Intellectual Property:

Better Data Analysis and Integration Could Help U.S. Customs and Border Protection Improve Border Enforcement Efforts

GAO-07-735: Published: Apr 26, 2007. Publicly Released: Apr 26, 2007.

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U.S. government efforts to protect and enforce intellectual property rights are crucial to preventing billions of dollars in economic losses and for mitigating health and safety risks from trade in counterfeit and pirated goods. The Department of Homeland Security's Customs and Border Protection (CBP) leads intellectual property (IP) enforcement activity at the U.S. border. GAO was asked to (1) examine key aspects of CBP's process to carry out border enforcement, (2) analyze CBP's border enforcement outcomes during fiscal years 2001 to 2006, and (3) evaluate CBP's approach for improving border enforcement. GAO examined relevant documents, interviewed agency officials in Washington, D.C. and seven port locations, and analyzed CBP data on trade and IP seizure and penalty activity. This is the public version of a law enforcement sensitive report by the same title (GAO-07-350SU).

CBP's Office of International Trade (OT), formed in 2006, and Office of Field Operations (OFO) carry out IP border enforcement processes, including targeting and examining suspicious shipments, seizing infringing goods, and assessing penalties as warranted. CBP uses computer-based and manual targeting to determine which shipments it will examine, and both methods have strengths and limitations. Port practices for recording exam results vary, making it difficult for CBP to fully assess the effectiveness of its IP targeting efforts. Since 2001, CBP's IP enforcement outcomes have been concentrated among particular transport modes, product types, and ports. Rising numbers of low-value seizures from mail facilities have driven growth in seizure actions, but uneven seizures of high-value goods from sea containers have caused the estimated value of seizures to fluctuate. The vast majority of seizure and penalty outcomes in the last 6 years have been concentrated among 10 or fewer of CBP's 300-plus ports. For example, 10 ports account for 98 percent of the $1.1 billion in penalties assessed during fiscal years 2001 to 2006. CBP lacks agencywide performance measures in its strategic plan and an integrated approach across key offices to guide and improve IP enforcement. Narrowly focused initiatives led by offices now under OT have had limited results. CBP has not done a broader analysis to examine variances in port IP enforcement outcomes. For example, GAO found that some of the largest IP-importing ports had very small seizure rates relative to other top IP-importing ports. A lack of integration between OT and OFO impedes using this type of analysis to identify potential IP enforcement improvements.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To develop a more effective approach to IP border enforcement, the CBP Commissioner should direct the Offices of International Trade and Field Operations to work together to clarify agencywide goals related to IP enforcement activity by working with the Office of Management and Budget to include in its agency's strategic plan measures to guide and assess IP enforcement outcomes.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

    Status: Closed - Implemented

    Comments: In this report, we found that while CBP's intellectual property (IP) enforcement activities had been growing, the agency's enforcement efforts were not well integrated across key CBP offices and enforcement outcomes were uneven across CBP ports. Although CBP's strategic plan highlighted the importance of IP enforcement, the plan lacked performance measures to guide agency-wide efforts and measure outcomes. The only articulation of CBP's IP enforcement strategy at the time was an internal planning document with limited distribution throughout the agency that we said was not an effective means of holding CBP accountable to Congress for its performance on IP enforcement. For this reason, we recommended that CBP clarify agency-wide goals by including measures to guide and assess IP enforcement outcomes in its strategic plan, the highest level planning document at that time. In commenting on the report, CBP said it partly concurred with this recommendation and would identify or create appropriate measures for potential inclusion in its strategic plan. GAO continued to report to Congress on IP enforcement (GAO-07-74 and GAO-07-529) and worked closely with key Congressional staff as they developed legislation that resulted in the October 2008 Prioritizing Resources and Organization for Intellectual Property Act (PRO-IP Act), which required important changes in the federal structure and planning for IP enforcement. In October 2008, CBP for the first time published a Trade Strategy for fiscal years 2009-2013 and cited GAO-07-735 as one of several program evaluations that influenced the plan. The strategy mentioned IP enforcement but did not contain related enforcement objectives or performance measures. In the October 2009 legislation on DHS 2010 appropriations, and consistent with our concerns in 2007, Congress expressed its sense that CBP needed to increase its focus on the enforcement of IP rights. In July 2010, CBP submitted to Congress a 5-year Intellectual Property Rights Enforcement Strategy that seeks to create a more effective IP enforcement approach by articulating enforcement goals and objectives at the pre-entry, entry, and post-entry import phases. For example, entry-based goals include improving the efficiency of models used to target shipments for potential IP infringement, improving the tools and processes used to determine IP infringement, and expanding training for all enforcement personnel. CBP's strategy is linked to the federal government's first Joint Strategic Plan on Intellectual Property Enforcement, which was required by the PRO-IP Act and published in June 2010. The joint plan established five performance indicators for IP protection and enforcement (three of which involve reporting from the Department of Homeland Security). The plan reported that these key performance indicators represent an initial list that is subject to modification based on the U.S. government's experience collecting and analyzing indicators. These two documents, CBP's 5-year Intellectual Property Rights Enforcement Strategy and the federal Joint Strategic Plan on Intellectual Property Enforcement, meet the intent of our recommendation, which was to send a broad signal across CBP of the importance of its IP enforcement activities.

    Recommendation: To develop a more effective approach to IP border enforcement, the CBP Commissioner should direct the Offices of International Trade and Field Operations to work together to improve data on IP enforcement activity by determining the completeness and reliability of existing IP enforcement data and identifying aspects of the data that need to be improved and ensuring uniformity in port practices to overcome any weaknesses in data reporting.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

    Status: Closed - Implemented

    Comments: In 2007, GAO reported in Intellectual Property: Better Data Analysis and Integration Could Help U.S. Customs and Border Protection Improve Border Enforcement Efforts (GAO-07-735) that poor data quality and uneven data recording practices among U.S. ports had made it difficult for Customs and Border Protection (CBP) to accurately analyze the results of its intellectual property (IP) enforcement efforts. We recommended that the CBP Commissioner direct the Office of International Trade and the Office of Field Operations to work together to improve IP enforcement data by (1) determining the completeness and reliability of existing IP enforcement data and identifying aspects of the data that needed to be improved; and (2) ensuring uniformity in port practices to overcome any weaknesses in data reporting. CBP concurred with this recommendation. The issue of IP data quality was discussed at CBP conferences on Trade and on Fines, Penalties, and Forfeitures in June 2008. In August 2008, citing the GAO report, the Office of International Trade sent two memoranda to the Directors of Field Operations who oversee CBP's port operations to (1) stipulate required data elements that port personnel must enter into CBP's data systems when reporting on IP seizures; and (2) require all ports to follow uniform case numbering practices when issuing penalties for IP violations under 19 USC 1526(f).

    Recommendation: To develop a more effective approach to IP border enforcement, the CBP Commissioner should direct the Offices of International Trade and Field Operations to work together to use existing data to understand and improve IP border enforcement activity by analyzing IP enforcement outcomes across ports and other useful categories, such as modes of transportation and reporting the results of this analysis internally to provide performance feedback to the ports, better link port performance to performance measures in CBP's strategic plan, and inform resource allocation decisions.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

    Status: Closed - Implemented

    Comments: In 2007, GAO's report, Intellectual Property: Better Data Analysis and Integration Could Help U.S. Customs and Border Protection Improve Border Enforcement Efforts (GAO-07-735) found that seizures by Customs and Border Protection (CBP) of goods that violate U.S. intellectual property (IP) laws were highly concentrated among just a few of CBP's 300-plus ports of entry. We found that CBP had not undertaken any systematic analysis of its IP seizures to understand variations in enforcement outcomes within or across ports or to learn from ports that have been relatively more successful in capturing fraudulent IP goods. Our findings were based on a simple but powerful analysis by port of estimated IP seizure value over estimated IP imports value. We suggested other types of analysis that CBP could perform to better understand differences in IP enforcement outcomes across ports and identify areas for improvements. We recommended that the CBP Commissioner direct the Offices of International Trade and Field Operations to use existing data to understand and improve border enforcement activity by (1) analyzing IP enforcement outcomes across ports and other useful categories, such as mode of transportation, and (2) reporting the results of this analysis internally to provide performance feedback to ports, link port performance to strategic planning, and inform resource allocations. CBP concurred in part with this recommendation, but at the time, did not indicate that they were planning to take actions responsive to the recommendation. We continued to encourage CBP to use our suggested analysis as a starting point for examining enforcement outcomes, and in August 2008, CBP's Office of International Trade produced an IP risk assessment that contained a set of analyses of CBP's IP enforcement outcomes by port, by transport mode, by source country, and by commodity. This analysis was very similar to that contained in the GAO report. CBP's risk assessment identified potential areas where it said IP enforcement could be strengthened. It also compared its IP enforcement outcomes by source country to the experiences of Customs offices elsewhere for the purpose of determining whether CBP needs to step up IP targeting of goods from certain risky source countries. Finally, CBP told GAO that the results of this risk assessment were incorporated into its FY 2009 IP strategy, which guides IP enforcement activities at all levels in CBP. This strategy represents a significant revision to earlier plans. Among other things, in order to meet its goal to increase the effectiveness of IP targeting, it contains action components related to best practices in targeting for IP violations. (The document is for Internal Use Only.) These steps are noteworthy, and while they stop short of specifically linking port performance to strategic planning, we believe the actions taken by CBP are directly responsive to the language in our conclusion: "it is particularly important that the agency collect key data, perform useful analysis of the data, and use the data to better inform policies and practices and make decisions to focus its use of limited resources."

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