The first line of defence: Using customs to protect your IPR in China
Businesses in Europe have increasingly benefited from customs authorities acting to prevent counterfeit products from entering their borders – seizures of products, infringing on the intellectual property (IP) of others, make the news in Europe every week. However, not many businesses realise that, unlike most countries, the Chinese customs authorities have the power to examine and seize both criminal imports and exports. China’s customs have the authority to protect IP rights by confiscating infringing goods and imposing fines on infringers. If the infringement of IP rights exceeds a certain threshold, the customs authorities will also arrange for criminal proceedings to be brought against the infringing party.
The Customs IP Regulations state that IP rights can be recorded by the General Administration of Customs (GAC) in Beijing. It is not compulsory to record IP rights at the GAC in order to apply to local customs for enforcement proceedings, but it is beneficial for companies moving goods in and out of China. This is because if IP rights are registered with customs, customs then has the power to detain any suspected infringing consignment of goods. In addition, local customs offices are more proactive when IP rights are recorded with the GAC, mainly because the recordal makes it easier for customs officials to determine whether goods are genuine or counterfeit. Recordal of IP rights also makes it easier to begin enforcement proceedings.
Given that the recordal of IP rights with the GAC is free and straightforward, recording with the GAC is recommended by the China IPR (intellectual property rights) SME Helpdesk experts.Recordal of IP rights with the GAC
Trademarks, patents (including patents for invention, utility model and design patents) and copyrights can be recorded with the GAC. Separate applications need to be filed for each IP right. In the case of trademarks, for example, holders must submit a separate application for each trademark in each class. There are currently no fees associated with IP registration. To record IP with the customs authorities, you must submit:
- A copy of your business registration certificate (including a Chinese translation);
- A copy of the trademark certificate (China registration);
- Information regarding related licences (customs do not want to withhold legitimate goods), photos of the goods and their packaging;
- A power of attorney in the name of the agent responsible for the registration process if one is used.
In addition, you can also register information about infringers that may have been collected independently such as names, company names, contact details, etc. If you have detailed knowledge of specific deliveries of goods, you can inform the customs authorities which will then examine the delivery in question.
Within 30 days of receipt of all relevant documents, the GAC will decide whether to record the IP rights in question. If the GAC approves the submission, the recordal of IP rights is valid for the duration of the IP right or for a maximum period of ten years. A request to renew the recordal can be filed six months prior to its expiry.
Customs enforcement proceedings
There are generally two ways of commencing customs enforcement proceedings.
- If you suspect that infringing goods will pass through customs, you can file an application with the local customs office at the place of entry or exit of the goods. You are required to provide the local customs office with a deposit to cover potential losses of the consignee or consignor and/or costs incurred by customs for warehousing, storage and destruction of any infringing goods. This option is available to those who have not registered with customs. However, it is quicker, easier, and more likely to be resolved successfully if the right is already registered.
- If the customs authorities suspect that goods infringe IP rights, they will request that the consignee or consignor declare the status of the goods and the IP rights in question. If a declaration is not provided, the authorities will suspend the release of the goods and notify you immediately. You must then act within three days to file an application to detain the goods. This is only possible if you have already registered the right with customs.
The customs authorities will make a final decision as to whether the goods infringe the IP rights within a six-month period and will then decide whether to detain and destroy the goods. The authorities can also fine the consignee or consignor.
Customs recordal – points to bear in mind
The purpose of recording your IP rights at customs in China is to stop the export or import of infringing products and prevent counterfeit versions of goods from entering the international market. The recordal process gives customs the ability to intercede autonomously if they believe this might happen.
Recordal of IP rights has, in the past, resulted in a number of encouraging results. To enable the customs authorities to make quick decisions when checking goods, it is important that you provide the authorities with a comprehensive description of your products. This includes pictures and samples (which you should retain), so that counterfeit goods can easily be identified. Customs authorities are also generally willing to attend ‘training’ meetings with you or your representatives to allow the best chance of limiting infringing products from crossing through customs in China.
In the latest customs regulations on IPR protection (effective as of 1 July 2009), you are obliged to provide customs with as much information about the legitimate business usage of the right as possible, if you wish to continue to benefit from this service. For example, if there is any change to the information made in the recordal application, customs must be notified within 30 days. Failing to meet your customs obligations can lead to your recordal being cancelled.
The China IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to China, Hong Kong, Macao and Taiwan, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (question [at] china-iprhelpdesk.eu) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.
The China IPR SME Helpdesk is an initiative by the European Union.
To learn more about the China IPR SME Helpdesk and any aspect of intellectual property rights in China, please visit our online portal at http://www.ipr-hub.eu/