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HOME > Publications > Professional Articles > RCEP and China IPR Customs Protection Analysis and Suggestions

RCEP and China IPR Customs Protection Analysis and Suggestions

Author: Ning Jing, Li Yang 2022-06-082411

Abstract: The Regional Comprehensive Economic Partnership Agreement (RCEP), the largest free trade Agreement in the world, has entered into force since January 1, 2022. Compared with China Customs protection of IPRs, RCEP Agreement is generally lower than China standards, and it pays more attention to moderation and balance, considering the interests of all Parties. For import and export enterprises, they should seize the opportunity of implementing RCEP Agreement, fully understand and apply the rules of China Customs protection of IPRs and use the Customs force to safeguard the IPRs, improve the international and domestic market reputation and enhance the overall competitiveness. Based on that, this note focuses on the comparative analysis of the rules of RCEP Agreement and China Customs protection of IPRs from the six perspectives and make suggestions.


Keywords: RCEP Agreement, Intellectual Property Customs Protection, Comparative Analysis



I. Overview of RCEP Agreement Intellectual Property Broder Measures


The current international intellectual property system is increasingly showing its importance in the international trade system. The high-profile RCEP Agreement has become a new scenario for the reconstruction and reform of the international intellectual property protection rules, which deserves attention and research.


(I) Brief Introduction of the Regional Comprehensive Economic Partnership Agreement (RCEP)


The Regional Comprehensive Economic Partnership Agreement (RCEP) was initiated by ASEAN in 2012. After 8 years of discussions and 31 rounds of formal negotiations, it was officially signed on November 15, 2020. The Contracting Parties include China, Japan, South Korea, Australia, New Zealand and ten ASEAN countries, a total of 15 Parties. It is the largest free trade area agreement in the world for now. On January 1, 2022, the RCEP Agreement came into effect. The legal text covers Trade in Goods, Rules of Origin, Customs Procedures and Trade Facilitation, Sanity and Phytosanitary Measures, Standards, Technical Regulations, and Conformity Assessment Procedures and Trade Remedies, etc. Subsection 3 Section J of the Chapter 11 sets out Border Measures regarding the intellectual property protection.


Clarification: It should be noted that Customs protection of IPRs is often referred to as intellectual property border measures internationally, which means the enforcement measures taken by Customs at border to protect intellectual property rights in accordance with national laws and regulations. Therefore, in this article, intellectual property border measures and intellectual property Customs protection have the same meaning.


(II)Overview of RCEP Agreement Intellectual Property Border Measures Regulations


The legal text of the RCEP Agreement sets up the intellectual property chapter, which provides a balanced and inclusive approach to the protection and enforcement of intellectual property rights. This chapter also includes provisions to intellectual property border measures in Subsection 3 of Section J.


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II. A Comparison of RCEP Agreement and China’s IPR Customs Protection Rules from Six Perspectives


The basic framework of RCEP Agreement on intellectual property border measures is roughly the same as the international approach for IPRs protection, including China, which is a dichotomous protection model based on request or ex officio. It also involves enforcement measures such as application, Customs suspension or investigation and determination, disposal of infringing goods, security collection and information disclosure. This provides the foundation for a brief analysis of the two rules from six perspectives.


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(I) Overall level of protection


1. China is emphasizing strengthening border protection of IPRs


The direct enforcement basis of China’s IP border protection system is Customs Law of the People's Republic of China (Amended in 2021), Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights (2018 Revision), and Measures of the Customs of the People’s Republic of China on Implementation of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property.(hereinafter referred to as Customs Law, Regulations and Measures ). Based on these regulations, China’s intellectual property border protection has a wide range, emphasizing strict Customs protection of intellectual property rights, and the protection is higher than the standard set by TRIPS. Therefore, the scope and level of protection are already at a high level.


2. RCEP Agreement is a moderate protection that balances the interests of all parties


Compared with China’s intellectual property border protection standards, RCEP Agreement is more balanced and moderate. This may be due to the large number of RCEP Agreement Contracting Parties. There is a great disparity among the Contracting Parties. And the demands for IP protection are not the same. On the premise of fully protecting and implementing IPRs, RCEP Agreement needs to respond and balance the demands of Contracting Parties. Therefore, in general, the standards set by RCEP Agreement intellectual property border measures are lower than China’s standards.


Clarification: The moderate protection here (see Academic Terminology at the end of the article) is not a proper term, but a generalization of the features of the RCEP Agreement border measure intellectual property protection rules for the convenience of understanding and writing.


(II) Overview of RCEP Agreement and China IPRs Customs protection rules from the six perspectives.


Six   Perspectives

RCEP   Agreement

China   Customs

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Protection   Modes and Stages

1.   Request mode: at the import stage

2. Ex   officio mode: at the import stage (Whether or not to protect ex officio at   the export stage is left to the discretion of the Contracting Party)

1.   Request mode: at the import and export stage

2. Ex   officio mode: at the import and export stage

China   has set up protection by request and ex officio at both import and export   stage, and the border protection is more powerful.

 

 

 

 

 

 

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Authority   of Law Enforcement

Suspension of the   release and dentation, the authority of investigation and determination under   the request mode and ex officio mode

Suspension of the   release and dentation, the authority of investigation and determination and   the authority of administrative penalty under ex officio mode.

Under the request mode, China Customs does not   have the authority to investigate and determine

 

 

 

 

 

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Types   of Protected Rights

1.Pirated copyright   goods or counterfeit trademark goods,

2.Importing for   distribution knowing that electronic RMI has been removed or altered without   authority. (RCEP Agreement Chapter 11 Article 11.15)

Goods   that infringe exclusive rights to trademarks, patents, copyrights, and   copyright-related rights, as well as the exclusive rights to the Olympic and   World Expo logos

In terms of the types of rights protected, the scope of protection in China   is much broader than that of RCEP Agreement.

However, China does not   yet have relevant provisions on import remedies for importing for   distribution knowing that electronic RMI has been removed or altered without   authority.

 

 

 

 

 

 

 

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Security   and Counter-Security

1.   Security: Under the request mode, provide a security or equivalent assurance   sufficient to protect the defendant and the competent authority and to   prevent abuse; there is no provision under ex officio mode.

2. Counter-Security: no provision

1.   Security: Under the request mode, it is equivalent to the security of the   value of the goods; Under the ex officio mode, a maximum guarantee of less   than CNY 100,000 is provided according to the value of the goods, and a   general security can be provided if the conditions are met.

2.   Counter-Security: In case of patent infringement, the consignee and consignor   can provide counter-security

The   security provisions under the request mode are basically the same; for patent   rights, based on the consideration of balancing the interests of the   intellectual property right holder and the consignee and consignor, China has   set up a counter-security procedure

 

 

 

 

 

 

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Disposal   of Infringing Goods

Destruction and disposal.

If the   goods are not destroyed, they should be disposed of in a manner that avoids   any damage to the rights holder outside of commercial channels

Dispose of in order:

1. Use for the relevant social public   welfare organization or make a compensated transfer of the goods to the   intellectual property rights holders.

2.   Auction according to law after eliminating the infringing characteristics.

3. Destruction.

it is   not permitted to only eliminate the labels on which the counterfeit trademark   is used on the goods and then allow the same to enter into the commercial   channels.

On the   premise of not violating international treaty obligations, China has set up a   more comprehensive and operable disposal approach.

 

 

 

 

 

 

 

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Information Disclosure

Where   its competent authorities have detained or suspended the release of goods   that are suspected of being pirated copyright goods or counterfeit trademark goods,   that Party may provide that its competent authorities have the authority to   inform the right holder of the name and address of the consignor, importer,   or consignee; a description of the goods; the quantity of the goods; and, if   known, the country of origin of the goods.

Notify   the right holder of the confirmation of rights and provide the consignee,   consignor and goods information after the detention of the goods. After   making the decision to confiscate the infringing goods, provide the consignee   and consignor and goods information obtained through investigation.

The   scope of information disclosure is almost the same


III. RCEP and China’s Intellectual Property Customs Protection Rules Comparative Analysis and Suggestions


It can be seen from the above that in terms of intellectual property border protection rules, the China Custom protection have set higher standards than RCEP, and enterprises need to clarify the common ground and differences between the two to better coordinate their intellectual property strategies.


(I) Common ground


1. Protection Mode


Based on the consensus that intellectual property rights are private rights and to maximize the effectiveness of Customs enforcement at the border, both RCEP Agreement and Chinese legislation have confirmed two basic protection modes regarding intellectual property border protection, namely protection by request and protection by ex officio. For the protection by request, the intellectual property right holders mainly apply for and promote the law enforcement procedure; in the protection by ex officio, the Customs shall perform its duties and investigate and dispose of infringing goods in accordance with relevant laws.


2. The Scope of Information Disclosure


The determination of the scope of information disclosure needs to consider the balance of interests of the consignee, consignor, and the intellectual property rights holder as well as the law enforcement needs of different procedures and stages. The regulations regarding information disclosure in RCEP Agreement are basically consistent with China’s position. They both give a moderate preference to right holders on the premise of protecting trade secrets, allowing the disclosure of relatively complete information to right holders to ensure the protection of their rights.


Measures stipulates specific provisions regarding information disclosure as follows: “Where the Customs detains the suspected infringing goods, the Customs shall notify the IPRs holder in writing of the description, quantity and value of the goods, the name of the consignee/consignor, the declared date of importation or exportation, the date of Customs detention, etc.” and “Where the Customs decides on confiscation of the infringing goods, it shall notify the IPRs holder in writing of the following known information:(1) description and quantity of the infringing goods. (2) name of the consignee/consignor. (3) date of declaration of importation or exportation of the infringing goods, date of Customs detention and effective date of punishment decision. (4) place of dispatch and place of destination of the infringing goods; and (5) other information relating to the infringing goods for which the Customs can provide.”


3. Security System


To compensate the loss caused to the consignee and the consignor due to the improper rights protection of the right holders, the rights and interests of the consignee and the consignor shall be protected. Whether it is domestic regulations or RCEP, a relatively moderate and balanced system has been set in terms of the amount, purpose, and method of security. At the same time, it is also necessary to consider the protection costs of right holders, so as to prevent excessive cost burdens on right holders and discourage their enthusiasm to defend their rights through border measures.


In addition, RCEP and China’s intellectual property Customs protection are also set up in the basic procedures such as the right holders’ request for protection, Customs suspension of release or investigation and identification, and the disposal of infringing goods.


(II) Difference between the RCEP Agreement and China’s Customs Protection


1. In terms of law enforcement, enforcement stages for Customs protection of intellectual property rights in China are more extensive.


In RCEP Agreement, no matter in the mode of protection by request or ex officio, it only imposes mandatory provisions on the implementation of border protection measures by Contracting Parties at the import stage. At the export stage, it is up to the Contracting Parties to decide whether to take protective measures.


In China, the Customs IPRs protection and enforcement includes the import and export stage. In practice, the infringement cases in the export stage account for more than 95% of the total number of cases.


2. In terms of the scope of protection, the types of rights and goods protected by China Intellectual Property Customs are broader


China Customs has the authority to protect the goods suspected of infringing the exclusive right of trademark, patent right (invention, utility model, design), copyright and copyright-related rights, and exclusive rights of two types of special signs, Olympic logo and World Expo logo.


RCEP Agreement is aimed at “Pirated Copyright Goods or Counterfeit Trademark Goods”. Simultaneously, at the import stage, it implements protection against importing for “distribution knowing that electronic RMI has been removed or altered without authority”.


It can be seen from the foregoing that RCEP Agreement defines infringing goods as Pirated Copyright Goods or Counterfeit Trademark Goods, which are smaller than the scope of goods and rights protected by China. Although, the RCEP Agreement provisions on the protection of copyrights are distinctive, but they do not affect the overall conclusion that China intellectual property border protection is broader.


3. RCEP Agreement does not require the right holders to submit applications one by one, which reduces the administrative burden of the right holders.


China Customs protection of intellectual property rights implements a filing system, and the ex officio protection mode requires right holders to record their intellectual property rights with Customs in advance. If the Customs finds that the import or export of goods suspected of infringing the registered intellectual property rights will promptly notify the right holders, and the right holders will file a protection application with the Customs to initiate the ex officio protection procedure.


Regarding the filing system, there is no direct provision in the text of the RCEP Agreement, but it states: “An application for suspension or attachment that has been accepted shall remain valid for an appropriate period with a view to reducing the administrative burden on the rights holder to a minimum”, and further explains “For the purposes of this subsection, a Party may equate ‘application’ with ‘filing’”. This seems to mean that if the right holders have filed an application for protection X against a certain batch of goods A, if other allegedly infringing goods B are found, the application for protection X will continue to be valid within an “appropriate period”, and there is no need to file a new application. In other words, there is no need to apply to the Customs for each batch of goods. In this sense, the provisions of RCEP Agreement reduce the administrative burden on right holders.


(III)Suggestions for Enterprises


Under the background of lower tariffs, fewer trade control measures and convenient Customs clearance in today’s free trade zone, the role of traditional trade barrier measures has gradually decreased. Countries are likely to take the strengthening of Customs protection of intellectual property rights as an important border measure, thus acting as a kind of barrier. Therefore, it is necessary for both import and export enterprises and intellectual property right holders to fully understand RCEP Agreement and the Customs protection rules of intellectual property rights of each member state.


1.For import and export enterprises, fully understanding the intellectual property border protection rules of RCEP Agreement and its member states can help avoid the risk of infringement and illegality.


RCEP Agreement has a wide range of member states, involving many target markets for China import and export enterprises. On the one hand, RCEP Agreement stipulates the bottom-line requirements for the border protection of intellectual property rights of each Contracting Parties, and enterprises should understand the basic position of each Contracting Parties on border protection based on this. On the other hand, each member state will formulate different domestic legislation under the requirements of RCEP. Import and export enterprises should have an understanding and mastery of the intellectual property border protection regulations of the target country, to control and avoid infringement in advance in the import and export declaration and other stages risk.


2. For right holders, a full understanding of RCEP Agreement and the intellectual property border protection rules of each member state is helpful for rational planning and improving the efficiency of enterprise rights protection.


Since intellectual property rights are private rights, the awareness and means of rights protection of all right holders are particularly important. On the one hand, by being familiar with and making good use of the intellectual property border protection rules, before the infringing goods flow into the domestic and foreign markets, the right holders can use the Customs force to effectively raid on import and export infringements. In this way, it maintains its own reputation, consolidates domestic and foreign markets, and protects its own rights and interests to the greatest extent possible. On the other hand, in addition to the Customs protection system of intellectual property rights, the right holders also need to have a more comprehensive understanding of other intellectual property systems in China and related countries. This is to take overall consideration of issues such as prevention in advance and accountability afterwards, thereby reducing the cost of rights protection and improving the overall efficiency.


Conclusion


1.The RCEP Agreement intellectual property border rules are an important part of the largest free trade area Agreement at present, and they are also the rules and regulations on Customs protection in the latest important international treaties. It embodies the latest consensus and expected goals of all member states on the border protection of intellectual property rights and deserves our attention.


2. By comparing the border protection rules of China and RCEP Agreement as an example, there is a big difference between the two. It is foreseeable that all member states will also transform the rules of RCEP Agreement by domestic law. Some member states may formulate new laws if they do not meet the minimum standards of the rules, and other member states may also make detailed adjustments requires continuous follow-up research.


3. Enterprises, whether they are import and export enterprises or intellectual property right holders, understand and master RCEP Agreement and the border protection system of the target country and related intellectual property systems, which will effectively protect their legitimate rights and interests, and help expand and consolidate domestic and foreign markets.


Academic Terminology

The moderate protection mentioned in this article refers to the relatively moderate standard and intensity of RCEP Agreement intellectual property protection and its border protection content compared with other international intellectual property rules. Specifically, RCEP Agreement has improved the standards and requirements of intellectual property protection based on TRIPS. However, compared with international intellectual property rules with high level of protection and standards such as TPP, CPTPP, and USMCA, RCEP Agreement has not set a super high-standard intellectual property protection framework according to the actual needs of its members. At the same time, the preamble of RCEP Agreement also mentions: “Considering the Parties’ different levels of economic development and capacity, and differences in national legal systems...”, RCEP Agreement requires appropriate and balanced requirements throughout.


Reference

[1] Chu Tong. Analysis of international intellectual property rules under the framework of mega-free trade Agreements and China's countermeasures. International Trade and economic exploration, 2019,35(9): 80-95.

[2] Zhang Naigen. The terms of RCEP and their comparison with the times. Review of International Law in Wuhan University, 2021.

[3] Tian Yunhua, Zhou Yanping, Cai Mengjun, etc. Evaluation of RCEP Open rules system: Progress and gap based on CPTPP. International Trade, 2021.