The Role of Customs Record Filing in Safeguarding Intellectual Property in China

Introduction

In the age of globalization, the importance of Intellectual Property Rights (IPR), like protecting your patents and trademarks, has taken center stage. Particularly in rapidly developing economies such as China, protecting IPR has emerged as a paramount concern. As such, customs record filing serves as an essential protective mechanism for safeguarding IPR in China. This tool provides businesses with a robust line of defense, reducing economic fallout, isolating infringing goods, and fostering respect for IPR in the Chinese trade market.

 

Customs Record Filing: A Vital Protective Mechanism

As a buffer against infringements, customs record filing reduces the potential for financial loss by right holders. By facilitating the identification and segregation of goods that violate IPR, it effectively minimizes the economic fallout from potential infringements. This safeguard system operates at the forefront of international trade, forming a bulwark that shields IPR owners from potential threats.

 

Validity Period and Extension

In China, the validity period for customs record filing is initially set at ten years. However, the law offers the possibility of extension, ensuring enduring protection for IPR. This extended validity enables businesses to operate with peace of mind, knowing their intellectual properties are continuously protected against potential violations.

 

Role of Customs Detention

An additional benefit of customs record filing is the provision for the extension of the customs detention period. This extra time allows IPR holders to take appropriate legal action and compile the necessary evidence against suspected infringers. Such a provision offers an added layer of security by providing ample time to respond to possible infringements, thus effectively protecting the rights holders’ interests.

 

Eligible Intellectual Property Rights

Under China’s IPR laws, trademarks, copyrights, related rights, and patent rights relevant to import and export products qualify for record filing. This comprehensive scope ensures that all key aspects of IPR are covered, offering an extensive protection net for businesses.

 

Eligible Entities

Entities eligible for record filing in China include trademark registrants, copyright owners, related rights owners, and patentees in the Chinese legal system. By extending this provision to a broad range of IPR holders, China encourages businesses to secure their intellectual properties first, fostering a culture of respect for IPR.

 

Record Filing Process

The record filing process in China involves submitting an application and providing security within three working days after receiving confirmation from China Customs. The promptness of this procedure allows businesses to establish protection for their IPR and commence trading activities quickly.

 

Empowering Businesses

Understanding and utilizing customs record filing mechanisms empowers businesses to protect their interests in a proactive manner. It gives them the tools to take preventive action against IPR infringement, bolstering their overall security in the Chinese trade market.

 

The “First to File” System and Its Relation to Customs in China

China operates on a “first to file” system when it comes to Intellectual Property Rights (IPR). Unlike the “first to use” system in some countries, where the initial use of a trademark in trade confers protection, in China, the first party to register a trademark, patent, or design is the one to receive the legal rights, regardless of who first used or created it. Understanding this system is critical for businesses seeking to safeguard their intellectual property in China.

Relevance to Customs Record Filing

The “first to file” system has substantial implications for customs record filing. If a company’s intellectual property has not been registered in China, customs authorities will be unable to protect those rights, even if infringements are discovered. This is because, under Chinese law, customs officials base their enforcement actions on the rights conferred by Chinese registrations.

Therefore, securing Chinese registration for your intellectual properties—whether they are patents, designs, or trademarks—is a prerequisite for utilizing the protection offered by customs record filing. Without such registration, your IPR will not be recognized, and you will be unable to activate the customs protections available.

Protecting Your IPR

This system underscores the importance of early and comprehensive registration of IPR in China. If a third party registers your intellectual property before you, it could prevent you from using your own property in the Chinese market. Furthermore, they could potentially stop your products at customs, even if those goods are only transiting through China to other destinations.

Legal Action

The “first to file” system also means that if a third party has registered your IPR in China before you, you will have to challenge this registration legally. This could mean lengthy and costly legal proceedings to prove that the third party has registered your intellectual property in bad faith.

The “first to file” system in China makes the early and comprehensive registration of IPR crucial for companies operating in the Chinese market. Registering your intellectual property allows you to take advantage of customs record filing, offering a robust line of defense against potential infringements. It is an integral part of any comprehensive IPR protection strategy for businesses in China.

 

Consequences of IPR Infringement Discovery at Customs in China

The discovery of goods infringing upon Intellectual Property Rights (IPR) at customs in China can set in motion a series of actions designed to uphold IPR laws and protect the rights of the IPR holder.

Detention of Goods

Upon discovering potentially infringing goods, Chinese customs authorities will detain the goods in question. The detained goods are held securely to prevent them from entering the market and causing further potential damage to the IPR holder.

Notification of the IPR Holder

Simultaneously, the customs authorities will notify the IPR holder of the detention. This notification will include details about the detained goods, including the names of the consignor and the consignee, the name and quantity of the goods, and the reasons for detention.

Investigation and Evidence Compilation

The IPR holder is then given a certain period of time to gather evidence and build a case against the infringer. This period typically lasts for 20 working days. The right holder must submit relevant evidence to customs indicating that an infringement of their IPR has occurred. This process is crucial as it provides the backbone for any subsequent legal action taken against the infringer.

Extension of Detention

Should the right holder need additional time to gather evidence or initiate legal action, they can apply for an extension of the customs detention period. This extension offers the IPR holder extra time to compile a robust case.

Legal Proceedings

If the right holder can provide satisfactory evidence of infringement, they can then launch legal proceedings against the infringer. If the court rules in favor of the IPR holder, penalties can range from fines and confiscation of goods to criminal charges in cases of significant infringement.

Release or Destruction of Goods

If the court finds no infringement occurred, the detained goods will be released. However, if a violation is proven, the confiscated goods are typically destroyed to prevent them from entering the market. In some cases, after removing the infringing features, goods can be donated to charities or used in other socially beneficial ways.

The discovery of IPR infringement at customs in China demonstrates the critical role of customs record filing in protecting IPR holders. It offers an initial line of defense against infringement and a mechanism for IPR holders to seek redress and enforce their rights.

 

Collaborating with Chinese Customs to Prevent IPR Infringement

Active collaboration with Chinese customs is one of the most effective ways to protect your Intellectual Property Rights (IPR) from infringement. There are several strategies that companies can adopt to ensure the most effective protection possible.

Register with China Customs

First and foremost, IPR holders should ensure their rights are registered with China Customs. This registration enables customs officers to act ex officio, i.e., to take action against potential infringements even without a specific request from the rights holder. The process involves submitting an application and providing security, which then allows for immediate action upon identifying suspected infringing goods.

Conduct Training Sessions

Chinese customs authorities are often open to training sessions conducted by IPR holders or their representatives. These sessions can educate customs officials about specific aspects of your products, trademarks, or patents that can be crucial in identifying infringing goods. Sharing knowledge about your IPR with customs can significantly enhance the effectiveness of infringement detection.

Provide Information and Updates

Regularly providing customs authorities with updated information about your IPR, products, distribution channels, and other relevant data can assist them in their role. This could include new product launches, changes in packaging, known counterfeit versions of your products, and other pertinent information. The more information customs officials have, the better equipped they will be to identify potential infringements.

Respond Promptly to Customs Notifications

When customs officers suspect an infringement of your IPR, they will notify you. Responding promptly to these notifications and providing the necessary guidance is crucial. The more effectively and efficiently you can respond to these alerts, the quicker infringing goods can be detained and removed from circulation.

Establish Strong Legal Counsel

Maintaining strong legal counsel in China can facilitate effective collaboration with Chinese customs. This can help you navigate the process of customs record filing, respond effectively to customs notifications, and take swift legal action against infringers when necessary.

Through these strategies, companies can build strong relationships with Chinese customs authorities, enabling them to work together more effectively to protect their Intellectual Property Rights. This collaborative approach forms a vital part of a comprehensive IPR protection strategy, helping companies safeguard their assets and ensure their products’ integrity in the Chinese market.

 

Why Foreign Companies Neglect Customs Record Filing in China

Despite the benefits offered by customs record filing in China, there are instances where foreign companies neglect this critical protective measure. Understanding these reasons can highlight the importance of addressing misconceptions and providing better education about IPR protection.

Lack of Awareness

One of the primary reasons is a simple lack of awareness. Many businesses, especially those new to the Chinese market, may not be fully versed in the nuances of China’s IPR laws and the benefits of customs record filing. They may not know that this process exists or understand the extent of protection it offers. A broader dissemination of information about IPR and the benefits of customs record filing is needed to address this issue.

Misconceptions about the Process

There is often a misconception that the process of customs record filing is complicated and time-consuming. The perceived administrative burden deters some businesses, who choose to skip the procedure. However, this neglect can expose businesses to significant risk, as they may lack adequate protection against IPR infringements.

Financial Constraints

For some smaller enterprises, financial constraints may be a factor. The fees associated with record filing, although relatively small compared to the potential losses from IPR infringement, can still deter businesses operating on tight budgets. This is a case where perceived short-term financial savings can lead to long-term financial losses.

Underestimation of Risks

Many businesses underestimate the risk of IPR infringement, especially in a fast-growing economy like China. They might believe that their business is too small or their technology too niche to attract the attention of counterfeiters. However, IPR infringement is a widespread issue affecting businesses of all sizes and sectors.

Overreliance on Domestic Legal Remedies

Some companies may over-rely on domestic legal remedies and fail to take advantage of the customs record filing. They might believe that their domestic IPR registrations and enforcement mechanisms will be sufficient to protect them. This, however, overlooks the importance of customs record filing as a first line of defense against infringements in the international trade context.

To maximize the benefits of trading in China, companies should invest the necessary time and resources in understanding and utilizing customs record filing. This approach ensures robust protection of their intellectual properties, laying the foundation for sustainable growth in one of the world’s largest and most dynamic markets.

 

Conclusion

Customs record filing plays an invaluable role in safeguarding IPR in China. It creates an environment conducive to innovation and entrepreneurship by protecting businesses from potential infringements. Its importance cannot be overstated in a world that increasingly thrives on exchanging and creating ideas. As such, businesses seeking to make their mark in the Chinese trade market would do well to familiarize themselves with the nuances of customs record filing and its role in IPR protection.

 

FAQs

1. What is customs record filing in China? Customs record filing is a process that allows Intellectual Property Rights (IPR) holders to register their rights with China’s customs authorities. This will enable customs to act proactively, identifying and detaining goods that may infringe upon these rights.

2. What is the validity period for customs record filing in China? The initial validity period for customs record filing in China is ten years. However, there is a provision for extending this period, ensuring continued protection for IPR.

3. Who can apply for customs record filing in China? Eligible entities for record filing in China include trademark registrants, copyright owners, related rights owners, and patentees. These IPR holders must also have these rights registered in China to take advantage of customs record filing.

4. What happens after customs in China confirm my application for record filing? Once your application for customs record filing is confirmed, you must provide security within three working days. This allows customs to act on your behalf, detaining goods that infringe upon your IPR.

5. What is the “first to file” system, and how does it relate to IPR in China? The “first to file” system in China means that the first party to register a trademark, patent, or design will receive legal rights, regardless of who first used or created it. Therefore, registering your intellectual properties in China is crucial to protect your rights and to enable customs record filing.

6. What happens when customs authorities find goods that infringe on my IPR? If customs authorities find goods infringing on your IPR, they will detain them and notify you. You then have a certain period to gather evidence and build a case against the infringer. Legal proceedings against the infringer can be initiated if the evidence is satisfactory.

7. How can I collaborate with Chinese customs to prevent IPR infringement? Active collaboration strategies include registering your IPR with China Customs, conducting training sessions for customs officials, providing regular updates about your IPR and products, responding promptly to customs notifications, and maintaining strong legal counsel in China.

 

Contact us if you need help with registering your intellectual property with the customs in China, legal help in China, like drafting contracts that follow Chinese law, background investigation of Chinese companies, protecting patents, trademarks, and verification of contracts to the law in China, etc.

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

 

 

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.