Misconceptions concerning logos, aftermarket parts, counterfeit parts and OEM refurbished seem to always be discussed when talking about this critical component of being in the repair business. While these bear importance, understanding the absolute legality will help you know about current and future risks while buying parts for your repair business.
Increase in Seized Packages
Two years ago when the iPhone 5/5c/5s were released we had the whole unlocking issue where Apple shutdown it’s unlocking database overnight with little to no explanation. This year they targeted Chinese factories that made close to $100 Million worth of cheap fake handsets. This year, customs seized $89,000 worth of repair parts from two stores in a Maryland Mall.
Being China’s first year having the iPhone (officially) available and the battle with Samsung to gain market share at an all time high, incidents like these directly help new phones sales and indirectly causes fear for similar grey market operations worldwide.
Apple isn’t fully into the repair segment (yet) but certainly have concern for inferior parts and cheap fake phones diluting their brand image. Parts, even quality ones are caught in an escalating fight to combat these priorities.
Laws of the Land
Let’s look at the specific requirements for importing mobile parts and phones into the USA:
- FCC Certification and Identifer -Each unit much have FCC certification and number identified on the packing list. This is mainly for phones with no impact for cell phone parts.
- Form FCC740 – Submitted Prior to Import – Again, mainly for phones and carrier will do this on your behalf as customs broker.
- Letter of License – From Brand to import and resell. Often times called SISVEL.
Now let’s look at the most important US Customs Guideline that apply to both phones and LCD replacement parts.
Goods found to be imported in violation of 1526(e) (bearing Goods found to be imported in violation of 1526(e) (bearing infringing or counterfeit trademark, trade name) is subject to s infringing or counterfeit trademark, trade name) is subject to seizure and forfeiture and forfeiture.
IP can also be enforced including patents and copyrights. Apple filed for 2,003 patents in 2014. Don’t be shocked. Apple has many LCD patents which basically gives them ownership of the touchscreens made by most manufactures.US Customs officials aren’t walking databases so random checks are unlikely to be seized for IP purposes.
Corporations are ultimately responsible for informing US Customs about IP filings and providing documented checklist for officials to follow. This database isn’t available to the public so we’re not sure if Apple has done this specifically for replacement parts or LCD screen assemblies.
Apple did get a temporary injunction against Samsung for such a patent in 2014 (which was later overturned) so is their concern for seizing imported LCD screens?
Unlikely, but possible and certainty keeps the door open for Apple if they feel threatened by future competition to their AppleCare warranty program and repair services.
- Phones – It doesn’t matter if the phone is refurbished from all OEM parts or aftermarket parts. If you don’t have a letter of license from the manufacture to import then it’s possible for items to be seized if trademarks are present. Items with logos in the housing or OS stand a much higher risk due to simpler identification of trademark violations.
The one exception is importing phones that you exported for refurbishing and then import back into the US. Mainly because concerns about duties (which has already been paid on the original import) and FCC Certification is minimal.
Years ago we refurbished phones in the Philippines and the process of near bypassing customs scrutiny was fairly easy to obtain through PESA after a background check on your company. Obtaining a letter of license from the big guys is near impossible unless your company is on or bound for the NYSE.
- LCD Screens and Parts– iPhone LCD screens don’t have visible logos on the unit but they do have trademark stamps on the flex cables, usually from the phone brand or manufacture of the part. For other Samsung LCD screens or other repair parts, logos are reproduced on aftermarket or refurbished parts to mimic OEM quality.
Covering the logo with a sticker or marking out the flex trademark with a Sharpie only reduces the chances of quick identification by customs officials but can easily be discovered with minimal effort.
Minimize Customs Issues
- Batteries – Don’t ever mix batteries in your parts order. Fires from overheating and components to bombs scare couriers. Buy domestically or in a separate order. This is the #1 way to ensure a package gets snagged.
- No Logos – Anywhere, on every single piece. Even if a shipment gets through, check to see if your supplier covers or marks over. If not, ask and most everyone will.
- Classification – Example: Describing your screens as “Mobile Phone LCD Screens” vs “Apple iPhone 5s OEM LCD Screen Assemblies” is sufficient for packing list and invoices.
- Declared Value – Don’t put $5 for a $60 LCD screen to avoid potential import tariffs. Customs knows what people are buying and average costs and can easily sniff this out.
- Organized Package – Hopefully your supplier presents it’s packages with proper packing, a good box, easily accessible documentation and clear computer generated or handwritten labels.
- Reputable Companies – One who aren’t may be red flagged.
- Customs Broker – When using FedEx, UPS or DHL always select the option to have the courier act as your clearance agent. It’s a nominal cost (~$10) but can help avoid issues upfront and help potential problems down the road.
- Samples – Don’t mix samples in your shipments if they could be problematic. 1/10,000 pieces is enough to seize the entire shipment.
- Documentation – Inspecting every package is impossible where reviewing paperwork is much easier and always reviewed to some degree. Make sure all your paperwork is on point.
I’m going to estimate that 50% or more of seized packages result from failure of one or more of the above before any items are actually physically inspected.
There’s two main categories for Customs officials. “For sure” and “Probable”. Both of which can be confiscated. By law, their required to send you a letter with the explanation. They must provide this proof promptly. No issues with calling to get the information but ensure you get the letter as well. Usually within 30 days someone will review the original findings and make a decision.
- Good Communication – Promptly return calls and emails. Show care and concern and avoid ignorance or passing the blame.
- Official Notification – Customs is required to send an official letter of notification within a few days of being seized. Specific details may vary but do ensure you receive this letter even if your original communications are through the phone.
- Time – The original seizure gets passed to another department that ultimately makes a decision on the validly of the original claim and the action to be taken. They have up to 30 days so it’s possible to go days or weeks without an update. Don’t be a pest but feel free to request regular status updates.
- Return to Sender – Officials may not have the authority to clear the package but can decide to return to the original sender. Ensure you’ve communicated this as a positive resolution option pending their priority to clear your items.
- Professional Help – Seek a specialized Customs Broken or Attorney if your package has significant value or feel you’re in full compliance. This typically won’t change the final outcome but could speed up the process and ensure your legal rights and the clearance process is being upheld.
It doesn’t matter if it’s new, OEM, aftermarket etc. If it has or had logos that are visible or covered up, you could have issues with customs. IP and patent laws could still bring issues for parts without logos but doesn’t seem to be anyone’s priority and rarely is scrutinized unless other trademark violations are in place.
Ensure the items you can control with your supplier but always know there’s no 100% certain way to ensure clearance unless the parts are truly aftermarket containing no original parts with logos and copyright stamps, which isn’t the case with most all replacement LCD screens.
Corporations priority is still new device sales but as Apple, Samsung and others gain more interest in repair, warranties and are increasingly concerned with poor quality refurbished parts, the likely hood of disrupting the parts industry isn’t likely to slow down.
Other Related Content:
- Hong Kong Man Caught Smuggling 94 Apple iPhones Strapped To Body
- 4,700 iPhones Seized and Destroyed
- Police Seize $10 Million in Fake iPhones, iPods and Parts
- 2.7 Million in Cell Phone & Computer Parts Seized
- $19 Million in Counterfeit iPhones Seized in China
- LA Sheriff’s Dept Seize $250K in counterfeit iPhone parts seized during 5 location Search Warrant, 3 arrested.
- Forum Post from Repair Shop Owner who had LCD Screens Seized
- Dear iPhone, Who’s Your Daddy? (About right to repair and OEM Monopoly opinion blog post)
- Less incentive for Chinese mainlanders to buy smuggled iPhones
- Is Apple Right To Defend Its Patents and Trademarks So Aggressively?
- Apple Must Pay $234 Million In Patent Infringement Case to University of Wisconsin
- Apple Invents a Touch Screen that users will finally be able to Control with Gloves on
- Apple Patents Idea For Making iPhone Screens Shatterproof
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P dizzle says
There is a lot of good information in this. Great article. I have a question though. What if used phones are sent to another country to be sold, then there are buyers in the US that want to purchase these used devices. Do you think there could be issue “re-importing” these used devices to be sold as used devices?