How to detect and capture infringing goods in China

Part one of this article outlined the importance of registering and recording trademarks in China. Part two covers what to do if infringing goods have been detected and the next steps that brand owners can take to protect their products.

Infringing goods are usually found either during the authorities’ standard inspections of goods (an ex officio customs action) or through a specific request for action (a request-based customs action).

Ex officio customs actions are initiated by the customs authorities during normal inspections at the ports. Although this is a passive step to stop infringing shipments, it is an effective way to monitor infringing goods. While suspected shipments may be detained any time and under any circumstances, an ex officio action is carried out when an IP owner has already filed a recordal with the General Administration of Customs (GAC) and this information has been included in the customs IP recordal system for easy reference for customs officers. 

The process for an ex officio action is as follows:

• IP rights are recorded in the customs IP recordal system.
• The customs authorities conduct their daily monitoring of imported and exported goods, although most counterfeiting issues relate to the latter.
• On discovering potentially infringing goods, the authorities send photographs of the goods to the IP owner’s recorded agent. The infringement is then confirmed within three working days.
• If the IP owner confirms that the goods are infringing, it is prompted to pay a guarantee within three working days. The suspected infringing goods are then formally detained and investigated (there is a distinction for patent-related detainments, where the importer/exporter may pay a guarantee to have the suspected goods released in advance).
• After further investigation, the GAC will issue a decision within 30 working days of the goods being formally detained, which allows the owner of the suspected shipment to respond.
• If the owner of the shipment is unable to provide sufficient evidence that the shipment is legal, the infringing goods will be confiscated and destroyed by the GAC.
• If the importer/exporter provides evidence that the shipment is legal and the GAC cannot ascertain whether trademark infringement has occurred based on such evidence, the GAC will require that the IP owner file suit against the importer/exporter and suspected infringing goods before the local court in order to continue the detention of the suspected goods and obtain a decision on the infringement.
• Where a case is submitted to the local court, a written notification from the relevant court will be sent to the GAC for assistance in the detention of the relevant goods within 50 working days from the date of detention. If the GAC  receives no notification from the court (or if the IP owner requests the release of the relevant goods), the customs authorities will release the goods.

While ex officio actions are effective for detecting problems, in order to proactively identify infringing shipments and seek request-based customs action, monitoring and targeted investigations should be part of a brand owner’s strategy.

Monitoring should be conducted regularly and should cover online infringement and exhibitions, as well as market/industry monitoring. This can incorporate digital tools, trusted investigation teams, relationships with informants and other informational sources, and active participation in exhibitions. 

A detailed on-site investigation may provide a more thorough picture of suspected parties and their activities. Brand owners should be sure to use a trusted and experienced investigator, as it is crucial that they go undetected to uncover as much information as possible. Challenges often arise in particularly closed industries where most players know one another and when infringers are already aware of potential legal action against them and are being cautious.

Evidence obtained from monitoring and investigations can not only be used as evidence in customs actions, it can also be used in other legal actions, such as administration for market regulation actions or actions before the courts. 

If an infringement has been uncovered, the IP owner can provide the customs authorities with information relating to the suspected shipment and apply for a customs seizure. For request-based seizures, the follow-up steps to detainment are the same as those of an ex officio action, but rather than recordal leading to detainment by the authorities and confirmation of infringement by the IP owner, the IP owner must provide clues and evidence to the customs authorities directly in order to initiate the action.