Measures for Implementing the Regulations on Customs Protection of Intellectual Property Rights

In China, as in many other countries, customs departments play an important role in the enforcement of intellectual property rights, seizing counterfeit goods and preventing them from being imported and exported. China's General Administration of Customs (GAC)—again, like many countries, including the U.S.—allows holders of an intellectual property right (IPR) such as a patent, copyright or trademark to record that IPR with the GAC in order to facilitate and strengthen enforcement of the IPR. Customs agents in China will enforce intellectual property rights even if the owner has not recorded its patent, copyright or trademark with the GAC. However, rights recorded with the GAC will receive priority enforcement.

The GAC issued the Measures for Implementing the Regulations on Customs Protection of Intellectual Property Rights (Amended Customs IP Protection Measures) on March 3, 2009. The new regulations will come into effect on July 1, 2009, at which time the existing regulations governing customs enforcement of intellectual property rights will simultaneously be repealed.

Protection of intellectual property rights has been a point of emphasis for the Chinese government in the past several years. In June 2008, for example, the State Council published the Outline of National Intellectual Property Strategy, which establishes a broad set of principles, strategies and goals for improving the use of and respect for intellectual property rights throughout China by 2020.

Customs officials have an important role to play. It has been reported that the GAC detained 553 loads of cargo valued at RMB 45 million in 2008, increases of 23 percent and 14 percent, respectively, compared with 2007.

Filing of Rights with the GAC

The Amended Customs IP Protection Measures provide detailed procedures for IP protection, and generally attempt to strike a balance between the rights of IPR holders and those who are importing or exporting goods. Owners of trademarks, copyrights and patents that are already protected by Chinese laws and administrative regulations can also record their intellectual property rights with the GAC. Chinese customs will not protect rights that have not been registered in China.

To record an IPR with customs, the owner must provide evidence of ownership and prior registration of the underlying right in China, such as a photocopy of the trademark registration certificate, the registration of copyright or a photocopy of the patent certificate. The Amended Customs IP Protection Measures treat utility model and appearance/design patents somewhat differently: Owners of such patents must also submit the patent right assessment report issued by the State Intellectual Property Office (SIPO).

Where the holder of an IP right has licensed or otherwise authorized another individual or company to exploit his or its IPR, the IPR holder should also provide that license or authorization to the GAC.

Recordation of an intellectual property right lasts ten years, or until termination of the underlying IPR (for example, expiration of the copyright). IPR holders may apply for an extension, which again lasts ten years, or until termination of the intellectual property right itself.

When the underlying IP right expires, the owner that has recorded such a right with the patent office shall file for deregistration with the GAC. Where the IPR holder fails to cancel its filing, the GAC may do so.

Requirements for Consignors and Consignees

Individuals and companies that import goods (consignees) or export goods (consignors) into or from China are required under the Amended Customs IP Protection Measures to know the ownership condition of intellectual property rights for all goods being imported or exported, and to provide relevant certification documents to customs.

Seizure of Goods upon Application

Where the IPR holder suspects that goods are being imported or exported illegally (i.e., so as to infringe on the intellectual property right), the owner (or his/its agent) may file an application requesting that customs officials seize the infringing goods. In that case, the IPR holder must provide to customs a guarantee equal to the value of the infringing goods. The intellectual property rights owner must also provide evidence of infringement. Customs officials must notify the consignor or consignee that the goods are being held.

Where an IPR holder has not already recorded his or its intellectual property rights with the GAC and suspects that infringing goods are being imported or exported, the holder can still request assistance from customs by attaching the appropriate documentation showing ownership of the IP right, as otherwise would be required for recordation.

Customs officials may also detain suspect goods. In that situation, GAC officials will notify both the IPR holder and the consignor or consignee.

The Amended Customs IP Protection Measures also provide that both parties can examine detained goods with prior approval.

Release of Goods

Upon seizure of allegedly infringing goods, an importer or exporter may file a written application for release of the goods; in such a case, the consignor or consignee must provide customs a deposit equal to the value of the seized goods. The GAC must also notify the IPR holder, who may file a lawsuit to stop the suspected infringement.

Oversight Role of the GAC

The GAC is charged under Amended Customs IP Protection Measures with administering and supervising the proper use of IP rights. Where goods exploit an IP right that has been recorded with the GAC, but use of the underlying right by the importer, exporter or manufacturer has not been recorded, the GAC may require the consignor or consignee to declare and show the condition of the underlying IP rights for its goods. As described above, suspect goods may be seized, with customs notifying the IPR holder in writing.

After seizing suspect goods, the GAC shall conduct an investigation to determine whether the goods infringe upon IP rights, consulting China's trademark, patent and copyright offices, as needed.

Where the GAC does not confirm that goods infringe upon an IP right, the IPR holder may apply to the People's Court for protection, such as an order to terminate infringement.

If GAC officials suspect that the import or export of infringing goods involves criminal activity, they shall transfer the case to the appropriate criminal enforcement authorities.

Guarantees for Goods Detained by Customs

When goods are seized by customs in the course of its ordinary work, rather than upon request of the IP holder, the IP holder must still provide a guarantee to customs. The amount of the guarantee is stipulated in the Amended Customs IP Protection Measures, and is generally 50 percent of the value, up to RMB100,000.

Owners of special use rights of trademarks filed with the GAC are treated differently. Their guarantee will vary, depending on the cost of storing their goods by customs in the previous year.

Disposal of Infringing Goods

The Amended Customs IP Protection Measures also contain procedures for disposal of infringing goods, including consultation with, and compensation for, IP holders.