IP enforcement through China Customs

Recent status of customs IP enforcement

China Customs made significant progress in IP enforcement in 2021. In April 2022, the General Administration of Customs issued a report titled the “Status of IP Protection in China Customs in 2021”. Focusing on the Outline for Building a Powerful Country in Intellectual Property (2021–2035) and the 14th Five-Year Plan for National IP Protection and Utilisation, Customs consolidated the foundation of its work, intensified IP enforcement, promoted method innovation, deepened collaboration, optimised service measures and promoted international cooperation.

According to statistics released by the General Administration of Customs, in 2021, Customs took measures to protect intellectual property 84,000 times and detained 79,200 product batches and more than 71.8 million pieces of suspected infringing goods, both imports and exports. A total of 20,133 IP customs recordation filings were accepted in 2021, and 17,667 applications were reviewed and approved, 11,738 of which were filed by domestic rights holders.

According to the report, the main characteristics of IP enforcement by Customs in 2021 are as follows:

• IP enforcement by Customs regarding exports achieved remarkable results, while enforcement in relation to imports continued to grow.
• Seized infringing goods mainly related to trademark rights infringements, and significant results were achieved in relation to the enforcement of patent rights, copyrights and Olympic-logo exclusive rights.
• IP enforcement relating to freight is mainly based on the actions of Customs ex officio, and protection arising from applications by IP rights owners has grown steadily.
• Customs enforcement focused on cross-­border e-commerce channels, and the number of detained batches increased significantly.
• Customs offices in the central and western regions of China (eg, Taiyuan in Shanxi, Nanchang in Jiangxi, Changsha in Hunan, Guiyang in Guizhou, Wuhan in Hubei, Nanning in Guangxi, Urumqi in Xinjiang and Xining in Qinghai) significantly increased the number of enforcement actions.
• The types of suspected infringing goods that are detained are mainly electronic appliances, clothing, shoes and hats.

The highlights of IP protection by Customs in 2021 are the introduction of the use of big data, artificial intelligence for smart IP enforcement and efforts to promote information regarding administrative penalties and enterprise credit certification.

Customs has also taken special action in recent years to strengthen the protection of IP rights, focusing on targeted protection in certain industries, transportation channels and circulation links.

In 2015, the General Administration of Customs deployed and carried out the ‘Qingfeng’ three-year campaign. Customs offices across China focused on mechanical and electrical products and mobile phones, among other products, that were being exported to Africa, Arabia, Latin America and countries and regions along the ‘belt and road’. During the crackdown on illegal exports of infringing goods, a total of 1.5 billion suspected infringing goods were seized, with a case value of Rmb5.2 billion.

Since 2017, the General Administration of Customs has deployed customs offices across the country to carry out a special campaign for IP protection referred to as ‘Longteng’ for five years. The Longteng action focuses on protecting the IP rights of domestic and foreign enterprises and involves carrying out risk prevention and control in accordance with the characteristics of infringing goods in different transportation channels and different trade forms, and strengthening the monitoring and investigation of import and export trade infringements in key areas, key links and key industries. According to statistics released by the General Administration of Customs, as of 25 April 2021, the General Administration of Customs has taken IP protection measures 126,000 times and seized more than 89.2 million suspected infringing goods for import and export.

Other actions have solidly promoted various forms of customs IP rights protection and vigorously cracked down on import and export infringement and illegal activities. These actions include Blue Net Action 2021 for the IP protection of delivery channels and Clean Net Action 2021 for the IP protection of export and transshipment goods.

Can all types of intellectual property benefit from customs services?

The recent status quo regarding customs IP rights protection in China shows that seized infringing goods mainly relate to trademark rights infringements, and significant results have been achieved in relation to the enforcement of patent rights, copyrights and Olympic-logo exclusive rights.

Intelligent trademark recognition integrates an intelligent query system with mobile inspection terminals. Relying on the customs knowledge base and the intelligent trademark recognition model, it can rapidly access big data through an image search and confirm the IP status of goods. Intelligent trademark recognition is currently in use in the Shenzhen customs office, and its expansion to other customs offices across China will greatly improve the efficiency and inspection rate of customs protection services against trademark infringements.

Compared with enforcing trademark protection through Customs, enforcing patent rights protection through Customs has special requirements. Unlike the case for invention patents, the patentee of a utility model or a design patent must provide a patent evaluation report, which is issued by the China National Intellectual Property Administration. Further, since it is difficult to determine patent infringement just from the appearance of a product, and since a complicated and professional comparison in view of the patented claims will normally be involved, customs enforcement was mainly carried out through a passive approach that requires patentees to provide sufficient evidence, submit an equivalent guarantee on a per shipment basis and obtain a court-issued written notification of goods detention.

High costs, poor timekeeping and the ease of advance detection by infringers, who may then take evasive measures, may lead to a deadlock in the case. Further, according to the provisions of Article 19 of the Regulations on Customs Protection of IP Rights, if the consignee or consignor of the goods believes that the imported or exported goods do not infringe the patent right, it may request Customs to release the goods by providing Customs with a guarantee of the equivalent value of the goods.

In recent years, Customs has made immense efforts to strengthen the customs protection of patents. For example, the Beijing customs office has carried out meticulous preliminary investigations to confirm the existence of infringing goods and has assisted patentees in expediting the customs recordation of patents, thereby transforming cases into active cases. Compared with invention patents and utility models, customs protection of design patents is more effective, and the number of seizures is larger.

Copyright protection through Customs is also available, especially for works of art, for which customs protection is more efficient and the number of seizures is larger than for other works, such as computer software, musical works, written and oral works, choreographic works, acrobatic works, photographic works, drawings of engineering designs and product designs, architectural works and cinematographic works.

Regarding IP infringement cases, with the exception of patent infringements – for which no criminal liability can be pursued – protection of trademarks and copyright infringement claims can be pursued through customs protection services and criminal procedure.

Key features of enforcement by application and ex officio

According to the Regulations on Customs Protection­ of IP Rights, Customs initiates the enforcement procedures for IP rights, for which application can be made by request of the IP rights holder or ex officio. The two methods have significant procedural differences, such as in respect of whether customs recordation is required, the amount of the guarantee, the time limit for court intervention, the degree of customs intervention and the obligations undertaken by the IP rights holder.

Enforcement through applications by IP rights holders refers to measures taken by Customs to detain suspected infringing goods discovered on the basis of an application by the IP rights holder. The key features of this method of enforcement are as follows:

1. The IP rights holder submits a protection application and provides information about the infringement to Customs. Customs commences enforcement after receiving the application and the information.
2. The IP rights holder is not required to file IP recordation with the General Administration of Customs in advance and can directly apply to the port customs office for detention upon discovering suspected infringing goods.
3. Customs is not responsible for monitoring the entry and exit of suspected infringing goods; the IP rights holder is responsible for investigating and monitoring suspected infringing goods and providing relevant information to Customs.
4. Pursuant to Article 14 of the Regulations on Customs Protection of IP Rights, if the IP rights holder requests Customs to detain the suspected infringing goods, the IP rights holder must provide Customs with a guarantee of the equivalent value of the goods to compensate the loss that may be caused to the consignee and the consignor owing to improper application, and must pay for the storage and disposal of the goods after the goods are detained by Customs.
5. If Customs detains suspected infringing goods upon request of the IP rights holder but fails to receive a court-issued written notification for goods detention within 20 working days of the date of detention, Customs will release the detained goods.

In the case of enforcement ex officio, Customs immediately notifies the IP rights holder in writing if it discovers import and export goods that are suspected of infringing the registered IP rights. If the IP rights holder files a detention request within three working days of the date of service of the notice and provides a guarantee not exceeding Rmb100,000, Customs will detain the suspected infringing goods. The key features of this method of enforcement are as follows.

1. The IP rights holder should have recorded the IP right with the General Administration of Customs in advance.
2. Customs discovers the infringing goods during routine inspection and supervision of import and export goods and detains them.
3. Customs informs the IP rights holder in writing, and the IP rights holder submits a detention request within three working days of the date of service of the notice.
4. The IP rights holder should provide a guarantee not exceeding Rmb100,000 within three working days of the date of service of the notice.
   • If the value of the goods is less than Rmb20,000, a guarantee amount equivalent to the value of the goods must be provided.
   • If the value of the goods is between Rmb20,000 and Rmb200,000, a guarantee amount equivalent to 50% of the value of the goods must be provided, but the amount must not be less than Rmb20,000.
   • If the value of the goods exceeds Rmb200,000, a guarantee amount of Rmb100,000 must be provided.
5. If, after investigation, Customs considers there to be no infringement, the IP rights holder can seek detention of the goods by obtaining written notification of detention from a court within 50 working days of the date of detention; otherwise, Customs will release the detained goods.

Relationship between customs enforcement and judicial relief

According to China’s current customs IP protection system, a multiple dispute resolution mechanism has been established. The mechanism includes complaints procedures on e-commerce platforms, customs enforcement, enforcement by market surveillance authorities, civil litigation and criminal litigation. It empowers IP rights holders to choose a method, from a variety of dispute resolution methods, that is suitable for the protection of their IP rights and obtain compensation for related losses.

Customs IP enforcement does not conflict with enforcement by the State Administration for Market Regulation, complaints procedures on e-commerce platforms, or civil and criminal litigation, which can be taken in parallel. In most cases, after customs enforcement is completed, the rights holder will choose to file a civil lawsuit in court for compensation.

With the exception of patent infringement cases, if Customs considers that criminal liability may be incurred, the case will be transferred to a public security authority.

For infringing goods that are sold only outside China, customs enforcement is usually the best way to obtain evidence of infringement. In other cases, especially those relating to patent infringement, the sole purpose of customs enforcement is to detain the infringing goods for civil proceedings.

Comment

Practice over nearly three decades has shown that Customs has made arduous efforts to protect IP rights and has made significant improvements in this regard. IP protection through Customs and other IP protection measures jointly constitute China’s IP protection mechanism. Nevertheless, Customs still has room to develop, which it must do while facing increasingly heavy tasks in IP rights protection.

Under the state strategy of strengthening IP rights protection, we believe Customs will take more effective measures in the process of building a better environment for innovation and will exert efforts to raise its IP rights protection work to a new level. It would, therefore, be advisable for IP rights holders to make full use of this customs IP enforcement service to effectively crack down on future IP rights infringements.