Customs is the first gate of border protection for intellectual property. After a trademark is recorded with the General Administration of Customs, customs can proactively discover and detain goods suspected of infringement at import and export; upon investigation and an infringement finding, the goods are confiscated by customs. Drawing on the annual typical IP protection cases published by the GAC in recent years, this article reviews how the path works in practice and its key points.
Case Overview
The GAC periodically publishes typical cases of IP protection by Chinese customs. Recent releases include multiple cases of infringing goods seized at export, for example:
- Shanghai Customs seizure of infringing photovoltaic modules for export: 737 items bearing the 'SUNTECH' sign and 2,480 items bearing the 'JINKO' sign, involving RMB 243,800 and RMB 1.09 million respectively;
- Yiwu Customs seizure of infringing hardware tools for export: 590,600 drill bits bearing the 'SKF' sign and 59,300 bearing the 'DORMER' sign, with a determined value of RMB 955,700, with administrative-to-criminal referral initiated on suspicion of crime and the case transferred to the public security authorities;
- Zhoushan Customs seizure of infringing mobile phones for export: 1,273 phones bearing the 'OPPO' sign, 3,017 bearing 'VIVO', and 207 bearing 'Lenovo', with a goods value exceeding RMB 2 million.
Issues in Dispute
Core issues in customs IP protection include: whether the rights holder has completed customs IP protection recordal; whether customs may proactively suspend release and detain goods; how the post-detention investigation proceeds; the legal consequences of an infringement finding; and how suspected crimes are handled.
Disposition and Legal Basis
Legal basis: Article 44 of the Customs Law provides that customs shall, in accordance with laws and administrative regulations, protect intellectual property related to goods entering and leaving the territory. Article 16 of the Regulations on Customs Protection of Intellectual Property Rights provides that where customs discover import or export goods suspected of infringing recorded IP rights, they shall immediately notify the rights holder in writing; Article 27 provides that detained goods suspected of infringement, once investigated and found to infringe IP rights by customs, shall be confiscated by customs.
In the cases above, customs initiated investigations on their own initiative, verified authorization with the rights holders, found that the goods used others' registered trademarks without permission, and detained and confiscated them in accordance with law; for cases suspected of constituting crimes requiring criminal accountability, they were transferred to the public security authorities in accordance with law, achieving the interface between administrative protection and criminal justice (source: annual typical IP protection cases published on the GAC official website).
Key Takeaways
- Recordal is the premise: only with customs IP protection recordal completed can customs proactively discover and notify the rights holder in writing, greatly improving enforcement efficiency;
- Two parallel paths: protection on customs' own initiative (for recorded IP) and protection on application (the rights holder applies when discovering suspect goods about to be imported or exported, providing security);
- Infringement finding leads to confiscation: goods found infringing through customs investigation are confiscated and re-enter no market;
- Administrative-to-criminal interface leaves no gap: where seized quantities and values reach criminal standards, customs transfers the case to the public security authorities, and infringers may face criminal liability.
Lessons for Businesses
Rights holders with export business should complete customs IP protection recordal as early as possible and provide customs with their main export ports, common infringing product categories, and related information; when infringement leads are discovered, timely applications with security should be submitted to port customs to intercept before the goods leave the country. Exporters must never accept entrusted processing or export of goods bearing others' registered trademark labels without verifying authorization; once seized by customs, in addition to confiscation, they may face administrative penalties and criminal liability.
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