Three Tips For Protecting Patent Rights At Chinese Customs

The article co-authored by Mei & Mark's Jiwei Zhang and titled “3 Tips For Protecting Patent Rights At Chinese Customs” has been published in IP Law360 and International Trade Law360.
 
A copy of the article is reproduced here:

Law360, New York (July 18, 2013, 1:22 PM ET) — Many intellectual property owners are familiar with functions of the U.S. Custom and Border Protection in protecting their IP rights at the U.S. border. CBP is authorized to exclude, detain and/or seize imported merchandise that infringes federally registered and recorded trademarks and copyrights and/or is covered by an exclusion order issued by the U.S. International Trade Commission in patent cases. Many IP owners do not know, however, that they can also take actions before infringing merchandise arrive in the U.S.

The Customs of the People’s Republic of China (“CPRC”) is one good example. It has procedures in place to protect IP rights. Article 3 of the “Regulation of the People’s Republic of China on the Customs Protection of Intellectual Property Rights” states that “[t]he People’s Republic of China forbids import or export of goods that infringe intellectual property rights.” Since the procedures for protecting trademarks and copyrights are well established, we focus on how patent owners can take advantage of this regulation. Here are three practice tips for patent owners.

1) Obtain Chinese Patents and Record Your Chinese Patents With CPRC

Article 2 of the Regulation states that “[c]ustoms protection of intellectual property rights used in these Regulations refers to protection of the exclusive right to use a trademark, copyright and related rights, and patent right (referred hereinafter as ‘intellectual property rights’) over imported or exported goods that are protected by laws and administrative regulations of the People’s Republic of China.” This means that only Chinese patent rights are protected by the regulation. To become a Chinese patent owner, you could file an original patent application, or you could file a patent application based on your U.S. or Patent Cooperation Treaty application.

After you obtain a Chinese patent, you should consider recording your Chinese patent with CPRC to protect your rights before any infringing products are being exported from China. There are two types of protection procedures provided by CPRC — application protection procedure (“APP”) and duty protection procedure (“DPP”). APP is a case-by-case procedure and does not require recordation of patent right. Patent owners have to take initial action to initiate this CPRC procedure.

DPP, however, requires recordation. Once recordation is complete, CPRC will take initial action and inform patent owners when it finds that suspected infringing products are about to be imported or exported.

The requirements for recordation are as follows:
• CPRC requires that only patent owners and their agents can apply for recordation.
• Licensees are not qualified to apply for recordation.
• Either patent owners or their agents must be located in mainland China.
• One recordation could include one patent only.
• There cannot be more than two contact persons.
• The contact person(s) must be standby 24/7 to be contacted by the local CPRC office.

2) Keep an Eye on Your Competitors

It is crucial for patent owners to know their competitors well, especially when they use APP without first recording their patents with CPRC.

For example, in a 2011 case regarding APP, a well-known printing supplies company in Zhuhai, China (“Company N”) found that another local company (“Company S”) manufactured a large number of printer cartridges for export to Japan using Company N’s patented technology. [Note that the identities of the companies are withheld for confidentiality reasons.] Although Company N did not record its patent with CPRC, it still requested CPRC to detain Company S’s suspected products and supplied supporting evidence.

On Nov. 24, 2011, CPRC suspended Company S’ clearance of products. After further examination, CPRC confirmed that the infringing products are over 40,000 in number. CPRC then seized these products. Consequently, Company S and its Japanese client signed an agreement with Company N and promised that they would not infringe Company N’s patents in the future.

Even in DPP, a patent owner’s knowledge can help CPRC expedite the process. For example, in a 2008 DPP case, an electronic technology company (“Company A”) owns a patent regarding circuit breakers and recorded the patent with CPRC. Company A exported most of its circuit breakers to the U.S. When Company A noticed an unusual decease of its market share, it investigated and found another company (“Company B”) in Guangdong province that manufactured similar products for export to the U.S. In January 2008, Company A purchased Company B’s suspected products in the U.S. for evaluation. In May 2008, Company A filed a request to CPRC in Shenzhen and CPRC subsequently detained the suspected products.

3) Patent Owners Should Consider Obtaining Court Orders

In APP, once a patent owner’s detention application is accepted, CPRC will issue a notice to detain suspected products. Meanwhile, the patent owner needs to request a local court to issue a preliminary injunction order to enjoin infringement or preserve evidence. If a court order is issued within twenty business days after the detention, CPRC will continue detaining the suspected products while assisting the local court to make a final decision on infringement. Otherwise, CPRC will release the suspected products.

In DPP, after recordation, CPRC will inform the patent owner when it finds that suspected infringing products are about to be imported or exported. Upon receiving the notification, the patent owner needs to file an application requesting CPRC to detain the suspected infringing products within three business days. CPRC will then determine whether these products are indeed infringing products within 30 business days after the detention. Once CPRC finds infringement, it will seize infringing products and issue penalties. If CPRC cannot determine whether there is infringement, the patent owner would then need to request a local court to issue a preliminary injunction order to enjoin infringement or preserve evidence. If a court order is issued within 50 business days after the detention, CPRC will continue detaining the suspected products while assisting the local court to make a final decision on infringement. Otherwise, CPRC will release the suspected products.

Therefore, in addition to working with the U.S. Customs and Board Protection, IP owners, including patent owners, could also try to stop infringing products at the country of production. If used properly, it can be an effective option to protect one’s IP rights.

–By Mandy Wei, Ninestar Image Tech Limited, and Jiwei Zhang, Mei & Mark LLP. Mandy Wei is a legal counsel at China-based Ninestar Image Tech Limited. Jiwei Zhang is an attorney with Mei & Mark in Washington, D.C.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.