Nike Succeeded in Custom IP Enforcement

Feynman Z. LIANG | Aug 7, 2016

Last week, 1,872 pairs of shoes were determined to be infringing products by Xiamen Customs of Fujian Province. These shoes were claimed to be infringing Nike's trademark "Air Max".

A few weeks ago, Quanzhou * Trading Company attempted to ship several thousand shoes through Xiamen Port with the goods name as “leisure shoes” in the customs declaration submitted to Xiamen Customs. In the Xiamen Port, during the routine inspection of the goods by Xiamen Customs Officers, it was discovered that some of the shoe boxes bearing the printed mark “Atr Max”, confusingly similar to Nike’s trademark “Air Max” as registered in the China Customs IP Registration System.

Xiamen Customs notified Nike of the discovery of the suspected infringing products. On Aug 2, 2016, Nike sent a correspondence to Xiamen Customs, confirming that the shoes were infringing products. Together with the correspondence, Nike filed a petition of customs seizure, begging Xiamen Customs to seize the allegedly infringing goods.

According to IP Custom Protection Regulation of P.R. China,

Rule 2 IP customs protection refers to protection carried out against import or export goods in relation to exclusive right of trademark, copyright/related rights, patent (hereafter referred as “IP” ) in China.

Under such regulation, China Customs is authorized to enforce trademark, copyright and patent on infringement of import or export goods. For customs IP protection, proprietor of trademark, copyright and patent may choose general IP rights registration, one-time petition for customs seizure, or both.

For the general IP right registration before China Customs, once it is registered, the protection will be valid for ten years. Upon expiring of such registration, proprietor may renew the registration for the next 10 years. The good news is, from Nov 1, 2015 on, official fee for customs registration is free. After the IP right is registered, it will be entered into a nationwide customs database. In the routine inspection carried out by China Customs, if Customs Officer discovers suspected goods, he will request the consignor to provide proof of authorization from the IP proprietor. If the consignor fails to provide the required information, China Customs will notify the proprietor and he/she is required to file a petition of customs seizure within three days if he/she wishes, on condition of providing bond equivalent to the value of goods to be seized. China Customs will investigate and determine whether the product is infringing within 30 days from the date of seizure. If China Customs determines that the products are infringing, the products will be confiscated and destroyed. If China Customs, on the other hand, fails to make a decision and if China Customs does not receive the notification of assisting execution from the court within 50 days from the date of seizure, the seized goods will be released.

For the one-time petition of custom seizure, if the proprietor discovers infringing products shipping through any port, he/she may file a petition before the China Customs responsible for the port to initiate the custom IP protection procedure with bond equivalent to the value of the seized goods. The proprietor needs to file a lawsuit before competent court against the consignor for IP infringement. For the one-time petition for custom seizure, China customs will not determine if the products are infringing or not. Proprietor is required to file a lawsuit before the competent court against consignor. If China Customs do not receive the notification of assisting execution from the court within 20 days from the date of seizure, the seized goods will be released.

Proprietor may consider the strategy of combining general IP customs registration and one-time petition of customs seizure. On the one hand, general IP customs registration is a very cost effective way of protection valid for ten years. On the other hand, proprietor is suggested to keep close monitoring on the activities of the possible infringer / repeat infringer. Once the proprietor discovers the infringing goods shipping through certain port, he/she should take quick action and file a petition of custom seizure in time.