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HOME > Publications > Professional Articles > How to Protect Intellectual Property Right through China Customs

How to Protect Intellectual Property Right through China Customs

Author: Jia Xiaoning & Ning Jing 2022-08-052564
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Abstract: In the past 30 years, as the State organ responsible for the supervision and administration of entry into and exit from the Customs territory , China Customs has been shouldering the important responsibility of border protection for Intellectual Property Right (IPR). According to Customs Release, in 2021, Customs around the country seized 79,000 batches of import and export goods suspected of infringing upon rights, detained 71,800,000 pieces of goods suspected of infringing upon rights. The year-on-year increases were 27.6% and 27.8% respectively. With the implementation of more stringent IPR protection strategy in China, Customs will further strengthen the crackdown on infringement as well as the IPR protection for imports and exports in accordance with the national strategic deployment from now on. For right holders, if they can make good use of the administrative resources of China Customs protection of IPR, they can manage to prevent infringing goods from flowing into domestic or international sales market in advance, which not only reduces the cost of right maintenance, but also avoids the expansion of losses and maintains the reputation of the enterprise at home and abroad.


Key words: IPR, Customs protection


I. Basic Modes of Customs Protection of IPR in China


Customs has done a lot of popularization in terms of the working modes of Customs protection of IPR, how to apply for protection and specific procedures, etc. Therefore, we will not repeat the details here. This article only makes a brief review and summarizes the basic work modes and key points of China Customs protection of IPR to facilitate enterprises to remember and understand. In addition, compared to Customs protection of IPR in freight channel, Customs protection of IPR in post and courier channels has its own particularity, for which we will give a special introduction when there is an opportunity. This article only introduces the Customs protection of IPR in freight channel.


(I) Ex Officio Protection (as known as “Initiative Protection”)


Case Study:


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The above case shows the ex officio mode of Customs protection of IPR.


What is ex officio protection? 


Ex officio protection is the work process which Customs shall follow to initiate the protection procedure of IPR. However, the initiation of this procedure requires the IPR holders to file the relevant IPR with the General Administration of Customs(GAC), for record in advance. In this mode, where Customs finds that the import and export goods are suspected of infringing upon the IPR which has been filed with the GAC, it will initiatively notify the right holders in written form, who will decide whether to initiate the Customs protection procedure of IPR. As in this mode, Customs has the obligation to take the initiative to inspect and find the suspected infringing goods and then notify the right holders, so it is also called “initiative protection”.


Notes


1. Ex Officio Protection is based on the premise that relevant rights have been filed with the GAC for record in advance.


2. The right of application for record and protection only belongs to the right holders.


Pursuant to existing regulations, all the interested parties of IPR, such as exclusive licensees, sole licensees and general licensees, cannot apply for Customs IPR recordal or protection in their own names. However, after obtaining the authorization from the right holders, the authorized licensee may act as an agent to handle the protection of IPR.


3. The right holders may file the IPR through Customs intellectual property protection system, and other enterprises or the general public may use the system to inquire about the rights filed with the GAC. As shown in the figure:


Official website: http://202.127.48.145:8888/ 


What is the purpose of other enterprises or the public to inquire through the Customs recordal system? For example, as a manufacturer who accepts foreign orders (ordered goods are marked with trademarks), upon confirming whether the entrusting party has filed the IPR with the GAC, or whether it has the authority to commission processing and using the trademarks within the territory of China, in addition to requiring foreign investors to provide relevant authorization documents, it can also inquire agent of the trademark in China on the website of the GAC, and contact them to confirm whether the authorization is valid.


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4. It is very important to update the recordal information synchronously.


For the right holders, timely updating the recordal information with Customs according to the actual situation of their rights can prevent missing the opportunity of rights protection or improper protection of rights due to incomplete or outdated information.


For the licensees, urging the right holders to timely file the relevant authorization information with the GAC can avoid the possibility of not being included in the Clear List of Customs recordal system due to the nonsynchronous update of information by the right holders, and thus avoid the loss caused for being suspended by the Customs in the import and export.


5. Filing application and accompanying supporting documents should be complete and effective, which can avoid the waste of time and reduce the cost of rights protection.


6. Under the mode of ex officio protection, Customs has the obligation of investigation and determination.


If the right holders apply for protection and pay the Customs bond according to the provisions, Customs has the obligation to conduct investigations. According to the investigation, there are three possible results, namely, “determining to be an infringement”, “determining not to be an infringement” and “impossible to determine infringement or not”.


7. Customs cannot determine whether to constitute an infringement.


If Customs does not receive the enforcement assistance notice from the People's Court within 50 working days from the date of detention, it shall release the goods; otherwise it shall assist in enforcement.


(II) Protection on Request (as known as “Passive Protection”)


This mode refers to the working process which Customs shall follow to take measures to protect IPR when the right holders, upon discovering that the suspected infringing goods are about to be imported and exported, apply to Customs at the place of import and export to detain the suspected infringing goods and provides sufficient bond according to provisions. Under this mode, Customs does not have the obligation to notify the right holders or to investigate proactively, but only detain the goods and decide the next action according to the right holders’ claim to the court (if Customs receives the court’s property preservation ruling or notice of assistance in enforcement, it shall assist the court; otherwise, Customs shall release the goods), so this mode is also called “passive protection”.


Notes


1. This mode is not based on the premise that relevant rights have been filed with the GAC.


2. Under the passive protection mode, Customs has no obligation to proactively inspect or detain the goods and notify the right holders.


3. In this mode, Customs does not conduct investigations, but gives the right holders a certain time limit to seek other domestic authorities to take intellectual property protection measures, and temporarily detains the goods while the right holders are seeking other remedies.


4. The above-mentioned time limit for temporary detention of goods is 20 working days from the date of detention.


5. In this mode, there are two possible results: if Customs does not receive the enforcement assistance notice from the People’s Court within 20 working days from the date of detention, it shall release the goods; otherwise it shall assist in enforcement.


(III) Extension: The situation between the two above-mentioned modes.


The dichotomy mode of Customs protection of IPR is very clear, but does it cover most possible situations in practice? Here is an example: when a right holder finds that others’ import and export goods are suspected of infringing upon their IPR filed with the GAC for record, and submits application and pays Customs bond for detaining the suspected infringing goods to Customs at the port of entry or exit, what kind of protection mode should be applied?


In this situation, the entity and rights regarding protection application are all qualified, and the procedure is also in line with the provisions - the right holder has submitted the application and other supporting documents and Customs bond according to the provisions. If the ex officio protection mode is applied (the right has been filed with the GAC), it seems that it is unworthy of the name because it is not the Customs to take the initiative to inspect, investigate and notify (the ex officio mode is characterized by the initiative of Customs). If the mode of protection on request is applied, it is clear that the right has been filed with the GAC for record, but the mode of protection on request is applied out of the single reason that the right holder applies for protection on his own initiative, which seems to deviate from the original intention of Customs recordal and is inconsistent with the current national strategy of strengthening IPR protection. In other words, it seems that both the ex officio protection mode and the protection on request mode can be applied under the above-mentioned circumstance, so we summarize them as “the situation between the two above-mentioned modes”, which will cause confusion to the grass-roots Customs law enforcement, and may also cause risks due to inconsistent law enforcement. The most effective way to solve this problem is to deal with it in the top-level policy design, evaluate all the factors, and make it clear when amending the Regulations on Customs Protection of Intellectual Property Rights.


II. The original intention and difference of the system design of the two protection modes 


(I) Original Intention of System Design


Customs recordal system and the dichotomy mode of ex officio protection and passive protection are all important systems of IPR border protection with Chinese characteristics. The original intention of system design is to consider the particularity of IPR border protection and meet the requirements of TRIPS Agreement, but also to adapt to China’s national conditions and law enforcement conditions and manage to maintain the balance between “effective protection” and “facilitation of Customs clearance”. 


1. The ex officio protection mode makes it unnecessary for Customs to protect all IPR equally, so as to concentrate the limited administrative resources to protect the rights with real demand for border protection (IPR is a kind of private right, it is assumed that the right holders who take the initiative to record the right have border protection needs).


2. The mode of protection on request gives the right holders a time limit of 20 working days from the date of detention to seek other domestic remedies, which can not only effectively suspend the Customs clearance of suspected infringing goods, but also reduce the obstacles to the Customs clearance of goods (after all, the time limit is relatively short). In this way, both “effective protection” and “facilitation of Customs clearance” can be taken into account to the maximum extent, so that the border protection of IPR will not develop into a new type of non-tariff barrier for countries to implement trade protectionism while maintaining the legitimate rights and interests of the right holders.


(II) Differences between the Two Protection Modes


1. Whether it is based on the premise of having been filed with the GAC for record. The ex officio protection shall be based on the recordal filing with the GAC, while the protection on request is not. As long as the IPR holders discover that the suspected infringing goods are about to be imported or exported, they may apply to Customs at the port of entry or exit to detain the suspected infringing goods. Of course, the application should be accompanied with relevant supporting documents and sufficient evidence to prove the actual existence of infringement facts.


2. The initiators are different. As for the ex officio mode, Customs takes the initiative to inspect and notify the right holders. Once the right holders apply for protection and pay Customs bond according to the regulations, Customs protection procedure shall be initiated. Under the protection on request mode, the right holders take the initiative to file an application with Customs. If the protection application and Customs bond are in conformity with the provisions, the Customs will initiate the procedure.


3. Customs protection procedures and depth are different. Under the ex officio mode, Customs has the obligation to investigate whether the goods are infringing upon rights, and make corresponding determination according to different investigation results (impossible to determine infringement or not,determine to be an infringement, determine not to be an infringement). Under the protection on request mode, Customs does not investigate whether the goods are infringing upon rights, but only detains the goods temporarily, while waiting for the right holders to protect their rights through the court, and Customs assists the court in enforcement.


4. The detention periods of the goods are different. Under the ex officio mode, except for cases where Customs determines that it constitutes an infringement or not, the Customs shall either releases the goods or assists the court in enforcement within 50 working days from the date of detention if it’s impossible to determine whether it constitutes an infringement or not. Under the protection on request mode, the time limit for Customs to detain the goods and wait for other domestic remedies is only 20 working days from the date of detention.


5. Customs bond is different. Under the ex officio mode, the maximum amount of Customs bond paid by the right holders to the Customs is no more than CNY 100,000, and the right holder to the exclusive use of trademarks can also apply for the general bond of IPR protection, so that there is no need to pay Customs bond case by case, so as to improve the efficiency of rights protection. However, under the protection on request mode, Customs bond equivalent to the detained goods must be paid when applying for rights protection.


III. Four suggestions for effective protection of IPR through China Customs


1. Maintain sensitive to Chinese IPR protection strategy and make the best use of the situation to maximize the protection of rights.


The particularity of IPR border protection determines that it involves not only legal issues, but also strong policy. Opinions of the General Office of the CPCCC and the General Office of the State Council on Strengthening the IPR Protection clearly put forward the policy guidance of strict protection in November 2019. The Supreme People’s Court, the China National Intellectual Property Administration and other authorities have gradually launched measures to comprehensively strengthen the protection of IPR in their respective fields. In the 25th group study session of the Political Bureau of the 19th CPC Central Committee, the General Secretary, Xi Jinping once again stressed the need to implement strict IPR protection. These frequent signals are the best interpretation of China’s ongoing implementation of the whole-chain and strict IPR protection strategy. Therefore, it is necessary for enterprises to maintain policy sensitivity and predict that Customs will also take more stringent border protection measures for IPR in the future. In this way, enterprises can make layout planning for its own rights protection, so as to seize the opportunity to maximize the protection of rights.


2. File IPR with Customs for record in advance in case of need.


Once the relevant rights are recorded, Customs has the obligation to take the initiative to investigate, discover and notify. Moreover, because the relevant rights information has been provided during the filing, it will be easier for Customs to lock the suspected targets of infringement by risk analysis and other means in daily supervision. In addition, with the application of big data, the whole process of handling Customs intellectual property cases has been paperless and traceable, which will further improve the international network against infringement and illegal activities of regional Customs or even cross-border, greatly improving the seizure rate of infringing goods.


3. Preference is given to the ex officio mode in order to maximize the use of Customs resources to protect IPR.


From the perspective of law enforcement practice, ex officio protection is applied for more than 90% of the total number of batches of infringing goods seized by Customs, which is the main mode used by Customs at present to seize suspected infringing goods. As for the characteristics and advantages of ex officio protection, it can be clearly seen from the differences between the two modes that if you want to effectively protect your own IPR, there is no doubt that the ex officio protection is the first choice.


4. The protection on request mode can buy time for enterprises to seek other domestic remedies.


In terms of the efficiency of IPR border protection, ex officio protection is the first choice. However, when the right holders do not file recordal for their rights with Customs for various reasons (such as trademarks that are registered in China but not filed with Customs), they can start the mode of protection on request when IPR border protection are needed, which can save valuable time for the right holders On the one hand, it can effectively suspend the Customs clearance of suspected infringing goods temporarily; on the other hand, within 20 working days of the Customs’ temporary detention, the right holders can seek other domestic remedies to protect their rights.


Conclusion


1. With the implementation of more stringent IPR protection strategy, China Customs may be more active and in-depth in the field of IPR border protection. Given the limitation of administrative resources and the requirement of promoting trade facilitation, the author believes that the dichotomy mode of Customs protection of IPR will continue to exist.


2. As the rights holders, it is necessary to understand the original intention of the system design of the protection mode of dichotomy, especially the differences between the two modes, so as to make appropriate choices according to the actual situation and effectively protect their IPR through Customs.


3. Four suggestions to help you effectively protect your intellectual property rights through China Customs.