MANILA — Gabriel Donato (not his real name) 65 has been a citizen of the United States for more than 15 years.

Every time he returns to Guam — his home — after a visit from Manila he brings back a few fake bags or wallets brought from the bazaars.

“They’re just a few items. Some friends ask me to buy for them because they’re so cheap there ” he told the Journal. His buying habits may soon be a thing of the past with the latest efforts by the U.S. government specifically the U.S. Customs and Border Protection to crack down on importers of counterfeit goods.

Citing an Oct. 5 travel advisory from the U.S. Commercial Service in Manila the Philippine Embassy in Washington D.C. is warning Filipinos against bringing fake goods such as CDs DVDs and books into the U.S.

It said anyone caught with fake items “will face automatic deportation proceedings in violation of intellectual property rights or arrest and criminal prosecution in addition to civil fines and penalties. Please remember that even one pirated item could jeopardize your trip.”

The most counterfeited leather goods in Manila are Louis Vuitton Gucci Coach Prada and La Coste while leading fake apparel brands are Burberry Nina Ricci and Chanel. Fake L’Oreal and Maybelline cosmetics also abound at stalls and low-end department stores.

Mark Brown general manager for Louis Vuitton Guam Inc. told the Journal “We are working very closely with the U.S. Department of State and the U.S. Embassy in the Philippines to try and attempt to cut off the importation to Guam and [the] export of counterfeit products out of the Philippines.”

Louis Vuitton and the Guam Department of Customs and Quarantine were consistent in efforts to curb the problem within the island Browne said. “We have regular update training customs sessions at the borders — the port and the airport in Guam — to keep them updated and informed of our products so they can readily identify the importation of counterfeits.” Browne would not comment on specific arrests other than to say “There have been some successes lately.” He praised local authorities for their diligence. “Guam Customs are doing some really effective work.”

According to the U.S. Embassy in Manila U.S. companies estimate losing almost $200 million annually through intellectual property theft. The Philippines is on the Special 301 Priority Watch List of the U.S. government which tracks IPR violators.

A U.S. importer who declined to be identified told the Journal “U.S. Customs now has zero tolerance for anyone bringing goods back for distribution. In November this year the U.S. authorities will recommend to the U.S. government whether to remove the Philippines from the watch list or not. Most of the industries concerned — in pharmaceutical publishing the cable networks the luxury goods industry the software industry and general apparel manufacturers — are firmly against the Philippines coming off the list. The situation was and is desperate — I can see progress being made albeit slowly.” The expert said despite the need to monitor the situation in the Philippines the country was striving to improve its record. “They are on the edge of making some significant progress; the Philippines judiciary are about to set up four IPR courts in the Philippines that will deal solely with IPR cases. The biggest problem so far is the [lack of] judicial process to see through the prosecution of these cases.”

Data from the Department of Homeland Security shows however that China still ranks as the top source of fake goods into the U.S.

In 2004 there were 7 255 seizures made by U.S. Customs with an estimated value of $138.77 million. Of the total seizures the Philippines accounted for only 1% or $1.35 million. China on the other hand accounted for 63% of total seizures worth $87.27 million. This was followed by Russia at $7.3 million (5% of total seizures) Hong Kong $7.02 million (5%) and South Africa $4.44 million (5%).

A source from the Gucci franchise holder in Manila told the Journal that most of the fake Guccis sold in the various flea markets or bazaars in the Philippines come from China while the so-called “class A” (high quality takes) comes from Korea.

The source admitted that it was impossible to spot a fake Gucci from the real one unless you work with the luxury goods brand. “Even the sales staff at our store sometimes can’t tell if it is fake. That’s when they call me ” the source said on condition of anonymity. Some customers ask the store to repair goods not knowing what they have are fakes. “It was just given to them. (In those cases) we just tell them that we never carried the style. We don’t want to embarrass them by telling them they own a fake.”

Despite the fake Guccis being sold locally the source said sales have not been affected. “In fact this year it’s been very very good ” though the source declined to give figures. This is why the Gucci head office in Italy is unperturbed by the proliferation of fakes in Manila. “They said they spent so much money on going after (pirates) but not anymore since they said the Gucci customers are not the ones who buy the fakes anyway. Those who buy the fakes are ‘aspirational ’ — those who want the brand but can’t afford it ” the source said. In Manila most Gucci customers are either Filipinos and lately tourists according to the source.

A real Gucci leather wallet costs between 24 000 pesos and 34 000 pesos ($430 to $609). A fake one costs about 10% of the item or anywhere between 2 400 and 3 400 pesos ($43 to $60).

In 2004 an unnamed Filipino couple that arrived via Northwest flight 72 was held in Detroit after their luggage yielded 70 to 80 fake compact discs 30 to 40 empty DVD jackets and 10 to 20 fake DVDs. Their visas were canceled and they were immediately deported to the Philippines.

Matthew Lussenhop spokesman of the U.S. Embassy in Manila clarified that Customs guidelines make a distinction between fake goods for personal use and those in commercial quantities. “They will be confiscated except for one personal item of the traveler ” he told the Journal in a phone interview.

He said the rules against IPR violations are “not a Filipino thing ” and apply to any nationality bringing in fake items. But this does not mean that when one is caught he is automatically deported. “You may be asked to pay a fine. American citizens may face criminal proceedings.” Representatives of the luxury goods industry might also take civil action they told the Journal.

According to U.S. Customs Directive No. 2310-011A issued on Jan. 24 2000 and reviewed in Jan. 2002 “Customs officers shall permit any person arriving in the United States to import one article which must accompany the person bearing a counterfeit confusingly similar or restricted gray market trademark provided that the article is for personal use and not for sale.

“Customs officers shall permit the arriving person to retain one article of each type accompanying the person. For example an arriving person who has three purses whether each bears a different unauthorized trademark or whether all three bear the same unauthorized trademark is permitted one purse.” The other items however will be seized.

The U.S. Embassy in Manila also said the American Association of Publishers has further alerted U.S. Customs officers to check for pirated books. Filipina nurses in demand in the U.S. sometimes bring pirated books to review for certification examinations for like the National Council Licensure Examination for Registered Nurses and the Commission on Graduates of Foreign Nursing Schools examination.

The Philippines reinforced its enforcement of IPR violations after demands by the U.S. government. Although little headway has been made in major retail locations such as the Greenhills flea market which is open almost all year round.

Adrian Cristobal Jr. director general of the Intellectual Property Office which is under the Office of the President of the Philippines said his agency “has no police powers.” As such it relies on the National Bureau of Investigation Philippine National Police and Bureau of Customs to enforce the IPR rules.

From January to September 2005 some 1.05 million pesos ($17 900) worth of counterfeit goods were seized by the above agencies including the Optical Media Board which has jurisdiction over fake VCDs and DVDs.

Fortunately the OMB’s regular seizures have made some headway as fake DVDs now sold are no longer of high quality. Some are in black and white and of poor sound quality. The fake DVDs usually come from Taiwan according to a retailer in the Alabang Town Center located in Alabang Muntinlupa the enclave of the new rich of Manila. These are sold at between 80 to 100 pesos ($1.43 to $1.80) apiece. Sometimes the titles of these fake DVDs are sold ahead of the local release of the film feature.

During a roundtable dialogue on Sept. 13 between the U.S. Embassy in Manila representatives of U.S. companies and the Philippine government Cristobal said the office is working with the Philippine judiciary to establish dedicated IPR courts in Manila and “specialized prosecutors in the Department of Justice to expedite the prosecution of IPR cases. In the meantime the IPO is working on alternative measures to resolve cases of IPR violations.”

— Maureen N. Maratita contributed to this story