[Abstract] What are the regulatory modes of Customs on cross-border e-commerce trade? What is Customs protection of intellectual property rights in cross-border e-commerce? What are the compliance suggestions? Focused on the above issues, this article will introduce infringement risks and compliance response in cross-border e-commerce through four real cases of Customs intellectual property rights protection.

[Key words] Cross-border e-commerce, infringement risks, Customs intellectual property rights protection, compliance response

In recent years, cross-border e-commerce trade has thrived, becoming important in boosting domestic demand and stabilizing foreign trade. On the other side of the coin, the cross-border e-commerce trade has numerous participatory entities, various transaction modes, and complex business environments. It is prone to intellectual property infringement in import and export links, and it is also currently the key area of cracking down on Customs infringement and protecting intellectual property rights. Therefore, while the enterprises participating in cross-border e-commerce trade are boarding the express train of e-commerce and enjoying the convenience of policy, they should also pay special attention to infringement risks prevention and compliance response.

1. Cross-border E-commerce

It refers to cross-border trade commercial activities where the trading entities belonging to different Customs areas reach transactions through cross-border e-commerce platforms, deliver goods, and complete transactions through cross-border logistics.1

2. Cross-border E-commerce Trade Entities

Including cross-border e-commerce platform enterprises, cross-border e-commerce enterprises, logistics enterprises, payment enterprises, cross-border e-commerce enterprises that carry out overseas warehousing business for export, etc.

3. Customs’ Regulatory Mode of Cross-border E-commerce

In terms of the regulatory mode, Customs has formed four types of retail import and export modes of cross-border e-commerce including online purchase bonded import, direct purchase import, general export, and special region export (see the figure below). In addition, Customs has also issued regulations on goods return regulation and tax policies of cross-border e-commerce, which have attracted much attention.

Comparison of import and export regulatory mode of cross-border e-commerce retail

(Source: China Customs Media 2021-08-06)

4. Inventory of Customs Regulatory Provisions of Cross-border E-commerce by the End of 2022

(I) Customs Protection of Intellectual Property Rights

Since 1994, the Customs of China has been entrusted with the responsibility of border protection of intellectual property rights by the state, and the border protection of intellectual property rights has already become one of the important responsibilities of the Customs.

1. Meaning of Customs Protection of Intellectual Property Rights

Customs protection of intellectual property rights shall mean the protection implemented by the Customs on the exclusive rights to use trademarks, copyrights, and copyright-related rights, patent rights, the exclusive rights of Olympic symbols, and the exclusive rights of World Expo symbols in respect of the imports and exports under the protection of the laws and administrative regulations of the People's Republic of China.

2. The Authority the Customs Can Exercise in the Border Protection of Intellectual Property Rights

Customs in addition to the exercise of the power of Customs Law Article 6, can also file relevant intellectual property rights, control and inspect based on risk judgment and clues in hand, notify the right holder when inspecting and issuing suspected infringing goods, review the application for protection the right holder submits and charge guarantee, detain suspected infringement goods, carry out investigation and determination, impose administrative penalty and dispose of infringing goods subsequently, etc.

(II) Brief Analysis of the Customs Intellectual Property Rights Protection Cases in Cross-border E-commerce Channels

At present, cross-border e-commerce channels have become a key area for Customs to seize infringement and protect intellectual property rights. The statistics show that2, in 2021, the proportion of batches and quantities of suspected infringing goods detained by the Customs in cross-border e-commerce channels in the law enforcement of non-freight channels increased from 11.69% and 9.93% in 2020 to 23.25% and 18.11% in 2021. The types of infringing rights seized were still mainly trademark rights, and the number of patent rights, copyrights, and exclusive rights of Olympic symbols increased significantly compared with previous years.

Let’s look at four Customs intellectual property rights protection cases:

1.The above-mentioned are typical cases of Customs intellectual property right protection in cross-border e-commerce. By summarizing the basic information, we can see the recurring narrative: the right holder files with the Customs in advance; the Customs discovers the suspected infringing goods by physical inspection, notifies the right holder to affirm the right; (the right holder submits the application for protection to the Customs and pay guarantee); the Customs starts investigation and determination and imposes administrative penalty for the infringement. This is the basic procedure of the ex officio protection mode of the Customs. The text in parentheses complements to the critical links not mentioned in the case narrative. In addition, although cases 2, 3, and 4 do not mention that the right holder filed with the Customs in advance, if you are familiar with the ex officio protection mode of the Customs, you will know that filing in advance, the Customs investigating and issuing, investigating and determining, and imposing administrative penalty are all characteristics of this mode.

2. The value of Case 1 was more than CNY 5 million, and CNY 757,300 was fined finally. In cases 2 and 3, the value of goods was not significant; especially in case 3, the value of goods involved was CNY 5,238.31, and he was finally fined CNY 600. Through the analysis of the value of goods, cases in cross-border e-commerce do not necessarily have small value and little profit. And under the current background of  national strategy and policy trend of “strict protection” for intellectual property rights, case value is not the key. Once the infringement is found, regardless of the value of fines, it is of the same nature of an administrative penalty. The infringement will affect the reputation of individuals or enterprises; especially enterprises’ credit level may be downgraded by the Customs and imposed a credit punishment.

3. The goods involved in Case 1 are bracelets. When determining the value of the goods, the Customs referred to the value of goods provided by the third-party appraisal institution and determined the value and the amount of penalty involved in the case. In recent years, assisting decision-making with the help of the professional force of a third-party institution is becoming increasingly normal for Customs. For example, the Customs also introduced accounting firms to audit in the inspection procedures and took the audit results as an important reference for making inspection conclusions.

4. In Case 4, first, Shanghai Customs took risk control, and Yangshan Customs subordinate to Yangshan Customs performed a physical inspection according to the control instructions, and then hit the infringing goods. With the Customs’ improvement of the level of science and technology and information, the comprehensive application of big data, various clues and information, risk analysis, and other means are all important factors for the increasing hit rate of Customs’ risk control. In addition, case 4 is an important result of deploying the “Action of Longteng” of the General Administration of Customs and the “Action of Cyber-sword” of the cyber-market regulation, highlighting the attitude of all regulatory authorities to strengthen coordination and jointly crack down on infringement.

1.In recent years, infringement has occurred frequently n cross-border e-commerce, which has become an important position for the Customs to crack down on infringement and protect intellectual property rights. From the perspective of protection results, with the continuous improvement of big data and means of risk analysis, the Customs’ precise control and crackdown efforts in this field are all improving.

2. When enjoying the policy convenience of “buying around the world” and “selling around the world”, the participatory entities of cross-border e-commerce trade need to improve their awareness of infringement risks. In particular, under the current of strict protection of the National Strategy for Intellectual Property Rights, they should not take chances and remember that the other side of the coin is punishment for violating laws.

3. The right holders need to improve the awareness of active rights protection, make full use of the Customs intellectual property right protection resources, such as filing in advance, timely reporting of infringement clues, and seeking judicial remedy as soon as possible after the Customs seize the suspected infringing goods. In addition, the Customs is strengthening the coordination with the market regulatory departments, public security organs, courts, procuratorates, and other departments so that the right holders can seize the import and export links to actively protect their rights and realize the whole-chain intellectual property protection through the Customs.

1. China Customs Media 2021-08-06

2. ZHICHANLI Official Account 2022-04-22

https://mp.weixin.qq.com/s/NhO8EWgy5nymLJ-wc8FYrw

3. Shenzhen Customs 12360 Official Account 2022-04-26

https://mp.weixin.qq.com/s/s2LM_CMeeaeC5VkCcHt_Cg

4. Shijiazhuang Customs Official Website 2020-08-31

http://nanchang.customs.gov.cn/shijiazhuang_customs/zfxxgk43/2988665/xzzfgs84/shgk1/xzzfgs67/hgzscqxzcfajxxgk13/3263582/index.html

5. Shanghai Securities News Public Official Account2022-04-25

https://mp.weixin.qq.com/s/azpkArdxqj0EmU2UmjnDmw