China Customs adheres to a strict three-working days rule (starting from the date of official notice) for IP right owners to verify and confirm through written application to China Customs for the detention of a shipment of counterfeit goods. Failure to meet the deadline means that IP right owners will have no choice but to accept that the shipment will be released by customs. This means that the brand owners can only intercept it at the destination country which can be more time consuming and difficult.
Rouse China's customs team successfully assisted a brand owner in getting the exporter of counterfeit shipment to pay damages despite missing the China Customs deadline, and crucially, doing so before the shipment was released.
The brand owner, a leading global supplier of power tools, usually handles customs seizures themselves. However, in this particular case, they missed the three-working days application deadline for the formal detention of a shipment of approximately 70,000 pieces of counterfeit items destined for Indonesia. They applied for detention on the fourth day, which China Customs rejected due to failure to meet the deadline.
Despite Rouse not being the brand owner's customs agent, they urgently sought advice from us on strategies to stop the counterfeits from being shipped out of China.
With over thirty years of experience in China brand protection and enforcement particularly in customs work, we were able to respond to the brand owner within half an hour with a constructive proposal.
We recommended negotiating with the exporter for a quick settlement before the exporter (who had not yet been informed of the coming release) could receive the notice of shipment-release from China customs. The brand owner liked the idea and instructed immediate action. Without further delay, we reached out to the exporter to negotiate.
The strategy worked.
We successfully got the exporter to agree to pay damages of RMB70,000 to the brand owner, remove the infringing marks on the products after retrieving them from China Customs, and promise not to infringe on the brand owner's IP rights in the future. The settlement agreement was signed within the day and was executed by the exporter in a very short time.
In this case, the brand owner not only stopped the counterfeit goods from being released, but was also compensated financially. The result is actually as good as, if not better, than a normal customs seizure. It demonstrated that even when facing the seeming desperation of missing a customs deadline, brand owners can get a positive outcome through working with creative, swift-acting enforcement partners with determination to protect their clients' IP rights. With the right strategy, a seemingly dire situation can yield a positive outcome.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
