Meaning
A legal liability mechanism measures financial damage caused when customs detains legitimate cargo at the request of a right holder. If an intellectual property owner fails to establish infringement or neglects to file a lawsuit within statutory limits, article 28 wrongful detention assigns strict civil liability for commercial losses. Under the Regulations of the People’s Republic of China on Customs Protection of Intellectual Property Rights, the applicant must compensate the cargo owner for storage fees, container demurrage, spoil, and lost sales contracts.
Customs officers execute payouts directly from the security deposit posted prior to the detention order.
Wrongful Detention Liability
Compensation liabilities activate under specific legal conditions defined in Chinese administrative law. A failure by the right holder to obtain a civil detention order or preliminary injunction from a Chinese court within twenty working days triggers wrongful detention liability. Similarly, if the court dismisses the trademark infringement claim or determines that the patent is invalid, the initial detention is legally classified as wrongful.
The cargo owner gains an immediate statutory cause of action to claim compensation.
Demurrage Damage Calculation
Financial damages cover direct operational losses documented by the shipper, freight forwarder, or recipient. Port demurrage, terminal handling charges, warehousing costs, and documented product decay during container detention form the core of recoverable damages. Losses from cancelled commercial delivery contracts are recoverable when the shipper presents binding purchase contracts executed before port seizure.
Chinese courts apply objective accounting evidence rather than prospective income projections when assessing damage claims under this rule.
Cargo Verification Practice
Foreign brand owners manage this liability exposure by conducting pre-detention product verification and market sampling before requesting customs intervention. Establishing evidence of counterfeit production prevents unexpected damage judgments arising from lawful parallel imports or authorized original equipment manufacturing shipments.
