How to effectively protect intellectual property rights (“IPR”) in overseas markets is a critical concern for multinationals operating globally. Compared with traditional civil remedies, customs border protection provides an effective and cost-free tool to protect our IPR in China.

There are generally two customs border protection schemes available to protect your IPR in China, i.e., the ex-officio or active protection scheme and the passive protection scheme.

The precondition for active protection from China customs is recording your IPR with the General Administration of Customs of China (“GACC”). After recordation with the GACC, all local customs offices across China will have access to your recordation information in the database and thus may monitor imports or exports to prevent potential infringement. If a local customs office suspects that a specific shipment of goods may infringe your recorded IPR, the customs would suspend the clearance of the goods and immediately notify you or your local agent of the suspected infringement. You would need to file an application to detain the goods and provide a deposit as determined by the customs within 3 working days of the notification if you would like the customs to take protection measures at the border. The customs would conduct an investigation on the shipment or ask you to file a lawsuit in a Chinese court where necessary. The goods will be confiscated if an infringement was established.

Under the passive protection scheme, you are not required to record your IPR with GACC. You may request China customs to detain a suspected shipment by providing evidence to prove the existence of infringement and a deposit equivalent to the value of the goods. However, generally China customs would not proactively monitor potential infringing imports or exports for you since actually there is no relevant IPR information in their database to facilitate such efforts. In addition, under the passive protection scheme, China customs generally would not initiate investigation on the detained shipments, but instead would ask you to file a lawsuit in a Chinese court. China customs would release the goods if no court order is received within 20 working days after the seizure of the goods.  

Until September 2019, there were around 50,000 valid IPR recorded with GACC. Recordation of IPR has, in the past, resulted in encouraging results. For instance, in 2018, China Customs took over 49,700 border protection measures, resulting in seizure of over 47,200 shipments of goods suspected of IPR infringement. Statistics show that around97% of the seizures in 2018 were based on customs’ ex-officio actions, only around 3% was initiated by brand owners under passive protection scheme.

Multinationals are recommended to register their IPR with GACC. The recordation of IPR with GACC is free of charge since 2015. To make customs IPR protection more effective, multinationals are encouraged to maintain close contact with China customs and offer product identification training sessions to officials of the customs offices where infringing products are most likely to enter into or exit out of China. The more awareness you can bring to your products and potential infringing goods, the more effective border enforcement actions would be.