Introduction of Customs Border IP Protection in China Part I--- the System and Current Implementation
On April 26, 2021, the World Intellectual Property Day, the General Administration of Customs of P. R. China held a press briefing to introduce the Chinese customs’ intellectual property (IP) protection and mentioned that since the beginning of 2021, China’s customs nationwide has further strengthened the protection of intellectual property rights (IPR) and effectively cracked down on IPR infringements involving import and export. In the first quarter, China’s customs nationwide seized 12,885 batches of import and export infringing goods and detained 13.329 million units of suspected infringing goods. For many IP owners, China’s customs has not only become a place where infringing products are gathered, but also an important and effective measure to enforce IPRs thanks to its rapid and severe crackdown.
This article will have two parts to introduce China’s customs IP protection system and key practices to achieve effective IP enforcement at China’s customs border. In the first part, we will introduce the system and current implementation of China’s customs IP enforcement.
I. The IPRs Eligible for China’s Customs Protection
According to the current regulations on customs protection of IPRs, the types of IPRs eligible for customs IP protection include: registered trademarks, copyrights, patents, Olympic symbols and World Expo symbols.
Most of the infringing goods detained by China’s customs nationwide in 2020 were related to trademark rights, including 61,600 batches of goods and 55,828,500 units in total which account for 97% of the year while only 3% of the infringing goods involved in other IPRs. Nevertheless, can we draw a conclusion that only trademark rights are suitable for customs IP enforcement? Of course not. In China, trademark infringement cases have accounted for a substantial majority of the total number of IPR infringement cases across the country over years. Such phenomenon is not unique to customs IP enforcement but also has been seen commonly in other types of enforcement measures, such as IP litigations filed to the courts. The number of infringement cases relating to other IPRs is much less than that of trademark infringement cases.
Some practitioners comment that customs IP enforcement is not suitable for patent rights because determination of patent infringement is complicated, and customs officials generally do not have the technical background or legal knowledge needed to determine patent infringement. However, such point of view may not be correct. In fact, the specific efforts in customs protection not only include determining whether products in issue are infringing, confiscating the infringing products, and imposing fines against infringement, but also include temporarily detaining suspected infringing products and allowing the right holders to inspect the products in issue. Therefore, in addition to compulsory measures, customs IPR enforcement is also an effective way to collect infringement evidence to facilitate IP enforcement with other authorities. For example, a right holder may request customs to collect samples of suspected infringing products and obtain evidence to prove the scale of the infringement, profits from the infringement and so on; that way the right holder can submit and utilize these samples and evidence in subsequent judicial proceedings.
Consequently, the IP right holders, no matter domestic or foreign enterprises and no matter involving trademarks, patents, or copyrights, should have some knowledge about China’s customs IP protection and make a good use of such measures to give their IPRs a full coverage of protection in China. An enterprise whose business involves import and export associated with China may smartly utilize customs IP enforcement to form a business strategy for winning international commercial competitions. Nevertheless, customs IP protection should not be regarded as a single or independent IPR enforcement measure but should be used to complement other types of enforcement under China’s comprehensive system of IPR protection (e.g., criminal investigation or judicial proceeding etc.) to achieve the best effect of IPR enforcement.
II. Infringing Conduct Enforced by CustomsBorder
Different from customs operations of many countries which only enforce IP rights against imported infringing goods, Chinese customs also prohibits infringing goods from leaving the country. In fact, most of the infringement cases handled by Chinese customs are aimed at exportation. In 2020, China’s customs nationwide detained 61,300 batches (54,976,200 units) of infringing goods to be exported while detained 614 batches (1,205,700 units) of infringing goods to be imported. According to the statistics, 96.5% of the infringing products seized were at customs’ export control instead of import control. This shows that Chinese customs has become a place where infringing goods are gathered before they go into the global market, and thus it is important for IP right holders to recognize China’s customs IP protection as an important measure of their global IPR strategy.
As a large trading country and a manufacturing factory of the world, China exports countless commodities from customs every day. Those products suspected of infringing others’ IPRs may mix with legitimate goods and flow into the international market from China. As a result, the damage suffered by the IP right holders has also increased with export of infringing products. Thus, strengthening the protection of IPRs at China’s customs border and stopping export of infringing products from China customs are of great significance to safeguard the rights and interests of IP right holders.
To curb IP infringements by export, Chinese customs not only implements IP protection through common freight channels, but also implements IP protection through postal channels. With the booming of cross-border online shopping in recent years, import and export of goods through postal channels is exploding, and many of those goods in e-commerce may involve IP infringement. Article 31 of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights stipulates that “if articles carried or mailed into or out of China by individuals beyond the reasonable quantities for a person’s normal use infringe any IPRs, the articles shall be treated as infringing goods.” Therefore, Chinese customs will initiate law enforcement ex officio against IP infringing goods beyond a reasonable number for normal personal use which enter and leave China through international postal parcels, international postal express mails, or express channels.
It is worth noting that whether the goods produced by original equipment manufacturer (“OEM”) in China constitute infringement of a Chinese trademark right and therefore are subject to customs IP enforcement is highly controversial in China. The decisions made by various courts, including the Supreme People’s Court, are inconsistent. At present, Chinese customs’ general practice is to detain the goods suspected of infringement upon the right holder’s request and make a decision that the infringement cannot be determined at customs. Then, the right holder has to file an infringement lawsuit with the court, and the court will determine whether those OEM goods infringe any IPRs. In other words, although there is a legal dispute over whether OEM goods constitute infringement of a Chinese trademark, the right holder’s request to customs to seize the suspected infringing goods will be accepted by Chinese customs.
In the second part of the article, we will discuss the procedure of China’s customs IP protection and the key practices to successfully achieve customs IP enforcement in China.
 In (2014) Min Ti Zi No. 38, the Supreme People's Court held that: the OEM products are not sold in the Chinese market, and the logo will not have any role with respect to trademark identification in China; therefore, affixing the logo to the products shall not be deemed as trademark use. In (2016) Zui Gao Fa Min Zai No. 339, the Supreme People's Court also held that: the trademark on the OEM products is not used to identify or distinguish the sources (in China) and will not mislead or confuse people about the sources of goods or services; therefore, such trademark use does not constitute infringement under the trademark law. However, in (2019) Zui Gao Fa Min Zai No. 138, the Supreme People's Court held that: affixing the trademark to the OEM products constitutes trademark use and is deemed as trademark infringement.