For each brand owner, counterfeiting is definitely a nightmare which will end neither quickly nor easily.
As we discussed in our previous blog post: IPR Infringement in China – Five Ways to Stop It, there are 5 different ways to enforce your rights in China. However, considering the requirement for evidence acceptable to a court, the threshold to initiate criminal or civil proceedings is actually pretty high, even to initiate an AIC raid has been proven to be rather difficult, too.
But still, we can do something to stop counterfeiting. Registering your IPRs with the Chinese customs is the best option. Why? Firstly, we have to understand that unlike in most countries, Chinese customs examine both imported and exported goods rather than only imported goods. Thus, by filing the IPRs with Chinese customs, the IPR owners notify Chinese customs of the legal status of their IPRs, and in the end，can stop counterfeits from leaving China to overseas markets.
Now, we are going to explain how the whole process works in detail.
1. Filing online
The whole filing procedure can be done online on the online registration system developed by the General Administration of Customs (GACC).
For the purpose of filing, IPR owners need to submit the following documents:
a) The identification certificate of the IPR owner and a corresponding Chinese translation, meaning the passport if the IPR owner is an individual or the incorporation certificate if the owner is a company;
b) An IP certificate issued by a competent IPR administration in the PRC;
c) A power of attorney and the identification certificate of the agent, if any agent is hired;
The right owners can also submit a list of authorized users of the IPR, such as the OEM manufacture or licensee of their IPRs, so products using the IPRs legitimately can pass through customs without any problem. They can also submit the photos of their products and the packaging, to help the customs detect suspicious products easily.
What we want to point out here is, that for the documents listed in above under point b), IP certificates issued in any other country wont’t be sufficient. To proceed with the filing with Chinese customs, you have to file the IP application in China and get it granted from a competent IP authority first.
2. Timeframe
It may take the GACC at the most 30 days to approve the application, once all necessary documents have been submitted. The term of the filing could be the duration of the IP right or for a maximum period of ten years.
Since 1 November 2015, all IPR holders can file their IPRs with Chinese customs free of charge.
3. Detention of products
Once the filing has been completed and all necessary information is deposited on the internal IP database, it will be easier for customs to find suspicious products. Customs is authorized to detain any suspected infringing products and undertake investigations. They will ask the consignee or consignor of the products to make a declaration regarding the status of such goods. If the declaration is not satisfying, customs will immediately notify the IP rights holder.
The customs will make a final decision as to whether the goods infringe any IP Rights within 30 days. Custom authorities will then decide whether to detain or release the products, or dispose of the products otherwise.
Customs officials can also fine the consignee or consignor up to 30% of the value of the products. Of course, the IPR holder will not get any compensation from the above-mentioned procedure. The fine is just a punishment charged by the state not any kind of financial compensation to the right holder. However, the outcome of the investigation undertaken by customs could be used by the right holder as strong evidence to initiate a civil case to demand for ceasing of infringement and monetary compensation.
If the total value involved exceeds the limits provided under the Criminal Law of the PRC, customs will transfer the case to the local police to initiate a criminal procedure. The infringer could face imprisonment of up-to 7 years.
4. Our message
We agree that the best way to stop counterfeiting is to find the source of it and remove it completely. However, the giant profit derived from counterfeit distributions makes “removing it completely” nearly an impossible task: you just removed one here with tremendous effort, while soon enough, another one pops up there!
Maybe, to stop counterfeits from being sold is a better and more practical way, as opposed to “removing the source completely”. In our opinion, filing with Chinese customs is a cost-effective way to stop counterfeits from being sold in overseas markets. As long as you get your IP rights granted by Chinese IP authorities, you can proceed with the filing procedure right away. Compared to the time-consuming and costly way of acquiring evidence to initiate criminal and civil procedures, registering your IPR with Chinese customs could be easier, better and far more efficient for overseas SMEs.
