China is the manufacturing capital of the world. While many legitimate brand owners make their goods in China to have them shipped all around the world, there are a large number of counterfeits coming from factories in China as well. Here are a few tips regarding Chinese Customs that IP owners should be aware of:
(1) China inspects both imported and exported goods at their ports. Since exported goods can be stopped by Customs officials, it can be a significant tool for battling counterfeits coming out of China.
(2) There are two ways Customs officials will detain goods for potential IP infringement, through “ex officio” action where Customs officials act on their own to detain a shipment, or through an “application for detainment” where an IP owner requests specific shipments to be stopped.
(3) To better the chance that Customs officials will be able to oversee and catch infringing shipments, IP owners should record their IP rights with Customs. Recordal is a quick, easy, and low cost process, so it can be a useful tool against infringers.
(4) Trademark, patent, and copyright may be recorded and enforced through Customs, however the majority of goods detained for suspected IP infringement are held based on trademark rights. Whether patent and copyright Customs recordals are valuable will vary case by case and will depend on the likelihood that Customs officials would be able to spot and confirm infringement.
(5) There will be opportunities for IP owners to communicate with and train Customs officials on better catching infringing products, this may be particularly helpful for patent related cases. Taking opportunities to train and develop stronger relationships with Customs officials will help IP owners optimize this protection tool.
(6) Some bad faith trademark filers may try to stop goods brand owners are manufacturing in China but shipping back to their home country. This may be done in an effort to further harass and push negotiations. However, the Supreme People’s Court has clarified that export-only shipments (or OEM activities) are not considered “use” in China as the goods are not for the Chinese market. Therefore, while shipments can certainly be stopped by the bad faith party, the brand owner can seek an “OEM Exception” to have their shipments released.
Customs action should be an option considered by anyone facing counterfeit or infringement issues in China. Even for those not currently facing issues, after IP rights have been registered in China, particularly trademark rights, a Customs recordal of such rights should be considered to ensure additional eyes are looking out for potentially problematic goods.