CHINA INTELLECTUAL PROPERTY LAW NEWSLETTER

SPECIAL ISSUE:

Regulation of People's Republic of China on Customs Protection of Intellectual Property Rights

Order of the State Council of the People's Republic of China
No. 395

(Adopted by the State Council on November 26, 2003, enacted from March 1, 2004.)

Chapter 1. General Provisions

Article 1. This regulation is formulated in accordance with the Customs Law of the People's Republic of China. The purpose of this act is to implement customs protection on intellectual property rights, promote foreign trade, economic, technological and cultural exchanges, and to safeguard public interests.

Article 2. The Customs Protection on Intellectual Property Rights ("CPIPR") in this regulation means the protection granted by the State Administration of Customs ("SAC" or "Customs") on exclusive use rights of trademarks, copyright, and patent rights and their subsidiary rights (thereinafter collectively called "IPR" or "Intellectual Property Rights") over imported or exported goods that are protected by Chinese laws, administrative regulations.

Article 3. PRC prohibits import and export of goods infringing IPR.
SAC shall implement the protection of IPR pursuant to the relevant Chinese laws and provisions in this regulation, and shall exercise its powers in accordance with the Customs Law of PRC.

Article 4. Owners of IPR who request Customs to implement IPR protection should submit an application for protective measures to Customs.

Article 5. Consignees or Consignors and their agents of imported or exported goods shall, in accordance with the rules of this State, factually declare the IPR status of their goods and provide the relevant supporting documents.

Article 6. Customs shall maintain strict confidentiality regarding the subject matter of the IPR in question.

Chapter 2. Recording System of IPR

Article 7. Owners of IPR may register their IPR with SAC in accordance with the provisions in this regulation. To register their IPR with SAC, they shall submit an application letter which should include the following contents:

(1) The IPR owner's name, place of registration and nationality;

(2) The names, contents and other relevant information of the IPR;

(3) The state of licensing of the IPR in question.

(4) The name, origin, points of entry and exit, importers, exporters, characteristics and prices of the goods in which the IPR owners lawfully exercise their IPR;

(5) Manufacturers, importers, exporters, points of entry and exit, characteristics and prices of the goods, which are known in violation of their IPR.

Owners shall provide evidentiary documents for the aforementioned contents of the application letter.

Article 8. SAC shall make a decision within 30 working days from the date of receipt of the application documents by recording the IPR and notifying the applicants regarding the decision in writing or, in the event of a rejection, notifying the applicant of the reasons for that rejection.

SAC shall not approve registration under following circumstances:

(1) Application documents are incomplete or invalid;

(2) Applicants are not owners of the IPR;

(3) Laws and administrative regulations do not protect the IPR.

Article 9. SAC may cancel the IPR registration if the IPR owners fail to factually provide relevant information or documents when applying for IPR recording.

Article 10. The registration of CPIPR shall be valid for 10 years starting from the date of approval by SAC.

Owners may renew the recording 6 months prior to the expiry, provided that the IPR is valid at that time. Each renewed term is 10 years.

The recording for CPIPR will automatically be invalidated on expiry if no application for renewal is submitted, or if the IPR is no longer protected by the laws and regulations of PRC at the time of expiry.

Article 11. In the event of any alteration of the recorded IPR, IPR owners should apply to SAC for modification or cancellation within 30 working days from the alteration of the recorded IPR

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Chapter 3. Application for and detention of Goods being suspected of infringing IPR (thereinafter "suspected goods")

Article 12. Owners of IPR may apply for the detention of suspected goods to Customs at entry and exit points in the event that the suspected goods will be imported or exported.

Article 13. When requesting detention of the suspected goods, owners of IPR should submit an application letter and evidentiary documents sufficient to prove the allegations.

The application letter shall include the following:

(1) Names, registration places and nationality of the IPR owners;

(2) Names, contents and other relevant information of the IPR;

(3) Names of assignors and assignees of the suspected goods;

(4) Names, specifications etc. of the suspected goods;

(5) Probable entry and exit ports, time and transportation means etc. of suspected goods.

The application letter shall also include the series number of the record at Customs if the suspected goods are related to a recorded IPR.

Article 14. When applying for detention of suspected goods to Customs, the owners of IPR shall provide a guarantee not more than the value of the goods to Customs for the purpose of indemnifying the losses suffered by assignors and assignees and to pay for storage, custody, and disposal etc. arising from inappropriate applications; If storage and custody expenses are paid directly by owners to storage providers, the payment shall be deducted from the guarantee. The SAC shall provide a detailed account to the owners of the relevant IPR.

Article 15. Customs shall detain suspected goods, give written notice to IPR owners and deliver the receipts of detention to assignors or assignees if the application for detention of suspected goods are in accordance with the requirements of Article 13 of this regulation and the IPR owners have provided a guarantee pursuant to Article 14.

Customs shall reject the application and notify the IPR owners in writing if the application is not in conformity with the requirements of Article 13 of this regulation or the owners have not provided a guarantee pursuant to Article 14.

Article 16. Customs shall notify IPR owners in writing if they suspect that imported and exported goods have violated IPR rights. If IPR owners submit an application within 3 working days after receipt of the notice acknowledging compliance with Article 13, and provides a guarantee pursuant to Article 14, Customs shall detain the suspected goods, notify IPR owners in writing, and deliver receipt of detainment to assignors or assignees of the goods. Customs shall not detain the goods if IPR owners fail to submit application or fail to provide guarantee within the required time limits.

Article 17. Upon approval by Customs, IPR owners, assignors or assignees of the goods may inspect the relevant goods.

Article 18. Assignors or assignees shall submit a written statement and related evidentiary documents if they consider that the goods are not in violation of IPR owners' legal rights.

Article 19. If the assignors or assignees of the goods being suspected to have infringed IPR consider that their goods are not in infringement of IPR, they may request Customs to release their goods after providing a guarantee equivalent to the value of the goods. Customs shall refund the aforementioned guarantee, if the IPR owners fail to initiate litigation to People's Court within a reasonable time period.

Article 20. Customs shall commence investigation and determine whether the suspected goods are in violation of IPR within 30 working days from the date of detention. In the event where IPR owners have requested customs to detain suspected goods and the infringement cannot be determined, Customs shall notify IPR owners of this in writing.

Article 21. IPR owners shall provide assistance if requested by Customs in investigation of detained suspected goods.

Customs shall provide assistance to IPR owners on request in the investigation of an infringement involving imported or exported goods.

Article 22. IPR owners, assignors or assignees shall cooperate with Customs in the investigation of suspected IPR violations.

Article 23. After applying to Customs for the detention of goods suspected of violating IPR, the IPR owners may apply to the People's Courts for an injunction or for property preservation measures prior to litigation proceedings pursuant to the Trademark Law of PRC, the Copyright Law of PRC or the Patent Law of PRC.

Customs shall provide assistance upon receiving notice of execution of orders for injunction or for property preservation from the People's Court.

Article 24. Customs should release suspected goods under detention in the following circumstances:

(1) Pursuant to Article 15 of this Regulation, Customs have detained suspected infringing goods and have not received the notice of assistance on execution from People's Court within 20 working days from the date of detainment;

(2) Pursuant to Article 16 of this Regulation, Customs have detained suspected infringing goods and have not received the notice of assistance on execution from People's Court within 50 working days from the date of detainment, and after investigation cannot determine the infringement of the detained suspected goods;

(3) The consignors or consignees of the goods being suspected to have infringed patent rights have provided a guarantee equivalent to the value of the goods in question and request discharge of the said goods;

(4) Customs consider that consignors or consignees have sufficient evidence to prove that their goods are not in infringement of IPR of the IPR owners.

Article 25. The IPR owners shall pay the expenses for storage, custody, disposal and other incidental costs where Customs have detained the suspected goods. Customs may deduct the aforesaid expenses from the guarantee or request the guarantor to perform relevant guarantee liability if IPR owners fail to pay the relevant expenses.

If the suspected goods are determined to be in infringement of IPR, IPR owners may include the expenses concerning storage, custody, disposal and other incidental costs into their reasonable costs for preventing infringement activities.

Article 26. In the event of cases involving suspected criminal activity, Customs shall transfer the cases to the Public Security authorities for determination.

Chapter 4 Legal Liabilities

Article 27. Customs shall confiscate the detained suspected goods if the said goods are determined to be in infringement of IPR.

Customs shall notify the IPR owners in writing regarding the state of the infringing goods after confiscating the infringing goods.

Should the confiscated goods be deemed suitable for public welfare, Customs shall transmit the said goods to the relevant public welfare utility; if the IPR owners have the desire to purchase the said goods, Customs may transfer the goods to IPR owners in return for adequate compensation. If the infringing goods are not fit for public welfare purposes and the IPR owners have no desire to purchase, Customs may auction the goods after removing the characteristics of infringement. In the event that the infringing characteristics cannot be removed, Customs shall destroy the confiscated goods.

Article 28. Customs shall confiscate the items carried by or posted by individuals at the entry/exit points of this country if such items exceed a reasonable quantity for personal use and infringe the IPR stipulated in Article 2 of this regulation.

Article 29. After Customs has accepted an application to record IPR protection or an application for protective measures, IPR owners shall bear the responsibility for providing accurate information regarding their claim.

After requesting the detention of the suspected goods, IPR owners shall be liable in the event that Customs cannot determine that the detained suspected goods have infringed the relevant IPR, or People's Court decided that the goods are not in violation of the relevant IPR.

Article 30. If a crime is constituted in the import or export of goods infringing IPR, investigation for criminal liability shall be conducted in accordance with the law.

Article 31. Where customs officials engage in criminal malpractice, dereliction of their duty, or the abuse of their power when carrying out IPR protection, they shall be investigated for criminal liability in accordance with law. If no crime is constituted, they shall be given administrative sanctions in accordance with law.

Chapter 5 Supplementary Provisions

Article 32. IPR owners shall pay a recording fee in accordance with the relevant rules when they apply to SAC for the recording for their IPR.

Article 33. This regulation shall be valid from March 1, 2004. The Regulation on Customs Protection of IPR promulgated on July 5, 1995 by the State Council was repealed simultaneously.

Lehman Lee & Xu

China Lawyers, Notaries, Patent, Copyright and Trademark Agents

http://www.lehmanlaw.com

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The China Intellectual Property Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.