30 Sep
2021

Trademark enforcement through customs services

Customs protects IP rights related to the import and export of goods in accordance with China’s laws and administrative regulations.

Customs protects trademark rights with both active and passive protection, including:

  • recording the right with Customs;
  • detaining the suspected infringing goods;
  • investigating the infringing situation;
  • punishing the consignee or consignor of the infringing goods; and
  • confiscating and disposing of the infringing goods.

Record trademarks with Customs

Active protection – also known as ‘ex officio protection’ – means that the owner of a registered trademark has recorded their mark (not available for service marks) with China’s General Administration of Customs. Once the mark has been recorded, on finding any goods suspected of infringing the recorded trademark right, Customs may detain those goods and investigate further.

Passive protection – also known as ‘protection upon application’ – means that if the owner of a registered trademark finds that the suspected infringing goods are about to be imported or exported, they can apply to Customs to detain those goods at the place where they enter or leave the country.

It is highly recommended for the registered trademark owner to record their mark with Customs, as only then will Customs take the initiative to protect the registered mark.

Simple and easy to operate

The process for Customs to record a trademark is simple and easy to operate. It provides a long protection cycle at low cost. At present, the procedure for recording trademarks with Customs is straightforward and can be completed on the General Administration of Customs’ website. Domestic trademark owners and rights holders may file an application directly or entrust a domestic agent to do so, while overseas rights holders must file an application through their China office or entrust a domestic agent in China to do so. Protection takes effect from the date of approval by Customs and is valid for 10 years. If the validity period is less than 10 years from the effective approval date, the validity period will be the same as that for the trademark right. Within the six months prior to the expiry date, the rights holder may renew registration. There is no official fee for customs protection recording.

Prerequisite

Customs protection recording is a prerequisite for Customs to actively protect a trademark right. If the owner of the registered mark fails to record it in time, Customs cannot determine whether goods are suspected infringing products.

During or after the recording process, the registered trademark owner can at any time add or remove legally authorised users of the mark from the customs database. In particular, if during a certain period the trademark owner entrusts specific manufacturers or importers and exporters to conduct import and export trade for its trademarked products, the trademark owner can add the manufacturers, importers and exporters as authorised users to the customs’ database. Once done, the import and export of the goods via the authorised manufacturers, importers and exporters can pass through Customs with ease. Similarly, if the cooperative relationship is broken or terminated, the trademark owner can also remove the information from the database at any time. If these companies continue to import and export goods using the registered trademark, they will be arrested by Customs.

Reduced economic burden

Customs protection recording will greatly reduce the economic burden carried by registered trademark owners and rights holders. Many enterprises will entrust law firms or IP agencies to conduct market monitoring to recognise the infringement of their trademark rights, which will often incur considerable costs. If the trademark owner wants to take legal action against the infringement (eg, bringing a civil tort lawsuit), it must bear the high legal fees and litigation costs. If the trademark right is recorded with Customs, then the local customs office will take the initiative to inspect the potentially infringing products. Once the suspected infringing products are located, the customs officers will contact the trademark owner or its agent recorded at Customs. If the trademark owner applies to Customs for the detainment of the suspected infringing goods, they need only submit a security deposit and Customs will investigate and dispose of the goods according to the owner’s authority. After the disposal of the goods and the settlement of the relevant fees, Customs will return the security deposit.

Deterrent to potential infringers

Customs protection recording can also serve as a deterrent to potential infringers. Enterprises generally understand that Customs will inspect goods on import and export and ask the consignee or consignor to truthfully declare the IP status of the items. Therefore, recording the trademark right with Customs as soon as possible will, to a certain extent:

  • help warn potential infringers;
  • reduce or avoid infringement; and
  • safeguard the trademark owner’s legitimate rights and interests.

A trademark owner can apply for passive protection of their trademark if it is not recorded at Customs; however, it is difficult to achieve.

If a trademark owner has not applied for protection, Customs will not take the initiative to check. If the owner wants to apply for protection, they must submit the relevant documents and provide sufficient information and evidence to prove the obvious existence of infringement. For example, the application should specify:

  • the name and specification of the suspected infringing goods;
  • the port of import or export of the suspected infringing goods;
  • the time, means of transport, name and address of the consignee or consignor and their main place of business; and
  • any relevant evidence of infringement.

In practice, it is difficult for a trademark owner to find or monitor such detailed information and evidence about suspected infringing goods within a short period. However, without it Customs cannot accurately judge the suspected infringing goods or protect the trademark rights of the owner.

Customs protection is vital – how to proceed

To be specific, a trademark owner should submit an application to the General Administration of Customs, or, if it entrusts a domestic agent to make the application, a power of attorney should be provided. The application must include the following:

  • the trademark owner’s name, place of registration or nationality, correspondence address, contact name, telephone or fax number and email address;
  • the registered trademark’s name, the class or name of the goods approved for use, the pattern of the trademark, the registration validity period, the approval certificate of assignment and any name and address change or renewal of the registered mark;
  • the trademark licensee’s name, the name of the licensed goods and the term of the licence;
  • the name, place of origin, import and export details, main features and prices of the goods in which the trademark right is lawfully exercised by the trademark owner; and
  • details of the infringing manufacturer, importer and exporter, the relevant customs offices, main features and price.

The trademark owner should attach supporting documents to their application, such as a trademark registration certificate, transfer or renewal document and name and address approval certificate. Photographs of the goods lawfully exercising the trademark right, trademark licence contracts, judgments and decisions on infringement disputes may also be submitted.

The trademark owner should also submit a separate application for each trademark right applied for. If the application is seeking to record an international registered trademark, the trademark owner should submit a separate application for each class of goods. The examination period is 30 working days. If the documents are complete, authentic and valid, Customs will issue a written notice of approval.

Customs will not record a trademark, but will provide reasons in writing, if:

  • the application documents are incomplete or invalid;
  • the applicant is not the IP rights holder; and
  • the trademark right is no longer protected by law or administrative regulations.

Where Customs finds that the trademark owner fails to provide the relevant information or documents, Customs may revoke the record. Where the validity period expires and the trademark right is not renewed or the right is no longer protected by law or administrative regulations, the customs protection of that right will become invalid immediately.

Finally, if a change in the situation concerning the recording of the trademark right occurs, the owner will inform Customs of that change within 30 working days from the date of the change. Where the trademark owner fails to update the change and it seriously affects lawful import and export or Customs’ performance of its regulatory duties according to law, Customs may, on the application of the relevant interested parties, cancel the trademark recordal.

Customs detainment

If a trademark owner has failed to record its right with Customs, it can, on discovering suspected infringing goods, request that Customs detain the suspected infringing goods and submit the relevant certification documents and infringement evidence. The evidence must prove that:

  • the goods requested for detainment were about to be imported or exported; and
  • the trademark used on the goods is not authorised and infringes the owner’s exclusive trademark right.

At the same time, a security deposit not exceeding the value of the goods will be submitted to Customs. This will be used to compensate the consignee or consignor for losses that may be caused due to improper application, as well as for paying the expenses for storage and disposal of the goods detained by Customs. If Customs decides to detain the suspected infringing goods, it will notify the applicant in writing and send a customs detention document to the consignee or consignor. If, on examination, Customs finds that the conditions for detention have not been met, the application will be rejected and the applicant will be notified in writing.

If Customs finds that goods are suspected of infringing a recorded trademark right, it will immediately notify the trademark owner or their agent in writing by email or fax. The trademark owner will reply regarding whether Customs should detain the goods for three working days from the date of receiving the notice. If it is deemed necessary to detain the suspected infringing goods, the trademark owner will submit a written application and pay the security deposit in accordance with the requirements of the notice. After detaining the suspected infringing goods, Customs will notify the owner in writing and send the customs detention document to the consignee or consignor. If the owner fails to submit an application or provide a security deposit within the prescribed time, Customs will release the goods. If the trademark owner wants to check the goods concerned, they can apply to Customs.

After the goods are detained, within 30 working days of the date of detention, Customs will investigate and determine whether the detained goods infringe the trademark right. Where necessary, the trademark owner, consignee or consignor will cooperate with the investigation. At the same time, the trademark owner may apply to the people’s court for legal measures to stop the infringing act or to preserve property with respect to the goods that are detained. Customs will assist on receipt of the notice of assistance from the people’s court concerning the order to stop the infringing act or to preserve property.

Customs will release the detained goods if one of the following circumstances is present:

  • where applying for passive protection, the notice of assistance in execution from the people’s court has not been received within 20 working days of the date of detention;
  • in the case of active protection, the detained suspected infringing goods cannot be determined to infringe trademark rights following investigation, and the notice of assistance in execution from the people’s court has not been received within 50 working days of the date of detention;
  • where Customs considers that the consignee or consignor has sufficient evidence to prove that the goods do not infringe the owner’s trademark right; and
  • where the trademark owner withdraws the application for detaining the suspected infringing goods before Customs recognises the detained goods to be infringing goods.

If Customs identifies a suspected criminal case in the implementation of IP protection, the case will be transferred to the public security authority for handling in accordance with the law.

Cargo disposal and expenses

The detained goods will be confiscated by Customs if, following investigation, it is determined that the trademark rights have been infringed. After confiscation, Customs will notify the trademark owner in writing.

If the confiscated goods can be used for public welfare undertakings, Customs will transfer them to the relevant institutions for such purpose. If the trademark owner is willing to purchase the goods, Customs will transfer them to the trademark owner for a reasonable fee. For goods that cannot be used for social welfare undertakings and where the trademark owner has no intention to buy, Customs can auction the goods, in accordance with the law, after eliminating the infringing features. However, imported goods with fake trademarks cannot enter commercial channels merely by removing the trademarks, except in exceptional cases. If the characteristics of infringement cannot be eliminated, Customs will destroy the goods.

After the trademark owner has requested that Customs detain the suspected infringing goods but Customs cannot identify any infringement, or the people’s court determines that the goods do not infringe the trademark right, the trademark owner will be liable for compensation according to the law. If the import or export of goods infringing a trademark right constitutes a crime, criminal responsibility must be taken.

Finally, if the suspected infringing goods are detained, the trademark owner must pay the related expenses for storage and disposal, among other things. If the relevant expenses are not paid, Customs may deduct them from the security deposit. If the goods are found to infringe the IP rights, the trademark owner may include the expenses for storage and disposal of the goods as part of the reasonable expenses paid by the owner to prevent the infringement.