

Six weeks after her brush with Homeland Security, Cox is still scratching her head.

“Aren’t there any terrorists out there?” she said.

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