Register Your China Trademark Now. Then Register It Again With Customs.

According to recently released statistics, in 2012 Chinese Customs (General Administration of Customs or GAC for short) seized approximately 15,000 shipments of counterfeit goods, the vast majority of which were exports. This was the first year since the Beijing Olympics in which the numbers weren’t goosed by a “special campaign” or similar program, and on a gross basis they weren’t embarrassingly far from those of US Customs, which seized approximately 23,000 incoming shipments in 2012. The comparison pales a bit given that nearly half of the shipments seized in the US originated from China, but let’s be fair here: Chinese Customs didn’t even have a plan to enforce IP rights until 1994, and it wasn’t until the run-up to the Beijing Olympics that they got serious about confiscating goods. Serious as a Jackie Chan PSA.

The implication for foreign companies doing business in China is clear: Chinese Customs can help protect your IP from infringement, even when there isn’t some artificial quota in effect. What the numbers don’t tell you, however, is that nearly all of the seizures were of goods that infringed registered Chinese trademarks, and that those trademarks had been registered not only with China’s Trademark Office but also with Chinese Customs.

As we have written a number of times — see File Your Trademark In China. Now., China: Do Just One Thing. Trademarks., and China’s Changing Trademark Environment. Why You Need To Register Your Trademark Now. — the essential first step in any China IP strategy is to register your trademarks with China’s Trademark Office. Because China is a first-to-file country, until you register a trademark you have no rights in that trademark. But a trademark registration alone will not limit the spread of counterfeit goods. A trademark registration merely gives you the legal capacity to enforce your rights to that mark, and should properly be seen as one of the pieces in an overall strategy.

For any company concerned about counterfeit goods coming from China, the next step should be registering your trademark with Chinese Customs. This is not a legal requirement but a practical one: though China Customs officials have discretion to check every outgoing shipment for trademark infringement against the Trademark Office database, in reality they only check against the Customs database. No separate registration with Customs means no enforcement by Customs.

If you register your mark with Customs, they will contact you any time they discover a shipment of possibly infringing goods. At that point you have three working days to request seizure of the goods. Assuming you request seizure (and post a bond), Customs will inspect the goods. If Customs subsequently concludes the goods are infringing, they will invariably either donate the goods to charity (if the infringing mark can be removed) or destroy them entirely. The cost of destruction, and of storing the goods during the inspection process, will be deducted from your bond.

Registration with China Customs generally takes three to five months and can only be done after China’s Trademark Office has issued a trademark certificate. The latter currently takes approximately 14 months, which means that from the time you file your first trademark application, you should within about nineteen months be able to stop any counterfeit goods from being exported from China. The beauty of this registration is that it can prevent counterfeits of your product from going to those countries in which you do not already have any IP protection.

Nineteen months can be an eternity in the retail world. Whether you’re a toy company producing dolls in Shanghai, a home video company making DVDs in Guangzhou, or a luxury goods company manufacturing high-end purses in Qingdao, there’s only one approach that makes sense. Register your China trademark now. Then register it again.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.