Intellectual Property Rights (IPR) in China: How to Navigate the Legal Minefield and Avoid Infringement under Customs Protection Law

In a country where intellectual property violations are a major obstacle to trade and investment, companies who know how to harness the power of Chinese customs protection laws have a competitive edge.

In recent years, with the increasing awareness of laws and regulations in Intellectual Property protection, companies dealing with China are increasingly protecting their legitimate rights and interests by registering trademarks and applying for invention patents or copyrights.

In recent years, The General Administration of Customs of the People's Republic of China (GACC), the country's inbound and outbound management and supervision agency, has also stepped up its efforts to prevent and reduce intellectual property violations and protect the trade secrets of enterprises.

Such actions are vital to maintain the healthy growth of cross-border trade and enhance overall investment in China. The China Customs is responsible for catching 90% of all IPR infringements in China and the remaining 10% is caught by different authorities. Once cargo is involved in intellectual property infringement, the customs clearance lead-time will be severely impacted. In addition, if the infringement is confirmed, local Customs will confiscate the goods and impose heavy fines on the parties concerned, as well as reporting the case to local police for further criminal investigation.

In this article, we discuss ways to mitigate the risks of intellectual property violations in China by taking advantage of Chinese customs protection laws.

Customs Protection of IPR in China

The customs protection of intellectual property rights is part of border supervision measures to protect intellectual property rights.

Its concept is mainly derived from the relevant provisions on customs protection of intellectual property rights under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). According to Article 2 of The Regulations of the People's Republic of China on Customs Protection of Intellectual Property Rights:

"Customs protection of intellectual property rights means the protection provided by the Customs for the exclusive rights to use a trademark, copyrights and their related rights, and patent rights (hereinafter referred to as intellectual property rights) related to import or export goods and protected under the laws and administrative regulations of the People’s Republic of China."

Two different administrative measures are applicable to the protection of intellectual property rights under China Customs, namely "protection upon application" and "protection upon authority":

• Protection upon application is the measure that the IPR holder can apply to the Customs at the place where the cargo enters or leaves the country to detain the suspected infringing goods before importation or exportation. The Customs should detain the goods according to relevant laws, and the right holder can choose to file a lawsuit with the Court to protect themselves.
• Protection upon authority is applicable when the Customs discovers any import and export goods suspected of IPR infringement, meaning the agency will notify the right holder and detain the goods according to the right holder's application. After further investigation on the status of intellectual property, the Customs will make an administrative decision based on the findings.

Here is a list of relevant intellectual property laws and regulations in China:

• Customs Law of the People’s Republic of China
• Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights
• Regulations of the People's Republic of China on the Implementation of Customs Administrative Penalties
• Trademark Law of the People's Republic of China
• Copyright Law of the People's Republic of China
• Patent Law of the People's Republic of China
• Criminal Law of the People's Republic of China

Practical Tips to Mitigate the Risks of Intellectual Property Violation in China

For foreign brand owners entering the Chinese market for the first time, it is necessary to apply to the GACC for filing of their trademarks, brands, and patents to obtain customs protection of IPR. This way, they can avoid any potential IPR infringement with other brands or products during importation or exportation, greatly reducing the overall customs clearance lead time of the supply chain movement.

For domestic manufacturers based in China that supply goods to foreign customers, it is particularly important to use the Customs Intellectual Property System to monitor the customs filing status of relevant trademarks while receiving orders from foreign customers for production — especially for those OEM orders production and export with established global brands or trademarks.

In addition to obtaining the official authorization from the overseas right holder, it is also necessary to add the export production entity to the authorized list under the record in the Customs Intellectual Property System. These steps will ensure there will be no seizure of goods during export clearance due to IPR infringement, resulting in severe losses of the manufacturers.

For import enterprises in China, before declaring imported goods to Customs, importers need to assess the status of intellectual property rights of the imported goods to ensure that they are declared without violation, so as to avoid any infringement risks as well as to achieve full customs compliance.

GEODIS: Your Trusted Global Partner in Customs & Trade Compliance

In order to avoid any IPR infringement in the process of import and export in China, companies must be fully aware of the related laws and regulations of intellectual property in China.

“ The use of Customs Protection of Intellectual Property Rights of the People's Republic of China can help companies to avoid legal minefields and effectively protect their intellectual property rights. “

As the world’s leading customs brokerage service provider, GEODIS provides a full range of professional customs & trade compliance solutions to all our clients globally. We have more than 900 professional trade experts worldwide to support our customers in researching customs and trade regulations as well as providing effective solutions to ensure efficient cargo shipping and full customs compliance at all times.

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