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Using Customs to Protect Your Brand from China Counterfeits

Register your trademark with China customs

A couple of my law firm’s international IP lawyers just returned from the INTA conference in Washington DC, a gathering of nearly 10,000 intellectual property professionals from around the world. A number of speakers at the conference emphasized how using customs to seize counterfeit goods can be a powerful tool for protecting brand-owners from counterfeit goods.

The European Court of Justice recently limited the ability of European Union (EU) customs agents to seize counterfeit and pirated goods. The decision pertained to two joined cases—one case involved a shipment of electric shavers coming from China (with an unknown destination) that allegedly infringed on the design protection of a Philips product. The other was a shipment of Nokia phones from Hong Kong bound for Columbia. When Nokia requested seizure of the phones, its request was denied because the goods were not bound for the EU market, and thus could not be considered counterfeit under EU regulations.  Nokia then brought a lawsuit against the UK customs office, but ultimately lost the case.

The European Court held that EU customs agents cannot detain suspected counterfeit goods unless the goods are actually bound for distribution within the EU or unless there are indications of fraudulent diversion into the EU market. This will impact the way brand owners seek protection through EU customs offices regarding counterfeit goods shipped from China, among other places.  It is now critical to understand the final destination of the goods and to look for possible leaks into the EU market—spotting fakes alone, is no longer enough to have the goods seized by EU customs authorities.

The courts in India also recently issued a decision relevant to counterfeit goods coming from China. In a case involving gray market electronics imported from China, the Delhi High Court held that goods bearing an identical or deceptively similar mark to a registered trademark are considered infringing, even though Indian trademark law as written does not distinguish between the importation of genuine goods and fakes. Under this holding goods imported into India using the same or a deceptively similar trademark will be considered infringing if they are imported without the permission of the registered trademark owner.

As for Indian Customs, trademarks can be recorded with the Controller of Customs and trademark rights may be enforced accordingly.  Indian courts have granted sweeping execution mechanisms by granting “John Doe” orders, allowing trademark owners liberty to perform unlimited raids for a period of two months in a local market. In performing raids, local customs commissioners may be accompanied by police, breaking locks and seizing infringing goods. It is our understanding from speaking with local practitioners that before these modernizations, enforcement measures were often hampered by information leaks and were too late to accomplish seizure of the goods in question.

You may be wondering why we are discussing IP enforcement measures in the EU and India, however the common theme in both places is that these sort of cases typically arise from imported counterfeit goods from China. As a brand continues to grow in this global economy, protection and enforcement of IP rights is critical to maintaining the brand’s identity and to developing good will. Seizure by customs officials is a powerful tool in achieving these goals. Brand-owners concerned about the movement of counterfeit goods should record their trademarks with various customs authorities around the world, adding another layer to their strategy for brand protection. These recent changes in the EU and in India are likely to have major impact on anyone who manufactures goods anywhere, but especially in China.

2 responses to “Using Customs to Protect Your Brand from China Counterfeits”

  1. Fascinating no doubt. But I find it rather off beat to suggest that we rely on US customs to protect us from China fakes. It’s too late by then, the product has been shipped and paid for. You fail to address the key issue here about using Chinese customs to stop shipment of fakes. That is the real argument and you don’t seem to have an answer.

  2. I wonder why there is such empasse between December’s Nokia Philips decision and the present day. The Dutch original proposal of considering the fiction of local manufacturing as a resolving tool looked good but was crushed by the ECJ. Even the principle of introducing the “suspicion” – rendered in the opinion of Mr. Advocate General Cruz Villalon was rather interesting but remained unattended.
    What were the conclusions on the topic at INTA? Any news from the EU legislative?
    The comment of the previous reader is coherent with the facts, but it slightly underestimates the volume of goods going outbounds from Chinese harbors: customs like Ningbo work better than ever but not everything is controllable with scarce customs personell. 

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