Authors: Evan Chuck, David Stepp, Zhiwei Chen of Bryan Cav LLP

Multinationals have come to realize that protecting intellectual property rights (“IPR”) with the assistance of the customs authorities is a key to success for their overall IPR protection in China. Recently, China Customs rolled out a 3-month campaign – “Longteng (Dragon Fly) Action” – beginning on September 1, 2017 (“Action”) to crack down on IPR infringements of exports from China.

According to the General Administration of Customs (“GAC”), the Action will mainly focus on exports to Africa, Middle East, Latin America and countries and regions along the “Belt and Road.” The targeted products of the Action include small household electric appliances, mobile devices, engineering machinery, daily necessities (e.g., towels, toothbrushes, etc.), festive products and specialty goods.

During the course of the Action, China Customs will enhance the investigation of and penalties on infringements of IPR of “exporting companies with IPR advantages”. The GAC will designate a liaison for each of the “exporting companies with IPR advantages” who will assist and coordinate the enforcement by China Customs and other relevant IPR enforcement authorities, including the Administration of Industry and Commerce, Public Security Bureau and the courts. Furthermore, China Customs will expedite the application process of IPR recordation, infringement investigations and disposal of confiscated infringing products.

To be qualified as an “exporting company with IPR advantages,” the company must be an export-oriented company with the value of its exported, self-owned IPR products equalling 10% or more of its total exports, or the company must own “well-known trademarks” or “key patents in the industry.” In addition, the IPR must have been recorded with the GAC and within the period of validity. Currently, it is reported that around 156 companies are added to the GAC’s list of “exporting company with IPR advantages.”

According to the GAC, the Action is a key step of China Customs’ plan to foster more “exporting companies with IPR advantages,” and to encourage more companies to seek customs IPR protection through the effects of the Action. The Action is expected to provide IPR holders a unique opportunity to work with China Customs to protect their IPR.

Generally, in China border protection is available to IPR holders even if they have not recorded their rights with China Customs. However, as a matter of practice, the enforcement process will be easier, quicker and more likely successful if the IPR are recorded with China Customs. Therefore, the first step in seeking the assistance of China Customs in protecting a company's IPR is to record them with the GAC. The recordation may be filed online, and is free of charge as of 2015. Once the IPR are recorded with the GAC, the company will be entitled to China Customs’ ex officio or active protection of its IPR at all Chinese ports of entry or exit.

To make the customs IPR protection more effective, it is also advisable for IPR holders to offer to conduct product identification training sessions for field customs offices where infringing products are most likely to enter into or exit out of China. The more awareness a company can bring to its products and IPR, the more likely that it will receive enforcement protection from China Customs. If you have any questions about working with China Customs and other IPR enforcement authorities to combat counterfeiting in China, please feel free to let us know.