Recording Your Trademark with Chinese Customs

>>Good morning, and thank
you all for standing by. All participants will
be able to listen only until the question-and-answer
session of today’s conference call. Today’s call is being recorded. If anyone has any objections,
you may disconnect at this time. And now I’ll turn the call over
to your first speaker for today. It’s Janice Wingo, International
Trades administrator. And you may begin.>>Janice Wingo: Good morning. Welcome to today’s
China IT webinar. This morning we’re
very lucky to have with us a practitioner working
in Shanghai who will talk to us about how to do customs
enforcement in China. Michele Ferrante is an
Italian licensed lawyer who spent many years working in
China, particularly in Shanghai. He has his juris doctorate
degree from the State University of Milan, and he is a
partner with [inaudible] and Ferrante in Shanghai. After Mr. Ferrante
gives his presentation, the lines will be open
for questions and answers. Michele?>>Michele Ferrante: Yes. Yeah, good morning to everybody. [ Pause ]>>Michele Ferrante: Hello.>>Janice Wingo: Yes. You’re on.>>Michele Ferrante: Yeah. OK. OK. Good morning
to everybody. OK. [Inaudible] I would like
to give you just a brief introduction of what is
actually the main steps that actually the China
[inaudible] in relation to [inaudible] protection
concerning to custom. So in 2000, the first
[inaudible] in general concerning
the IPF protection in China was also
custom consider in 2000 for the new regulation
considering the [inaudible] for [inaudible] copyright and
patent to reduce their rights of custom and aggravating
a system of protection at the Chinese custom. In 2006, the custom and the PSB, that is the Public
Security Bureau or the police were assigned in
cooperation agreement in order to enforce also the
penal level cases related to infringing seized
at the custom. And just to give
you some numbers. In 2010, the Chinese customs
stopped 21,000 shipment of infringing goods
that were sent abroad. So the Chinese custom the first
important consideration we have to make is that actually
they are doing a good job, great job I would
say in relation to goods exported abroad. So they stop the
infringing goods produced in China and shipped abroad. The second, in order to give
you also an idea of the good job that the custom did
in few years, because as I say the custom will
activated, the real activation of custom is started in 2004. From 2004 up to today,
so at least eight years, they were able to create
a [inaudible] remarkable, and actually in 2006, they have
been awarded by the [inaudible], sorry, [inaudible] award in 2007 from the World Custom
Organization, 2008 and 2011 when the major Rights
Organization in China recognized the job
performed by the Chinese Custom in the protection of IPRI. So let’s see the
main adventures. As I mentioned in 2004, the
new regulation allowed just as introduction of
the protection of IPR system in the customs. So the rights owner
can fire, record, and accustom their rights. So speaking, talking
about trademarks, copyright date and design. This record the custom will
check the goods bearing, for example, trademarks,
and we’ll be able to inform the rights
owner of goods that are actually
shipped abroad. Let’s see. The main advantage
is actually this kind of [inaudible] represent
for the rights owner. So the custom would practically
take protection measure. So they will check the goods, and if they consider the goods
are not infringing or not from an authorized
producer or dealer, they will inform
the rights owner. The record also helps,
as I said, the custom in the
identification infringing goods. After we see in the next slide
how they proceed in doing that, and the rights owner can
have actually the custom in doing this kind of activity. And generally I will
better mention in the next slide their
custom will ask a bond. And so in amount of money that
the rights owner has to transfer to the custom in three days
or sometimes when we talking about a rights owner that
is not based in China, it present an issue
because it is difficult to have the money
transfer on time. So is it possible to
have a general bond. So it’s basically a letter of
grantee of the Chinese bank, and through this general bond, all the [inaudible]
are guaranteed with this general bond, and the
rights owner is not to send, to transfer the money
on each, every seizure. What kind of rights can be
actually register at the custom? Well, first of all, for sure,
trademarks because it’s easy for custom to detect
trademark infringement. China, can be reduced to nation
or trademark registration, but also international trademark
registration extended to China. In relation to international
trademark registration, the rights owner has
to sign an application for what we call trademark
confirmation certificate. It’s basically a
certificate draft in Chinese where the trademark
[inaudible] confirm that international trademark
has been extended to China for a certain goods or service. Design also can be filed. Invention [inaudible]
and copyright. What is important to mention
now is that ERA’s actually that in case the rights
owner is not based in China, an agent that actually
follow the procedure and will represent for, in relation to custom actions
their rights owner in China. OK. Just to give you a few
documents that are necessary to record the rights in China. So power of attorney
is very simple. [Inaudible] So business
license basically. The certificate, of course. A copy of the certificate,
and this important. If you produce in China the, and the license the
Chinese custom requires to have a copy of the contract. This is very important because,
I mean, in consideration I would like to mention, in relation
to the license, I had a client that once a big fashion company
in Italy, and that the work of [inaudible] the
license with them. Of course, investment,
a huge cost for relation in Chinese [inaudible]
the license. And here is in case, I mean,
you’ve got many license or in case you’ve
got information in the license [inaudible]
that you don’t want to disclose to the custom. Is it possible to fire the
custom [inaudible] short version of the license agreement
where it’s [inaudible]? And basically the customer
just interested to know who are the official,
the advertised dealer. So [inaudible] producer
[inaudible], and in order to avoid actually this stock
goods at the end it comes from authorized producer. [Inaudible] information,
of course, it’s better to give
it to the custom. The custom require, like,
photo of the original goods and packaging, and this
also can help the custom for every [inaudible]. Then the goods stop and have to
make the first exam in relation to the quality and to
the nature of the goods. And, of course, also, if
there’s been cases in the past, it’s interesting to give to
the custom all the information so they can detect if there
are infringe [inaudible] goods and product. They, I mean, as official fees of the cost is not
very important because it’s just [inaudible] that it means what is $150
U.S. dollar more or less. And these are all the, I mean,
it’s for at least ten years of the duration of the rights,
and when, a little after, you can, it’s renewable,
and in this case, you don’t need to pay any fees. I mean, it’s quite reasonable. The application to record the
rights can be done online, but after the GACC, that is
[Inaudible] for Custom require that all the documents
are sent via post, and all the documents
must be translated, of course, in Chinese. Chinese custom does not receive
any documents in English, and even if, for example,
because sometimes require power of attorney or documents
that are in bilingual. So in English and
Chinese, and in this case, custom gave us some issue
because they do not want to receive this documents
in bilingual because although some
officials speak English, they don’t want to, the
official language is Chinese, and so they do not want to receive documents
[inaudible] language, drafting the language
that is not Chinese. And once everything
is completed, the process, it takes
[inaudible]. So it’s quite fast. OK. Let’s go to the action. So in case the custom,
the [inaudible] shipment that is consider infringing one of the rights [inaudible]
the custom, the custom originally
sees the suspected good, and inform the trademark
owner, rights owner. And in three days the
rights owner has to IPR, that’s a PR holder as
to reply and confirm if the goods are counterfeiting,
infringing or not. The problem is, I mean, the issue is you have many
custom are now organized with the [inaudible]
features and via mail. So it’s possible to reply
before the deadline. The problem is if in [inaudible]
to the nature of the goods, of the quality of the goods,
and sometimes the exam of the pictures not
sufficient to confirm whether or not they are counterfeiting. So it is necessary to
send someone at the custom to stop the goods and two
days sometimes is quite short. If the rights owner does not
apply for a general bond, he also has to pay the
bond before the three days, and this is another [inaudible] that sometime give
IPR owner some issue. If, I mean, once the custom
has received the confirmation that the goods are infringing,
he, the customs start, and the [inaudible] sees the
goods, confiscates the goods, and generally we
fine the exporter, and after awhile the
goods will be destroyed. So [inaudible]. Generally will be
destroyed, but, I mean, the law provide also
the possibility to, for the right [inaudible]
holder to test the goods, which I do not suggest
to be honest. Could be [inaudible]. So if it’s possible to
remove the trademark, you can donate to charity, and. Or if not, the goods
will be destroyed. The storage and disposal
costs will be at, will be charged to
the IPR owner. Generally because
the IPR owner has to pay the beginning a
bond the cost of storage and destruction will be deduct
before giving back the bond to the rights owner. There is, I mean, there
is also another procedure that the rights owner can
use, and these indicates that there is not prior
[inaudible] custom, but the rights owner
received the information or know the information
about the shipment. So the number of the container
number of the shipment, did the shipment is
going through a port, and which custom
should be contacted. So in this case, the custom
can proceed and the container. If the custom of, we find the
goods, we receive the goods, and generally we’d ask to the
rights owner to pay a bond that in this case is quite
high because go out to the, it’s to the value
of the goods seized. This, as you can
imagine, this procedure at a practical level
is very difficult to. Because there are rights,
and it must have quantity of information that is very
difficult to get, and so it’s, I do not, haven’t seen many
in the last year to be. As I mentioned at the beginning,
the custom if the quantity and value of the goods seized
reach the premium of threshold, it should pass the
[inaudible] to the police that police will stop basically
[inaudible] investigation that will end up in a criminal
action against a [inaudible] and maybe the producer, too. There are more and more custom
[inaudible] cases to the PSB, although it is going quite slow,
and there are not so many cases, but it’s becoming more
and more frequent. Custom training. OK. Custom training are really,
really important, in my opinion, because we learn few years
ago that Chinese authority, Chinese official, they do
not know the original version of the trademark even of
very famous trademark. We were in a meeting
with, not with the custom, with the IC [inaudible]
authority in China, and we understood that some
moment that we were referring to the client with his original
trademark in Roman character, and we understood that they did
not recognize the [inaudible]. This was a very famous
[inaudible] in, very big fashion
company in Italy. So we understood that it’s very
important to trainings in order to make them understand
that the original version of the trademark is represented
in this way, and, of course, if our goods exported, they
will not reproduce the Chinese version of the trademark. It’s very important
also to explain to the custom official
the quality and the nature of the regional goods in order
to make it easier for them to recognizing infringing goods. And it’s also important to make
understand that, to the custom that the rights owner is
really I’d say beside them in the action and
in the activity against IPR infringement. As said, we consider
that it’s very important to find the rights
and the custom, but the fine is just a
first step in my opinion. It’s very important to
follow the custom activity, but organize training with them, trying to make them understand
what are the [inaudible] of the product, of
the trademark. Of course, if you’re
talking about bait and design and copyright, it’s
even more important. Customary are willing to
learn and to have more and more information
from the rights owner. Now they’re organizing
also visit to factories in case the rights
owner is producing China to better understand how the
original goods are produced. They organize different kind
of training over the year. So it’s very important
to [inaudible] trademarks and assist custom
in their activity. Thank you for your
participation. I think that now you can
pause the question that. If there’s anyone that, Janice.>>Janice Wingo: Yeah, thank
you very much, Michele.>>Michele Ferrante: OK.>>[Inaudible] Did
you want me to pause for questions at
this time, ma’am?>>Janice Wingo: Please.>>Yes. If you’d like to ask
a question, please press star, 1 on your touchtone phone, and
record your first and last name so that you may be announced. In order to withdraw
your question, you will press star, 2. Once again, if you’d like to ask
a question, please press star, 1 on your touchtone phone and
record your first and last name so that you may be announced. One moment, please,
for our first question.>>Janice Wingo: Michele, sometimes when Chinese
customs come and speak with the United States
government, they complain that they will send off a
fax to the rights holder. They’ll find goods that
they suspect are infringing, and they’ll send a fax
off to the rights holder at the legal address,
maybe in New York, but the rights holder
will not reply within the three-day
time period. Could you talk about
the importance of having a local agent
who speaks Chinese so you can respond within
the three-day time period?>>Michele Ferrante: As I
said, it’s very important because as you said, the first
communication is via fax, but, unfortunately, there are
still a lot of customs that are not organized
with Internet. I mean, they’ve internal,
they’ve got computers, but they said to me
for safety reasons, they are not connected
to Internet. Very strange. So it’s very important
to have a local agent who actually is able
to, first of all, because I believe
the faxes in Chinese. So it’s very important to have
a local agent that understand that this is communication
from the custom agent, have three days to reply,
and it’s very important also to have a local agent
because in case that you don’t receive picture. You need to go to the
custom, examine the goods. You’ve got someone that
can easily or, for sure, with the [inaudible] coming
from the United States, go and examine or maybe
take picture of the goods and send via e-mail the picture. Maybe this person that
goes is not a [inaudible], but has got information
from the expert that say to him what he has
to take picture of. [Inaudible] with this picture
are able to examine the goods and confirm whether or not
these goods are counterfeit. And also, as I said, for the
bond, it’s very important. Although now I believe it’s
becoming more and more necessary to have a general bond
because [inaudible] in three days, it’s
very difficult. It’s very difficult for
the local agent, I mean, to face all the bonds
that might, I mean, different clients might
need, and it’s very difficult for the rights owner to send
the money from United States in three days into
the Chinese customs. So, yeah, absolutely. Confirm it’s very
important local agent. [ Pause ]>>It looks like we have a
question from Mark Cleveland. Your line is open, sir.>>Mark Cleveland: Hello. Thank you. This is very interesting. I was interested in asking you to just spend a little
bit more time on the initial registration
of IPR. Our company has products
manufactured in the United States and
primarily distributed in the United States, and
we’re interested in trying to make sure that we have
laid some proper ground work for protecting the
brand and designs, etc. in other countries. So could you spend a little
time talking about that if you were not yet infringed
upon, but you’re worried about that being a possibility,
and it’s very simple. So.>>Michele Ferrante: Yeah, yeah. Well, first point
I believe that, and this is very important, is
to consider if your portfolio, talking about China is complete
considering also Chinese. I won’t say laws because
Chinese laws now, they are more and more closer to
international agreement. So this is OK, but maybe Chinese
interpretation there’s sometimes are different [inaudible]
talking about subclasses, and maybe also the
passion of the trademark. But once that your portfolio
is, I mean, it’s confirmed that it’s OK, I would start, now I don’t know what your goods
companies produce, but trademark for sure because trademark is
[inaudible] for the custom. Of course, if you got
particular issues with design, it’s very important to
find designs for copyright and organize a strategy
related to trainings. Maybe in the [inaudible]
that are produce that can spot your
kinds of goods. There are also some custom
that got a blacklist. So the blacklist is important. So, for example, if you know
that there’s an infringer that produce [inaudible]
goods, you can work with custom from there. Or we can do investigation and
try to have more information and understand why these
people, I mean, the custom, they generally used
to [inaudible]. So, I mean, also, yeah. It’s also very important to have
a local agent in order to talk to the custom, and also
from them the feedback and understand what they need
to basically do a better job.>>Janice Wingo:
Mark, this is Janice with International
Trade Administration. We have actually
have another webinar on a trademark fundamental, and
if you’ll send me an e-mail, I’ll happy to send you the link. It explains the subclass system which Michele was
discussing earlier.>>Mark Cleveland: Yeah. I’d be happy to. I don’t have your
e-mail immediately handy.>>Janice Wingo: It’s
Janice, J-A-N-I-C-E, dot W-I-N-G-O at
T-R-A-D-E dot gov.>>Mark Cleveland: My company
has a federal registered trademark on its brand and
has probably got a relatively strong portfolio. It’s just we haven’t
taken steps to extend that internationally beyond what
I think it comes with normally. So ->>Janice Wingo: Well, a
trademark is territorial. So you will only have
protection in the United States for federally registered mark. You will not have any protection
in China, and I’d have to advise you that China
is a first to file system. Michele, you could probably
explain how clients come to you and someone else has registered
their trademark fraudulently.>>Michele Ferrante: Yeah. We were speaking about this
last time you were in China. Unfortunately, China, they’re, Chinese [inaudible] are very
active in the IPR protection, but in not in the
proper way, let’s say. So basically what they do,
they’re really reduced a lot of [inaudible] trademark and before even the rights
owner decide or start to sell [inaudible]
its good in China. So I think that at least the
Roman character [inaudible], the original [inaudible]
it should be filed as soon as possible in China,
in my opinion. Because if not, Chinese
authority will not protect your trademark. Because with the international
trademark not extended to China or national trademark not
[inaudible] and not in China, unfortunately, it’s
very difficult. And if, as I said, one of your
competitor will file before you, there will be a big [inaudible]
also because, I mean, when we stared in China
more than ten years ago, infringe [inaudible]
really have to say passive. So you could do action
against them, but they were not reacting. Now, I experience in the last
year or, I mean, they are, they know what they are doing. So that they react. They wait to [inaudible]
your goods to China. They file CVK’s. Sometimes they file
[inaudible] action. They stop your goods
at the custom. So, I mean, it’s something that
I would suggest to consider to file at least in the class
of interest and for the most, I mean, for the trademark, the
mean trademark I would suggest to file [inaudible] as
soon as possible in China.>>Mark Cleveland: Thank you.>>And there are no further
questions on the audio portion.>>Janice Wingo: Michele, can
I ask you about the training?>>Michele Ferrante: Yes.>>Janice Wingo: When I would
used to do this, we used to go in with hand, I represented
a handbag company, and we used to go
in with handbags and explain the difference. We also would prepare a booklet
detailing the differences between and, you know, the genuine product
and the fake product. Could you tell me a little
bit more about when you go in and doing the trainings or when
the trainings are actually done at the factory, when the customs
come to the actual factory?>>Michele Ferrante: Yeah. I mean, it really
depends of the, what kind of goods
left, speaking about. Because, for example, we got
a very important chocolate company, a fine chocolate
company, and, of course, during the meeting or during
the training we offer chocolate to all the custom official, and
after we got slides introducing to them what, I mean, what you
say [inaudible] original good. In particular here it’s
quite tricky because we are, the client has got a three
dimensional trademark. So we can protect also the
shape of their chocolate, and we underline the
difference between, as I said, between the original goods
and infringing goods. We also leave it to the
officials so they can use where they work, as I say,
a leaflet of two pages with the main [inaudible]
of original good. There are subtrademark,
for example, or other important
information they can use to detect infringing
goods during the activity. I mean, [inaudible] activity. And, for example, for, we
got [inaudible] other clients to do session business,
and we got clients that is very well known
in China for mail session. So the training stop. You always have a
shirt or a jacket. So the official can
try the jacket, can see how the jacket
is produced and the quality of the jacket. And, I mean, there’s
also, these, I mean, there are two important
factor during the meeting. One, to give the
right information to them, to the custom. Because, for example, I
got some clients that say, they complain a bit
or they were surprised about our presentation, but I said this is not a
commission presentation. We are not doing marketing. We give them the tools to
recognize the infringing goods. So it’s very important
to say then, you know, we do not produce in France. So if it’s made in
France, it’s not us. If there is [inaudible]
beside this other trademark, it’s not as we never do this,
or also the quality of the goods and say, you see,
they cannot, I mean, to show it to the
custom what kind of, how original goods are produced,
and this is to one end. The other side is also I
would say psychological. I mean, give to the custom a
reason to stop the goods and go and examine the goods. You have to imagine that how
many goods a container go through every custom in China. So if they do not feel that the
rights owner is behind them, beside them to give them all the
information, reacting quickly, and really the term in the
professional [inaudible], I mean, they got reason to
not be so informed, let’s say.>>Janice Wingo: OK. Well, we’ve gone a
little bit over our time because we have so
many questions. Are there any more?>>No, ma’am. There are no further questions.>>Janice Wingo: I wanted to
thank Mr. Ferrante for his time, and if you have additional
questions, you can e-mail [inaudible]
at M-I-C-H-E-L-E at S-F-L-A-W dot IT, and he
will answer your questions on customs [inaudible]
with Chinese customs.>>Michele Ferrante: I hope that the presentation
has been pretty clear and to give you an idea of
the importance of the, I mean, of custom registration, and
an overview of the activity of the Chinese custom in China.>>Janice Wingo: Yes. Thank you very much, Michele.>>Michele Ferrante: OK. Have a good day, and
talk to you soon, OK.>>Janice Wingo: Bye.>>Michele Ferrante:
Bye, bye, bye.

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