[Abstract] We have briefly introduced the basic modes of Customs protection of intellectual property and its basic system in China in our previous notes. In addition, the legal liability that enterprises may face after Customs initiates the intellectual property border protection mechanism is another concern. The topic is also what we are going to introduce in this note. We selected 3 cases - all of them are infringement cases initiated by Customs under the ex-officio protection mode. We will briefly analyze the the Customs administrative penalties, civil liabilities, and even criminal liabilities that enterprises may face after infringement of intellectual property rights in import and export (taking trademark exclusive right as an example).

[Keywords] Customs ex-officio protection, Infringement of exclusive rights to use trademarks, Legal liabilities

The ex-officio protection is one of the two main modes of border protection of intellectual property rights in China. The protection procedure is roughly as follows: Customs discovers the goods suspected of infringement upon exclusive rights to use trademark during Customs clearance supervision, and the trademark right has been filed with the General Administration of Customs by the trademark right holder (hereinafter referred to as the “right holder”), Customs will issue a notice to the right holder to confirm the status of intellectual property rights. If the right holder requests Customs to take protective measures and provide a security deposit or general security according to the regulations, Customs will initiate the procedure of intellectual property protection, carry out investigation and determination, and once infringement determined, Customs will make an administrative penalty decision to confiscate the infringing goods and impose a fine. If the infringement is suspected of a crime, Customs shall forward the case to the public security organ pursuant to the law for handling. When the infringement is found in the imports and exports, in addition to safeguarding their rights through Customs, the right holder can also take advantage of the opportunity of Customs detention to file a lawsuit to the court and require the infringer to bear civil liabilities such as compensation for losses. In a word, with the Customs inspection of suspected infringing goods as the trigger point, once the relevant infringement is ascertained, the infringer will not only face the Customs administrative penalty, but also may incur civil liabilities or even criminal liabilities.

(I) Basic case information

Meishan Customs seized a batch of goods concerning infringement of the exclusive right to use the trademark of foreign sports brand

On June 24, 2021, Meishan Customs inspected a batch of caps and other goods declared for export by a Yiwu company, and found that there were caps with the trademark of “NY graphic trademark”. The right holder believed that the above-mentioned goods are suspected of infringing exclusive rights to use trademark filed with the General Administration of Customs, and submitted application to the Customs for taking intellectual property rights protection measures.

Meishan Customs detained the suspected infringing goods according to the law. After investigation, it was determined that the “NY graphic trademark” used on the caps exported by the company, which was identical to the “NY graphic trademark” registered by the right holder. and without the prior permission of the right holder, the goods infringed upon the exclusive right to use the trademark, and the conduct has constituted an act of exporting goods which infringe upon the exclusive right to use the trademark. Pursuant to Article 91 of the Customs Law of the People’s Republic of China, Article 27 paragraph 1 of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights, and Article 25 paragraph 1 of the Implementation Regulations of the Customs of the People’s Republic of China on Administrative Penalties, it is determined to confiscate the infringing caps bearing the trademark of “NY graphic trademark”, and imposed a fine.

(The above information comes from Ningbo Customs’ official website, the Disclosure of Government Information, release time: June 9, 2020)

(II) Case analysis

1. The basis of Customs law enforcement

2. Brief analysis

(1) This is a typical case of infringement of exclusive rights to use the trademark in the imports and exports. The Customs applied to the ex-officio protection. The enforcement procedures are as described above. Customs discovers the goods suspected of infringement upon exclusive rights to use trademark during Customs clearance supervision (the trademark right has been filed with the GAC), Customs issues a notice to confirm the status of intellectual property rights. Where the right holder considers that the goods infringe upon the exclusive right to use trademark filed in the GAC and requests Customs to take protective measures, Customs will carry out investigation, and once infringement determined, Customs will make an administrative penalty decision to confiscate the infringing goods and impose a fine.

(2) The legal basis for Customs to impose administrative penalties on the import and export of goods that infringe upon the exclusive right to use trademark is mainly the Customs Law of the People’s Republic of China, the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights, and the Implementation Regulations of the Customs of the People’s Republic of China on Administrative Penalties, etc.

3. Tips

(1) The right holder shall bear the corresponding legal liability for improper rights protection

If the right holder requests the Customs to detain the suspected infringing goods, the Customs can not determine that the detained suspected infringing goods infringe upon the exclusive right to use the trademark registered by the right holder with the General Administration of Customs, or if the people’s court ruled that the exclusive right to use the trademark is not infringed, the right holder shall bear the losses caused to the  consignee and consignor by the improper protection of the right. This also suggests that the right holder needs to carefully confirm the status of the exclusive right to use the trademark of the goods when applying to the Customs to detain the goods, so as not to cause compliance risks.

(2) The reconciliation system provides a third dispute settlement mechanism for right holders and consignees and consignors

The reconciliation system is based on Article 27 of the Measures of the Customs of the People’s Republic of China on Implementation of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property, “Where the IPR holder and the consignee/consignor reach an agreement on the suspected infringing goods detained by the Customs, they shall submit a written application to the Customs and attach the relevant agreement; where the parties request the Customs to release the suspected infringing goods under detention, the Customs may terminate the investigation, except where the Customs suspects that the case constitutes a criminal offense”.

This provision provides a third way for both parties to settle disputes, that is, after Customs initiates the intellectual property protection procedure, both parties are allowed to settle disputes through settlement. However, it should be noted that the application of the reconciliation system is subject to preconditions, that is, the application for reconciliation should be submitted during the Customs investigation, before an administrative decision has been made, and it is not suspected of constituting a crime.

(I) Basic case information

A first-instance civil case of a foreign enterprise and a Yiwu trading enterprise on the ownership of exclusive rights to use the trademark and infringement disputes

On December 21, 2019, a Yiwu trading enterprise declared a batch of goods to Daxie Customs for export. During the inspection, there are belts with the trademark of a foreign enterprise int this batch of goods. After investigation, Daxie Customs finally determined that the above-mentioned goods infringed on exclusive rights to use registered trademarks, and determined to confiscate the above-mentioned goods and impose a fine on the enterprise.

On November 11, 2020, the foreign enterprise filed a lawsuit with the People’s Court of Yiwu City, Zhejiang Province, and requiring the defendant to immediately stop the sale of goods that infringes on the plaintiff’s exclusive right to the registered trademark, and compensate the plaintiff for the economic losses (including the reasonable expenses incurred by the plaintiff to investigate and stop the infringement, as well as the storage, transportation, disposal expenses, notary fees, attorney fees, etc.)

The court’s discussion on the determination of infringement is as follows: the plaintiff is the owner of the exclusive right to the registered trademark involved, and the above-mentioned exclusive right to use the trademark is legal and and should be protected by law. According to Article 48 of the Trademark Law of the People’s Republic of China, trademark use referred to in this Law shall mean use of a trademark on commodities, commodity packaging or containers and commercial transaction documents, or use of a trademark in advertisement and promotion, exhibition and other commercial activities, for identifying the source of commodities. According to Article 57, the acts that use a trademark identical to a registered trademark on the same type of commodities without licensing by the trademark registrant shall be deemed as an infringement of exclusive rights to use registered marks.

In this case, the accused infringing goods are belts, which are the same goods  approved for use by the registered trademark involved. The prominent use of the brand logo of the foreign company on the accused infringing goods plays the role of indicating the source of the goods, which is the use in the sense of trademark. The defendant’s sale of the infringing goods infringed the plaintiff’s exclusive right to use the registered trademark, and shall bear the civil liability of stopping the infringement and compensating for economic losses.

After the trial, the court ruled that the defendant shall immediately stop the sale of goods that infringed upon the plaintiff’s exclusive right to use registered trademark, and compensate the plaintiff for economic losses (including reasonable expenses).

(This case is from China Judgments Online, (2020) Zhejiang 0782 Minchu No. 18121, website:

https://wenshu.court.gov.cn/website/wenshu/181107ANFZ0BXSK4/index.html?docId=6cc2269a678149c98a42ad1900b18c0d）

(II) Case analysis

1. Focus Regulations

2. Brief analysis

(1) In civil litigation, the main legal basis for the court to determine trademark infringement is Article 57 of the Trademark Law, and the civil liability borne by the defendant mainly includes stopping the infringement and compensating for economic losses.

(2) For the infringement of the exclusive right to use the trademark in the import and export, the right holder may also claim its rights by filing a civil lawsuit in addition to applying to intellectual property protection measures in the Customs administrative procedures, and the Customs investigation determines and imposes administrative penalties on the infringement, confiscates the goods and imposes a fine.

(3) It can be seen from this that for the infringement of the exclusive right to use the trademark under the Customs ex-officio protection, the infringer may not only face the Customs administrative penalty, “losing the goods and paying a fine”, but also may have the risk of litigation, and then bear the civil liability.

3. Tips

(1) The right holder can use the information obtained in the Customs administrative procedure to support the judicial procedure.

According to the Measures of the Customs of the People’s Republic of China on Implementation of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property, if the people’s court needs assistance of the Customs in collection evidence relating to imports and exports, the Customs shall render assistance. For right holders, it is necessary to communicate actively with Customs in administrative procedures, learn about infringing goods and import and export information as detail as possible, and keep relevant samples and documents in order to support for the claim in the civil litigation. In the civil proceedings, the right holder can request the court to obtain relevant evidence from the Customs to prove the defendant’s infringement facts, so as to better protect their rights.

(2) If the Customs broker fails to fulfill its obligation to reasonably review the intellectual property status of imports and exports, it may be jointly and severally liable for compensation.

According to the Customs Law of the People’s Republic of China, the Implementation Regulations of the Customs of the People’s Republic of China on Administrative Penalties and the Measures of the Customs of the People’s Republic of China on Implementation of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property, the Customs broker shall fulfill the legal obligation of reasonable examination of the accuracy of information of imports and exports, and truthfully declare the relevant intellectual property status of the Customs according to the regulations. If the Customs broker fails to fulfill this legal obligation and declares the intellectual property status of the exported goods to be false, it may constitute an act of assisting infringement that intentionally facilitates the infringement of exclusive rights to use registered trademark. In the determing of legal liability, it will bear joint and several liability for compensation. This also clearly puts forward normative requirements for the act of Customs broker and strengthens their legal obligations.

Reference of regulations:

Article 4 of the Measures of the Customs of the People’s Republic of China on Implementation of the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property stipulates that a consignee of imports or a consignor of exports or its agent (hereinafter referred to collectively as “the consignee/consignor”) shall have an understanding, within a reasonable scope, of the intellectual property status of the goods he imports or exports. Where the Customs requires declaration of the intellectual property status of imports or exports, the consignee/consignor shall declare truthfully and submit the relevant proof documents to the Customs within the period stipulated by the Customs.

Article 17 of the Implementation Regulations of the Customs of the People's Republic of China on Administrative Penalties stipulates that where the failure of the Customs declaration enterprise and Customs declaration agent to conduct a reasonable examination of the accuracy of information provided by the principal or their negligence results in any of the occurrences stipulated in Article 15 of the Regulations, the Customs declaration enterprise shall be subject to a fine of not more than 10% of the value of the goods and be suspended from engaging in Customs declaration activities for a period of not more than 6 months. Under serious circumstances, the Customs declaration enterprise shall be prohibited from engaging in Customs declaration activities.

Article 25 paragraph 2 stipulates that consignees, consignors and agents who fail to make truthful declaration of intellectual property rights information to the Customs or fail to submit supporting documents to prove legitimate use of the relevant intellectual property rights shall be subject to a fine of not more than RMB 50,000.

(I) Case basic information

A criminal case of sale of commodities bearing counterfeit registered trademarks

From May to June 2017, Zhang Moujie sold server platforms, in-server configurations, hard drives, CPUs, and other server accessories marked with Hewlett Packard Enterprise (HPE) and Hewlett Packard Enterprise (HP) brand logos to others at a total price of RMB 706,000 in Haidian District, Beijing. The above-mentioned items were detained by Beijing Customs according to law when they were declared to Customs. After investigation, there are 3 server platforms, 29 hard disks in the server configuration and 11 CPUs, all of which are counterfeit commodities bearing HPE, HEWLETT PACKARD ENTERRISE and HP registered trademarks, and the total sales price is RMB 577,800. Zhang Moujie was arrested on October 17, 2019 on suspicion of the crime of sale of commodities bearing counterfeit registered trademarks, and the Beijing Haidian District People’s Procuratorate initiated public prosecution with the Beijing Haidian District People’s Court on June 17, 2020. After trial and ascertaining the relevant criminal facts, the court convicted the defendant Zhang Moujie to the crime of sale of commodities bearing counterfeit registered trademarks, and sentenced to imprisonment of three years, and a fine of RMB 300,000. The defendant refused to accept and filed an appeal. After the second-instance trial of the Beijing First Intermediate People’s Court, the appeal was rejected and the original judgment was upheld.

The court of the first instance held that “The defendant knowingly sold commodities bearing counterfeit registered trademarks, and the sales amount was huge, and his conduct constituted the crime of sale of commodities bearing counterfeit registered trademarks and shall be punished. … ... In view of the facts that all the counterfeit goods involved in the case have been seized, Zhang Moujie is a first-time offender, and upon telephone notification by the public security organs, he can accept the investigation, truthfully confess his basic crime, plead guilty, and accept punishment. With the assistance of his family, he has actively compensated for the economic loss of the victim, obtained the understanding of the other party, and showed repentance. The court will impose a lighter punishment on him. ......”

(This case is from China Judgments Online, (2020) Jing 0108 Xing Chu No. 1020/(2020) Jing 01 Xing Zhong No. 460, website:

https://wenshu.court.gov.cn/website/wenshu/181107ANFZ0BXSK4/index.html?docId=32d0a183c6514b56adddaca8009b0021,

https://wenshu.court.gov.cn/website/wenshu/181107ANFZ0BXSK4/index.html?docId=29ed95e2eeb24131a44baca8009ac913)

(II) Case analysis

1. Focus regulations

2. Brief analysis

(1) According to the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights, where the Customs discover suspected criminal cases in the course of enforcing protection of intellectual property rights, the Customs shall forward the cases to the public security organ pursuant to the law for handling. The public security organ shall file a case for investigation, and if it is confirmed that the suspect has criminal facts, a public prosecution shall be brought to the court.

(2) The suspected crime of infringing the exclusive right to use a trademark by imported and exported goods mainly includes Crime of Counterfeit of Registered Trademarks and Crime of Sale of Commodities Bearing Counterfeited Registered Trademarks. The criminal liability includes not only fines, but also fixed-term imprisonment.

3. Tips

Where there are indeed criminal facts, in the stage of criminal investigation and court trial, the criminal suspect shall truthfully confess the crime, plead guilty and accept punishment, cooperate with the investigation of the public security and the procuratorial organs, actively reach reconciliation with the victim, compensate for its economic losses, and strive for the understanding, so as to obtain a lighter punishment.

1.Customs protection of intellectual property rights is a double-edged sword. It is an extremely favorable opportunity for right holders to safeguard their intellectual property rights through Customs procedures and prevent infringing goods from flowing into the international or domestic market. The information obtained in Customs procedures can also be used to provide strong support for claims in the judicial procedures.

2. For consignees and consignors of imports or exports, it is necessary to improve the awareness of intellectual property compliance, prevent and resolve infringement risks in a timely manner. Otherwise, once identified as infringement by the Customs or the court, they will face administrative penalties from the Customs, and may also bear civil or even criminal liability.

3.This notes briefly analyze the legal liabilities that may be triggered after the Customs initiates ex officio protection when the consignees and consignors are suspected of infringing intellectual property rights in the import and export process.