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HOME > Publications > Professional Articles > What can IPR Customs Protection do for you?

What can IPR Customs Protection do for you?

Author: Sean Jia & Jing Ning 2021-01-271583

Same as most countries, the Customs undertakes the main duty of our IPR border protection. Since 1994 when the Customs was officially granted the duty of IPR border protection by the State, our IPR Customs Protection history has gone through nearly 30 years. At present, it is the general trend for all countries to give stronger protection to IPR on the basis of the Agreement on Trade-Related Aspects of Intellectual Property Rights. Under the national IPR strategy, our Customs has continued to strengthen the infringement raid and independent IPR protection in the import and export links, which is a rare opportunity for the right holders to safeguard their rights. Unfortunately, we found that many enterprises have missed the opportunity because of their weak awareness of IPR protection or lack of understanding of IPR Customs Protection. Based on this, let's take a look at what IPR Customs Protection can do for you.


I. Who needs to pay attention to the IPR Customs Protection ?


1. IPR holders


IPR holders include domestic and overseas intellectual property rights holders. Domestic IPR holders can stop the import and export of goods infringing their own intellectual property rights through the Customs, to maintain their own brands, and to preserve the reputation of enterprises, especially to promote the stability and expansion of overseas markets. Overseas IPR holders can also stop the infringing goods in the import and export links through the Customs, prevent the goods infringing their intellectual property rights from entering into the sales channels and increasing the cost and difficulty to protect their rights.


NOTE:


1) The IPR types can be protected by the Customs are limited.

According to the current regulations on customs protection of intellectual property rights, the IPR types protected by the Customs when importing and exporting include: trademark right, copyrights, copyright-related rights, patent rights, exclusive rights of Olympic symbols and exclusive rights of World Expo symbols.


2) The overseas intellectual property rights holder shall authorize their domestic business offices or entrust domestic agents to protect their rights through the Customs in China. While the domestic intellectual property rights holders can protect their rights through the Customs either directly by themselves or by domestic agents.


2. The consignees of imports and the consignors of exports


The consignees of imports and the consignors of exports shall truthfully declare to the Customs the details of intellectual property rights relating to the imports and exports, and submit the relevant proof documents pursuant to the regulations of the State. Once the imports or exports are identified as infringing goods, they need to bear the corresponding legal liability. On the other hand, it is true that a few enterprises use the IPR Customs Protection procedure as a means of malicious competition, and there are also cases where the rights holders cause losses to the consignees or consignors due to improper means of protecting their rights. Therefore, whether from the perspective of compliance operation, risk prevention, or preventing malicious competition and safeguarding their own rights and interests, the consignees of imports and the consignors of exports need to learn about the requirements and procedures of IPR Customs Protection.


3. Individuals who carry or post articles into and out of China


This involves the IPR Customs Protection in postal channels, which is mainly based on Article 31 of the 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 the “Measures”): “Where the Customs discovers that articles carried by individuals or posted into and out of China are suspected of infringing upon intellectual property rights stipulated in Article 2 of the ‘Regulations’ and exceed self-consumption or reasonable quantities, the Customs shall detain the articles, except where the tourist or sender or recipient renounces the articles to the Customs and obtains the consent of the Customs.”


In terms of penalties, the articles shall be confiscated by the Customs if seized and deemed as infringing goods after investigation. If the party involved is unable to identify, the Customs may take over the articles in three months after issuance of the relevant announcement.


Therefore, individuals who carry or post articles into and out of China need to learn about the regulations of IPR Customs Protection, so as to avoid inconvenience or loss caused by carrying or posting infringing articles.


4. Other customs supervised enterprises related to import and export business


Domestic processing enterprises. Under the background of global economic integration, it is common for domestic processing enterprises to take orders from overseas companies, manufacture products according to specified brand requirements and export to earn processing fees. This brings up whether OEM constitutes infringement, which is a difficult problem in the current customs enforcement of intellectual property rights. In this regard, there are no specific regulations at present. In practice, the court's rulings on this issue is also inconsistent with great differences and changes. Generally speaking, it is necessary to evaluate the domestic and foreign trademark registrations, the agreement and implementation of OEM contracts, and the trademarks disputes involved in each case. When taking orders, domestic processing enterprises are best advised to consult a professional lawyer for intellectual property issues, so as not to be sued due to suspected infringement. As for the IPR Customs Protection in foreign-related OEM, we will discuss it in the future.


Customs brokers. In practice, consignors and consignees of imports and exports often outsource customs declaration, logistics and other business to relevant agents. These agents, such as customs brokers, are the counterparts of customs administration. They should have the awareness and ability of IPR Customs Protection no matter from the perspective of providing professional services, or accepting customs supervision and undertaking reasonable diligence.


Enterprises related to new business forms. At present, cross-border e-commerce is booming. While the State has issued policies to support and accelerate the development of cross-border e-commerce, it also requires the Customs and other competent departments to strengthen law enforcement and supervision, and resolutely crack down on all kinds of illegal acts in cross-border e-commerce. Therefore, cross-border e-commerce enterprises and foreign trade comprehensive service enterprises need to pay attention to IPR Customs Protection.


II. What is IPR Customs Protection?


1. IPR Customs Protection


According to the Article 2 of Regulations of the People's Republic of China on Customs Protection of Intellectual Property Rights: Customs protection of intellectual property rights shall mean the protection implemented by the Customs on the trademark rights, copyrights, copyright-related rights, and patent rights (hereinafter referred to collectively as the “Intellectual Property Rights”) in respect of the imports and exports under the protection of the laws and administrative regulations of the People’s Republic of China.


NOTE:


1) In addition to the above-mentioned types of intellectual property rights protected by the Customs, there are also the exclusive rights of Olympic symbols and exclusive rights of World Expo symbols added thereafter.


2) Besides, whether other IPR types, such as geographical indications, new varieties of plants and layout design of integrated circuits, will be included in the scope of IPR Customs Protection, remains to be fully demonstrated and considered in the future revision of laws and regulations.


For example:

Shatian Customs, subordinate to Huangpu Customs, found that the surface of a batch of track lights declared for export by a company was printed with “OSRAM” mark. According to the label of the goods on site, as well as the analysis of the goods of the same brand found in the earlier stage, the goods were suspected of infringement by the inspectors. According to the confirmation of the right holders, 1700 pieces of track lights were suspected of infringing OSRAM Co., Ltd.’s rights to the trademark right recorded in GACC. At present, the Customs has detained the goods and handed them over to the disposal department, and the case is under further handling.

(From WeChat official account “Customs Release” - January 3, 2021)


It can be determined whether it’s in line with the concept of IPR Customs Protection according to the following steps:

--Within the Customs authority: import and export links.

--Export goods: related to import and export goods.

--Trademark right: one of the IPR protected by the Customs.

In conclusion, it belongs to IPR Customs Protection scope.


III. What can IPR Customs Protection do for you?


1. Functions and powers that the Customs can exercise in IPR border protection


Since the IPR Customs Protection is one of the statutory duties of the Customs, the power conferred on the Customs by Article 6 of the Customs Law can naturally be exercised in accordance with the law in the IPR Customs Protection. We only briefly extract the relevant functions and powers of the Customs in the protection of intellectual property rights.


-- Filing a recordal

-- Notifying the rights holder to confirm whether the products constitute infringement

-- Reviewing the application submitted by the rights holder and collect the security deposit

-- Detaining the suspected infringing products

-- Under the mode of official power protection, if the infringement is deemed after investigation, the infringers shall be given administrative punishment. If the infringement is controversial, and the notice of assistance in execution is received from the court within the prescribed time limit, the Customs shall assist in execution; otherwise, the goods shall be released.

-- Under the mode of application protection, if the notice of assistance in execution is received from the court within the prescribed time limit, the Customs shall assist in execution; otherwise, the goods shall be released.

-- Transferring to the competent department

For example, those infringing acts are suspected of constituting a criminal offence shall be transferred to the PSB for handling

-- Disposal of the infringement goods

-- Releasing the guarantee / refunding customs deposit


2. What can Customs do for you in IPR Protection?


1) The Customs will take the initiative to protect the recorded intellectual property rights for you and reduce the cost for rights protection.


If you want the Customs to take the initiative to protect your IPR, you shall file IPR with the GACC in advance. So, what's the advantage of initiative customs protection for you? First, it can greatly reduce the cost of protecting your rights. Initiative protection is also called “ex officio protection”. In this mode, the maximum amount of customs bond submitted by the rights holder to the Customs is no more than CNY 100,000. While if the intellectual property rights have been filed with the Customs, the rights holder must submit a bond equivalent to the value of the detained goods. Second, filing a recordal can help to improve the seizure rate of infringing goods. The filing enables the Customs to grasp a lot of intellectual property rights information in advance, which is convenient for the Customs to control risks in daily supervision and improve the seizure rate of infringing goods. Third, filing a recordal can help you save the time of relevant administrative procedures. Filing a recordal means to submit the proof documents and information related to intellectual property rights to the Customs in advance, which saves the time for the Customs to understand and make preliminary judgment from the beginning in the process of customs clearance, seizing the opportunity in real-time customs clearance. Moreover, under the mode of ex officio protection, trademark right holders can also apply for the general guarantee of intellectual property protection, so there is no need to pay the customs bonds separately, so as to improve the efficiency of rights protection.


Tips: Filing a recordal can help to make full use of the opportunities for IPR Customs Protection.


2) It can directly strike and restrain the infringement and prevent the infringing goods from entering into the sales market.


Once the suspected goods detained by the Customs are deemed as infringing goods after investigation, the infringers shall bear one or all of the following legal liabilities according to the specific circumstances:


--Administrative liability. Where the infringement is found by the Customs, the Customs shall confiscate the infringing goods and impose a fine of no more than 30% of the value of the goods.

--Civil liability. The intellectual property rights holders may sue to the court to require the infringing enterprises to undertake civil liability and compensate for the losses caused by the import and export of infringing goods.

--Criminal liability. Where it is suspected to constitute a criminal offence, it should be transferred to the PSB for handling.


Tips: From the perspective of the national intellectual property strategy and the current practice in the field of intellectual property legislation, it is the trend to impose more severe punishment on infringement.


3) Through cross-departmental and cross-regional joint prevention and control, it can strike and stop infringement to the maximum extent.


China is promoting the all-chain protection of intellectual property rights. At present, the whole process of handling intellectual property cases by the Customs has been paperless and traceable. The regional customs in the Pearl River Delta, Yangtze River Delta and Beijing-Tianjin-Hebei have carried out close law enforcement cooperation, and have continued the cooperation with the customs of Europe, the United States, Russia, Japan, South Korea and other countries and regions under the existing framework of intellectual property protection cooperation, so as to further improve the international network of combating cross-border infringement and illegal activities. Under this background, the rights holders can seize the opportunity of IPR Customs Protection in the import and export links, and the Customs can carry out joint law enforcement across departments and regions through information sharing with the competent departments including intellectual property, PSB and courts, so as to maximally strike and prevent the infringement.

Tips: The Customs Administration System for the Import and Export Credit of Enterprises can be used to deter and punish the infringing enterprises and avoid them from engaging in infringing activities again to the most extent.


Learn more: Customs Administration System for the Import and Export Credit of Enterprises


In the actual supervision, the Customs will apply different administrative measures according to the enterprise creditworthiness grade. The general principle is to “praise honesty and punish dishonesty”. The higher the enterprise creditworthiness grade is, the more preferential and convenient measures it enjoys. Administrative punishment for infringement may lead to the downgrading of the infringer's enterprise creditworthiness in the Customs. Once the creditworthiness grade is lowered to the level of dishonest enterprise, it will be subject to severe disciplinary measures. The legal consequences of dishonest enterprises are all-round and multifaceted, not only in the supervision of customs, but also in the supervision of many Chinese government departments and relevant organizations, such as taxation, banking, industry and commerce. The corresponding loss assessment is not only  singular and tangible economic loss, but also intangible loss such as corporate reputation, planning and development.