Monthly Archives

May 2013

Legislation for Internet Sales Tax

By Internet / eCommerce

Congress is deciding on a bill that requires internet sellers with annual sales of $1 million or more of annual sales outside of their home states to collect all the states’ sales tax. The legislation passed the Senate earlier this month on a 69-27 vote, and the House will vote on it in the near future.

According to the Wall Street Journal, although the bill has not passed yet, Maryland and Virginia have both passed transportation bills that are counting on the extra revenue that would come in from internet sales. If more states follow their lead, this could be a way to force Congress to vote a certain way. If the legislation doesn’t pass, the wholesale gas price in Virginia could jump up over 2% in two years and Maryland drivers may have to pay an extra 7 cents per gallon in taxes in two years. The District of Columbia is considering the option of spending the $49 million it would collect from the tax on housing the homeless. The National Conference of State Legislatures estimates that states lost a collective $23 billion in uncollected taxes from online shopping that occurred in 2012.

Small business owners oppose the legislation, arguing that it is a huge burden to comply with the rules in so many different tax jurisdictions. The Senate legislation addresses this issue by requiring the states to adopt standards and exempting businesses with annual revenue that is less than $1 million.


CBP Intercepts Khapra Beetles at DFW Airport

By Import

U.S. Customs and Border Protection (CBP) agriculture specialists stationed at the Dallas/Fort Worth International Airport recently intercepted Khapra beetles in personal effects from passengers arriving from Sudan and India.

“CBP agriculture specialists remain vigilant in safeguarding our agriculture industry by preventing the introduction of invasive, harmful pests and plant diseases into the country,” said Houston CBP Director of Field Operations Judson W. Murdock II. “The introduction of harmful pests, such as this beetle, into the U.S. can have devastating effects on our agriculture production because it will demolish stored grains such as rice, wheat and oats.”

These are some of the intercepted Khapra beetles intercepted at DFW airport.

Khapra beetle is a serious pest of stored grain products in Africa, the Middle East, the Near East and pockets of Europe and eastern Asia. The U.S. Department of Agriculture considers the Khapra beetle one of the 100 worst invasive species worldwide. If the beetle is left undisturbed in stored grain it can cause significant grain loss, and in case of seeds, it may lead to significant reduction in seed viability. Once identified, the Khapra beetle may be killed through fumigation. The USDA will determine if fumigation is feasible. In many cases such as in these cases where Khapra beetle was found in passenger’s personal effects, the infested product is simply destroyed by incineration or steam sterilization.

The Khapra beetles were found in three separate passenger inspections arriving from countries known to host the beetle. Upon inspection of the passengers’ luggage, CBP agriculture specialists discovered the pests in containers of seeds and dried beans. The prohibited items were immediately safeguarded for further examination.

CBP agriculture specialists submitted sample specimens of the pests to a local U.S. Department of Agriculture entomologist for identification and learned May 8, that the pests were in fact Trogoderma granarium Everts, which is the scientific name for the Khapra beetle.

CBP Ensures Mother’s Day Bouquets Are Safe

By Import

With Mother’s Day celebrations this weekend, U.S. Customs and Border Protection officers and agriculture specialists working at U.S. ports of entry are busy making sure that flower imports are free from insects, pests and diseases that could harm the agricultural and floral industries of the United States.

“Travelers need to declare all items acquired in a foreign country to the CBP officer upon entry to the United States,” said San Diego Director of Field Operations for CBP, Pete Flores. “It is an important part of the CBP mission to identify and stop pests and diseases at the border before they can be spread elsewhere.”

Chrysanthemums, gladiolas, and orange jasmine from Mexico are prohibited through the passenger ports of entry. Travelers cannot bring arrangements with those flowers into the country through a passenger port of entry, like the San Ysidro border crossing.

With the current restrictions, CBP is trying to prevent funguses called “Chrysanthemum White Rust” and “Gladiolus Rust” from entering the U.S. Additionally, some cut greenery, which are the plants used to fill a bouquet, may have pests or diseases. For example, Murraya (common name “orange jasmine”) is a host for Asian citrus psyllid, a dangerous pest of citrus. If any portion of a bouquet has pests, the entire bouquet will be confiscated.

Roses, carnations, and most other flowers are allowed into the U.S. after they pass inspection. However, plants potted in soil cannot be brought from Mexico. Travelers must declare all flowers and plants to CBP officers.

If a traveler declares a bouquet with prohibited plants, it will be seized, but travelers can avoid possible penalties by ensuring that they declare the items. After a traveler declares a bouquet with no prohibited items, CBP agriculture specialists will inspect cut flowers and plants for any sign of insects, pests or diseases.


Sophilia Hsu Speaks at NEC Corporation of America’s International Trade Compliance Conference

By News

Sophilia Hsu, associate attorney in the Dallas-based global business & technology law firm of CHESTER pllc, recently presented on protecting intellectual property at the NEC Corporation of America’s International Trade Compliance Conference, which was held at NEC’s offices in Irving, Texas.

The title of the presentation was, “Protecting Intellectual Property in International Markets.” Hsu addressed the key elements of intellectual property asset protection. Participants and speakers of the conference came from across the county and the world. Other speakers at the event included Shin Takahashi, President and CEO of NEC Corporation of America; Gerry Kenney, Senior Vice President and General Counsel of NEC Corporation of America; and Mark Herlach, partner at Sutherland Asbill & Brennan LLP.

NEC Corporation of America was established in 2006 and combined operations of NEC America, NEC Solutions America and NEC USA. NEC Corporation of America is a leading technology provider of strategic IT and communications solutions. Serving carrier, small-to-medium business and large enterprise clients across multiple vertical industries, NEC Corporation of America provides its customers greater access to a rich portfolio of technology and professional services, enhanced opportunities and competitive solutions.

Of the event, Hsu reports, “The protection of intellectual property plays an integral role in the success of individual businesses and the U.S. economy. This is an important topic and I am glad that NEC Corporation of America is addressing this issue.”

About CHESTER pllc

CHESTER pllc is a Dallas, Texas law firm providing comprehensive legal services to innovation-based companies doing business in the US, around the world, and on the web.  Its mission (and passion) is helping entrepreneurs and emerging companies solve problems and protect their interests. CHESTER pllc delivers value by providing business-savvy, cost-effective solutions to legal challenges.  The firm offers a wide array of business legal solutions, such as business entity formation (LLCs, corporations, etc.), trademarks and other intellectual property, technology transactions, domestic and international contracts, and e-commerce matters.  Additional information about the firm and its attorneys may be found at

India’s Supreme Court Decides to Provide Generic Drugs to the Poor Instead of Enforcing Patent

By Intellectual Property, International IP

Earlier last month, the Supreme Court in India ruled on whether or not Novartis, a pharmaceutical company, should be given a patent for Glivec, a cancer drug. The Court decided a patent should not be given because the formula in question was too similar to Novartis’ earlier version of the drug.

The India Patents Act prevents pharmaceutical companies from gaining a monopoly on patent protection on updated drugs that are not demonstrably more effective than previous versions.  India’s laws prevent patent holders from extending the duration of a patent by making small changes to existing patented formulas, a concept known as “evergreening.”

Chapter II of The Patents Act states: “3. What are not inventions? The following are not inventions within the meaning of this Act” and lists several items.

Section 3(d) states: “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.”

Novartis argued that the new drug is more effective than its predecessor because it is 30% easier for the body to absorb the drug. However, the Supreme Court of India decided that Novartis did not prove that the new drug provided the “enhanced efficacy” required.

As a result of the Court ruling, India’s generic drug manufacturers can continue to make generic version of Glivec. The impact for the sick in India is huge: a year’s supply of Novartis’ Glivec can cost about $70,000 while a year’s supply of a generic version costs around $2,500 a year. This ruling has no impact on the price of Glivec in the United States.

Customs Targets Illegally Imported Land Rover Defender Vehicles

By Import

U.S. Customs and Border Protection is on the lookout for illegal imports of Land Rover Defender vehicles that do not meet federal safety standards, including the standard that requires airbags. This year, CBP has identified dozens of illegal shipments at various ports of entry across the United States, including Baltimore, Charleston, S.C., Jacksonville, Fla., and Savannah, Ga.

Most recently on March 5, CBP officers at the port of Norfolk, working closely with the U.S. Department of Transportation’s National Highway Traffic Safety Administration, seized a shipment of two imported Land Rover Defender vehicles. CBP officers seized the shipment following the determination that the vehicle identification numbers on the vehicles were found to be fraudulently manipulated. The VINs were changed to make the vehicles appear older than they are to take advantage of an exemption that allows vehicles that are at least 25 years old to be imported without regard to whether they comply with federal motor vehicle safety standards. The shipment arriving from Great Britain had been targeted for examination by CBP’s Commercial Targeting and Analysis Center in Washington, D.C.

“Ensuring the safety of imported products is a top priority for CBP,” said Allen Gina, CBP’s assistant commissioner for international trade. “The concerted targeting efforts of CTAC and the vigilance of CBP officers and import specialists at our ports of entry will help ensure that unsafe vehicles from overseas markets do not reach our roadways.”

NHTSA regulates imported motor vehicles. Illegally imported vehicles can pose potential safety hazards to drivers and all road users.

“Safety is the Department of Transportation’s top priority,” said NHTSA Administrator David Strickland. “Those who illegally import Defenders and fraudulently offer the vehicles for sale are motivated by profit and do so at the expense of U.S. consumers and legitimate U.S. businesses that follow the law. We continue to work with our partners at CBP and the CTAC to prevent the importation of illegal vehicles and to inform consumers about the presence of and potential safety risks associated with these vehicles.”

Since October 2012, CBP has seized more than a dozen illegal Land Rover Defender vehicles for violating NHTSA and Environmental Protection Agency regulations, for a total value of approximately $250,000. The overseas value for this model of vehicle is approximately $25,000. However, the resale value in the U.S. can run as much as $150,000 per vehicle depending on its model year, condition, and because these vehicles cannot be lawfully imported into the U.S. unless they are at least 25 years old. A significant portion of those shipments arrived into the U.S. via sea cargo from Great Britain.

Prospective buyers of imported vehicles can confirm the validity of the vehicle by checking the VIN in a vehicle history report. Buyers who suspect a vehicle is being illegally imported are encouraged to report suspected trade violations. All information submitted to CBP is voluntary and confidential. To report a possible trade violation, please visit eAllegations. ( eAllegations )

The CTAC combines resources and staff from several government agencies, including NHTSA and EPA, to protect the American public from harm caused by unsafe imported products. For additional information on the CTAC and import safety, please visit, and click on the “Priority Trade Issues” tab.

Chinese Man Sentenced for Exporting Sensitive US Military Technology to China

By Customs IP Enforcement, Export, Intellectual Property, International IP

A former employee of a New Jersey-based defense contractor was sentenced Monday for exporting sensitive military technology to China, stealing trade secrets and lying to federal agents. The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), FBI and U.S. Customs and Border Protection.

Sixing Liu, aka Steve Liu, 49, a Chinese national, who had recently lived in Flanders, N.J., and Deerfield, Ill., was sentenced to 70 months in prison. Liu was also ordered to serve three years of supervised release and pay a $15,000 fine. Restitution is to be determined at a later date.

Liu was convicted by a federal grand jury in September 2012 and has remained in federal custody.

The jury convicted Liu of nine of the 11 counts in the second superseding indictment with which he was charged, including: six counts of violating the Arms Export Control Act and the International Traffic in Arms Regulations; one count of possessing stolen trade secrets in violation of the Economic Espionage Act of 1996; one count of transporting stolen property in interstate commerce; and one count of lying to federal agents.

“Today’s sentencing underscores the potential global consequences when sensitive military weapons and technical data come into the wrong hands,” said Andrew McLees, special agent in charge of HSI Newark. “HSI is determined to bring these criminals to justice and prevent criminal organizations from threatening our safety and security.”

According to court documents, in 2010, Liu stole thousands of electronic files from his employer, L-3 Communications, Space and Navigation Division, located in Budd Lake, N.J. The stolen files detailed the performance and design of guidance systems for missiles, rockets, target locators and unmanned aerial vehicles. Liu stole the files to position and prepare himself for future employment in China. As part of that plan, Liu delivered presentations about the technology at several Chinese universities, the Chinese Academy of Sciences and conferences organized by Chinese government entities. However, Liu was not charged with any crimes related to those presentations.

Liu boarded a flight from Newark Liberty International Airport to China Nov. 12, 2010. Upon his return to the United States Nov. 29, 2010, HSI special agents found Liu in possession of a non-work-issued computer found to contain the stolen material. The following day, Liu lied to HSI special agents about the extent of his work on U.S. defense technology, which the jury found to be a criminal false statement.

The U.S. Department of State later verified that several of the stolen files on Liu’s computer contained export-controlled technical data that relates to defense items listed on the United States Munitions List.

Under federal regulations, items and data covered by the USML may not be exported without a license, which Liu did not obtain. The regulations also provide that it is the policy of the United States to deny licenses to export items and data covered by the USML to countries with which the United States maintains an arms embargo, which includes China.


Customs Seizes Thousands of Toasters with Counterfeit Safety Markings

By Import

U.S. Customs and Border Protection (CBP) officers and import specialists assigned to the Los Angeles/Long Beach seaport complex seized 14,904 toasters bearing counterfeit Underwriters Laboratories (UL) safety markings.

“This is yet another example of CBP officers’ vigilance in preventing potentially dangerous counterfeit appliances from reaching American consumers,” said Todd C. Owen, CBP director of field operations in Los Angeles. “CBP takes an aggressive stand against counterfeiters attempting to introduce unsafe products that disregard quality, safety and the law.”

One of the toasters seized by Customs

Example of the UL certification mark









The uncertified toasters that arrived from China in two shipments were seized on March 28 and 8, after UL confirmed to CBP officials that the safety markings on the toasters are counterfeit. The combined estimated manufacturer’s suggested retail value is $297,931. The combined domestic value of the shipments is $72,597.

An independent product safety certification organization, UL rigorously tests and
evaluates products for potential risk of fire, shock, and/or personal injury. Products are not certified until they meet established UL standards.

Products bearing counterfeit UL certification marks have not undergone such a testing and certification process, and can present potential safety hazards to the consumer.

In fiscal year 2012, consumer electronics/parts presenting potential safety or security risks, with an estimated domestic value of $33.5 million, represented 23 percent of all commodities seized by CBP nationwide.




Customs Seize Counterfeit Credit Cards

By Import

Customs seized counterfeit credit cards from a man on a tourist bus

A male Mexican national was arrested last month for attempting to smuggle a number of fraudulent credit cards through the Dennis DeConcini port.

U.S. Customs and Border Protection officers conducting an inspection of a tourist bus selected Leonardo Daniel Robles Castro, 23, of Hermosillo, Sonora, Mexico, for further inspection. During the search, officers found and seized two packages of counterfeit credit cards (79 total) along with a fraudulent driver’s license. Robles was arrested and referred to U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

CBP officers working at Arizona’s ports are assigned to the Office of Field Operations, the primary organization within Customs and Border Protection tasked with an anti-terrorism mission. CBP officers screen all people, vehicles and goods entering the United States while facilitating the flow of legitimate trade and travel. Their mission also includes carrying out border-related duties, including narcotics interdiction, enforcing immigration and trade laws, and protecting the nation’s food supply and agriculture industry from pests and diseases.