China issues Opinions on destroying infringing and counterfeit goods

In Insights

15 October, 2020
Opinions

On August 13, 2020, nine of China’s authorities including the Supreme People’s Court and the State Administration for Market Regulation jointly released the Opinions on Strengthening the Destruction of Infringing and Counterfeit Goods (Opinions). The nine authorities involved are:

  • National Leading Group for Combating Infringement and Counterfeiting,
  • Publicity Department of the Communist Party of China,
  • Supreme People’s Court,
  • Supreme People’s Procuratorate,
  • Ministry of Public Security,
  • Ministry of Ecology and Environment,
  • Ministry of Culture and Tourism,
  • General Administration of Customs, and
  • State Administration for Market Regulation

The Opinions address long-standing issues relating to the destruction of confiscated goods and counterfeits that infringe intellectual property rights by emphasising three principles for disposal:

  1. Disposing of the goods in accordance with laws and regulations;
  2. Disposing of the goods in a harmless manner, preventing pollution during the destruction process and strictly prohibiting any re-circulation of the goods; and,
  3. Preventing the return of the goods to the marketplace.

The Opinions include six aspects for the destruction of the infringing and counterfeit goods to clarify scope, timeline, sorting, pollution control, storage and supervision.

Scope:

Includes infringing and counterfeit goods confiscated by administrative law enforcement authorities and judicial authorities at or above the county level as well as materials, tools, logos, labels, packaging, moulds and other tools mainly used to manufacture infringing and counterfeit goods.

Timeline:

In general, the competent authorities should start the destruction procedure or address the destruction issue within six months from the serving date and/or the effective date of the relevant administrative penalty decision or judicial judgment.

Sorting:

Goods shall be sorted to ensure that recyclable goods can be dismantled and reused, and harmful goods are disposed of in a manner that prevents diversion.

Pollution Control:

Goods should be disposed of in a harmless way to prevent pollution during the destruction process and mitigate environmental risks.

Storage:

The Opinions specify that any entity or individual, without authorisation, cannot dispose of the goods.

Supervision:

Goods should be destroyed in line with stipulated procedures and under supervision, to ensure the legality of the whole destruction process.

Guarantee measures are also included in the Opinions to strengthen organisational leadership, enhance communication and collaboration, provide guidance and strengthen supervision and assessment.

The Opinions seek to improve and regulate the destruction process of infringing and counterfeit goods while addressing issues like environmentally friendly destruction practices, arbitrary storage and the disposal of infringing and counterfeit goods.

Disposing of infringing and counterfeit goods has become a challenge and a priority around the world. The Chinese authorities are recognising the need to dispose of these goods in a safe and environmentally friendly way.

The Opinions specify that storage, transportation and the disposal costs of the infringing and counterfeit goods shall be included in the authorities’ budget as required. Unless provided for by law, the rights holder will not be responsible for such expenses.

It is worth noting though that China customs still requires the rights holder to assume the cost of storage and destruction, but this can be recovered through a compensation claim against the infringer, along with any other reasonable and related expenses.

The Opinions show the Chinese government’s commitment to tackling IP infringement. From an IP rights holder’s perspective, it would have been preferable to include a provision that provides for the supervision of any destruction. Under current practice, any inclusion in the destruction process is at the discretion of the relevant authority.

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