How Businesses Can Leverage Chinese Customs Authorities to Protect Their Intellectual Property

In an increasingly interconnected global market, intellectual property (IP) rights are a pivotal aspect of business strategy. This is particularly true in China, where the IP regime operates under a stringent “first-to-file” system. This system differs significantly from the “first-to-use” or “first-to-invent” frameworks, favoring those who file their patent or trademark applications first, regardless of actual use or invention date. As patents are based on geographical areas, you will not automatically be protected, even if you own a patent in, for example, the US.

Understanding and effectively navigating this system is crucial for any business operating within or related to China. Here, we will show you how you, as a company, can leverage Chinese customs authorities to protect your intellectual property in China.

The First-to-File System in China

China’s IP protection regime mandates that the right to obtain a patent for an invention goes to the first person to file an application, provided all conditions are met. This underscores the importance of filing IP applications promptly to secure rights before competitors. The urgency fostered by this system often results in a rush to the patent office, leading to a high volume of applications and, sometimes, premature filings aimed at outpacing competitors.

Strategic Filing and the Role of Customs in China

Businesses must adopt strategic filing practices to effectively navigate the first-to-file system. However, protecting innovations does not end with filing with the China National Intellectual Property Administration (CNIPA). Engaging in customs record filing is equally important. This step can safeguard against the unauthorized export and import of counterfeit goods, adding a critical layer of defense in a country known for its expansive manufacturing and export activities.

The Mechanism of Customs Record Filing

The procedure for customs record filing in China is systematic and offers substantial benefits. Once CNIPA has granted an IP right, the owner can record this right with China Customs, valid for ten years and renewable. This record empowers customs officials to inspect shipments for potential IP violations—a significant deterrent to counterfeiters.

The Importance of Timing and Awareness

Timing is critical when benefiting from customs record filing. Businesses must submit the necessary documentation to China Customs within three days of receiving confirmation, a quick turnaround that can be challenging, especially for foreign firms. Moreover, there is a need for heightened awareness about the benefits of this process. Some companies hesitate to engage due to misconceptions or perceived costs, but the potential market losses and brand reputation damage from counterfeit goods can be much higher.

Collaboration for Enhanced Protection

Effective IP protection often requires collaboration between businesses and Chinese customs authorities. Sharing information about genuine products, typical counterfeiter routes, and other intelligence can significantly enhance the effectiveness of customs enforcement. Additionally, close work with legal entities ensures that any actions taken are swift and lawful.

The Evolving IPR Landscape and E-commerce

China’s IPR framework has evolved significantly, with the government introducing stricter laws to combat infringement. These changes have increased the responsibilities of Chinese Customs and impacted the growing e-commerce sector. Online platforms, which have become hotbeds for counterfeit sales, require cooperation between IPR holders, customs authorities, and e-commerce platforms to tackle IP challenges effectively.

Focused Legal Strategies for Confronting IP Infringement in China

In the complex legal environment of China, businesses must employ targeted and effective strategies to protect their intellectual property (IP). Key components of this approach include proactive customs registration, the strategic use of cease and desist letters and forming enforceable partnerships with online platforms. Here’s a detailed look at how these strategies can be effectively implemented:

1. Proactive Customs Registration

Securing IP rights begins with the registration process. Once IP rights are granted by the China National Intellectual Property Administration (CNIPA), businesses should immediately register these rights with China Customs. This legal action enables customs authorities to inspect, monitor, and detain shipments potentially containing counterfeit goods, serving as a critical preventive measure against IP infringement.

2. Use of Cease and Desist Letters

Cease and desist letters are an essential tool for directly confronting IP infringement. These letters act as a formal demand to halt the unauthorized use of IP and provide a clear warning of further legal actions if the infringement continues.

Key aspects of using cease and desist letters effectively include:

  • Timeliness: Issue these letters promptly upon infringement detection to demonstrate resolve and urgency in protecting IP rights.
  • Detailing Infringement: Clearly outline the specifics of the infringement, the rights owned, and the actions required to remedy the situation.
  • Legal Authority: Ensure letters are drafted by legal professionals with expertise in Chinese IP law to enhance their credibility and enforceability.
  • Follow-Up: Continuously monitor for compliance and be ready to escalate to legal proceedings if the infringer does not comply.

3. Engaging with Online Platforms

To address IP infringements effectively on online platforms, it is crucial to have your intellectual property rights securely registered in China beforehand. Once these rights are established, you can assert them against unauthorized listings on e-commerce sites. Popular Chinese platforms such as Taobao, JD.com, and Pinduoduo, where infringement often occurs, are legally obligated to remove listings that violate registered IP rights under Chinese law.

Effective engagement with online platforms includes:

  • Documentation and Evidence: Always keep detailed records and documentation of your IP registration. This evidence is essential when submitting complaints to platforms to demonstrate ownership and the specifics of the infringement.
  • Prompt Reporting: Act swiftly in reporting IP infringements to the platform as soon as they are detected. Provide clear and concise evidence of the infringement alongside your IP registration details to facilitate a quick resolution.
  • Regular Monitoring: Continuously monitor these and other e-commerce platforms for potential infringements. This proactive surveillance helps ensure that new violations are addressed quickly, preserving the integrity and value of your IP rights.

By securing your IP rights and actively engaging with major e-commerce platforms in China, you can leverage their legal obligations to remove infringing listings, thereby effectively protecting your intellectual property against unauthorized use and sales.

Conclusion

For businesses operating in China, understanding and utilizing the customs record filing system is crucial. It not only complements the first-to-file IP system but also provides an essential safeguard against the infringement of goods. By recognizing the importance of these measures and actively engaging with them, businesses can protect their innovations, maintain their brand integrity, and navigate the complex landscape of international trade and IP rights more effectively.

FAQ: Leveraging Chinese Customs Authorities to Protect IP

What is the “first-to-file” system in China?

The “first-to-file” system in China is a framework where the right to obtain a patent or trademark goes to the first person or entity to file an application for it, rather than the one who first uses or invents the IP. This system prioritizes the timely filing of IP applications to secure rights.

How does the first-to-file system affect businesses?

Under the first-to-file system, if two parties independently develop the same invention, the patent will be awarded to the one who files for it first, irrespective of who actually invented it first. This can lead to increased filings, including some that may be premature, as entities rush to secure their IP rights.

What is customs record filing?

Customs record filing is a process where businesses register their IP rights with China Customs after obtaining them from the China National Intellectual Property Administration (CNIPA). This registration empowers customs officials to inspect and detain shipments containing counterfeit or infringing goods.

Why is customs record filing important for businesses in China?

Customs record filing is critical for businesses because it provides an additional layer of protection against IP infringement, particularly against the unauthorized import and export of counterfeit goods. This is especially important in China, which is known for its significant manufacturing and export activities.

What are the benefits of engaging with Chinese customs for IP protection?

Engaging with Chinese customs authorities allows businesses to enhance the effectiveness of their IP protection strategies. Customs officials can act swiftly to intercept counterfeit goods at borders, reducing potential market losses and protecting the company’s brand reputation.

What is the validity period for a customs record in China?

A customs record in China is valid for ten years and can be renewed accordingly. This period aligns with the term of protection offered by the patent or trademark.

How can businesses enhance their IP protection through collaboration?

Businesses can enhance their IP protection by collaborating with Chinese customs authorities and sharing key information, such as details of genuine products and typical routes used by counterfeiters. This collaboration helps ensure that enforcement actions are more targeted and effective.

What challenges might foreign companies face with customs record filing?

Foreign companies might face challenges such as navigating the quick three-day turnaround required for submitting documentation to China Customs and understanding the broader Chinese IPR landscape, which can significantly differ from those in other countries.

How does the evolving IPR landscape in China affect e-commerce?

The evolving IPR landscape in China, with stricter laws and regulations, affects e-commerce by increasing the responsibility of online platforms to combat the sale of counterfeit goods. Effective cooperation between IP rights holders, customs authorities, and e-commerce platforms is essential to address this challenge.

Contact us if you need help with drafting of contracts that follows Chinese laws and are enforceable in China, background investigation of Chinese companiesprotecting patents, trademarks, verification of contracts to the law in China, or help with other legal challenges that you have in China.

If you require our assistance or have further questions about our services, please do not hesitate to contact our Customer Relationship Managers Jan Erik Christensen, at janerik@ncbhub.com  or Milla Chen, at huimin.chen@ncbhub.com. We look forward to hearing from you and helping your business succeed in China.