Beanie Babies may have helped put IPR matters on the public's radar screen, but it was three seizures of more unassuming products-products that couldn't have been more unlike Beanie Babies-that really made 1999 a banner year. The first was a seizure of counterfeit Microsoft CDs and packaging appraised at more than $29.2 million in domestic value and smuggled in a container of furniture. That seizure represented more than 30 percent of the year's total for IPR seizures. The other two seizures were shipments of sunglasses-combined value estimated at $11 million. Together, these three seizures accounted for 41 percent of the entire year's value for confiscated IPR merchandise.

Things slowed down a bit in 2000, but IPR seizures began to rebound in 2001. The number of seizures increased 11 percent over 2000, from 3,244 to 3,586. And the value of seizures increased almost 27 percent over FY00, from more than $45 million to more than $57 million in domestic value.

As seizures were dipping and then rebounding, a new trend in IPR infringements was emerging, one that might account for the reduction in post-Beanie Baby seizures. The "trend" translated into a new way of importing counterfeit designer merchandise.

Anyone who's ever strolled along a city sidewalk knows that clothing and fashion accessories have always been targets for counterfeiters. After all, where else can you get a "Gucci" handbag or a "Rolex" watch for less than $30?

So the trick, for IPR violators, is to import component parts, called identifying elements, in a shipment that is separate from the merchandise to which these elements will be attached. For the IPR scam artist, "identifying elements" are key: they're the clothing tags and labels, Levi's tabs, Cardin-logo belt buckles, FUBU embroidery, handbag clasps-any of the fashion elements that identify the designer.

It's a clever ruse. The domestic value of identifying elements is relatively low, considerably lower than the value of a generic leather belt or tennis shirt. It's only when identifying elements are attached to that "blank" product that their true value, not to mention their cachet, conveys. In other words, a leather belt is just a leather strap until a Gucci buckle is attached. Then, whether it's the genuine article or a knock-off, its value increases.

Since identifying elements are only components and not finished pieces of merchandise, they're lower in value than the completed item would be. For example, a seized Gucci-logo metal clasp is worth between forty cents and a dollar in domestic value, while the value of a seized counterfeit Gucci bag averages $30.

So counterfeiters and other infringers do the math: If Customs seizes a shipment of counterfeit identifying elements, the importer loses far less than he would if Customs seizes a shipment of fully assembled goods.

The top five sources of IPR-infringing goods are China, Hong Kong, Korea, Singapore, and Taiwan. Collectively, goods seized from those countries account for 70 percent-that's almost $41 million worth-of confiscated items.

Because wearing apparel is a front runner among seized commodities-in FY 2001, the domestic value of seized apparel accounted for 14 percent of all seizures made that year-the identifying-element scam is expected to persist. And if you add accouterments like handbags, backpacks, or cell phones* * to the apparel category, Customs can expect to make lots of low-value seizures, much like it did in the Beanie Baby days.

A final, timely, and most unusual finding regarding IPR infringement: investigative agencies have discovered strong links between IPR infringements and the financing of terrorism. It is alleged, for instance, that profits from counterfeit-marked tee shirts helped finance the 1993 World Trade Center bombing.

So the fact that IPR seizures have rebounded portends well, and not just for economic reasons.

This, as sports handicappers might say, is one area to watch...

Special thanks to Acting Director Therese Randazzo of the Los Angeles Strategic Trade Center, whose generosity of time, attention, and information was essential in preparing this story.