Trademark Squatting Filed against Your Own Chinese Character Mark
Secure Chinese character mark registrations across all product and service subclasses before sharing product details or contracting with mainland manufacturers.
Customs Seizure Release Bond
Meaning
Financial guarantees submitted to the General Administration of Customs allow importers or exporters to secure the release of goods detained on suspicion of intellectual property infringement. The customs seizure release bond acts as a security measure to protect the rights of the trademark or patent holder while allowing trade to continue during a dispute. This mechanism is primarily used when the customs office discovers goods that appear to violate a registered IP right and the owner of that right requests a formal detention.
By posting the bond, the consignee provides a fund that can be used to compensate the IP holder for damages if the infringement is later confirmed by a court. The bond applies to both branded consumer goods and industrial components moving through any Chinese port of entry. Its use stops applying if the goods are confirmed as counterfeit or if the IP holder initiates a formal seizure under the mandatory detention rules.
This system balances the need for IP enforcement with the commercial necessity of maintaining supply chain velocity.
Financial Security
Establishing the bond requires the party whose goods are detained to provide a cash deposit or a bank guarantee equal to the value of the shipment. This customs seizure release bond is evaluated by the local customs officials based on the declared value of the goods and the potential risk of loss to the IP owner. Once the bond is accepted, the goods are released into the market, which prevents the build-up of demurrage charges and storage fees at the port.
The administrative process involves filing a written application within the statutory three-day window following the detention notice. Customs officials do not decide the final legality of the goods but merely hold the security while the parties resolve the matter through litigation or negotiation. For a foreign buyer, this bond provides a way to recover inventory that might be caught in a dispute between a supplier and a third-party rights holder.
If the IP holder fails to file a lawsuit within the required timeframe, the bond is returned to the applicant and the case is closed.
Release Condition
Goods are only permitted to leave the control of the authorities if the applicant satisfies the specific evidentiary and financial requirements of the port. The customs seizure release bond does not apply in cases of obvious piracy or where the goods are listed on the national prohibited list. Customs officers check the bond against the specific detention order to ensure that the coverage is sufficient for the total volume of the seized items.
This condition is strict, and any shortfall in the bond amount will result in the continued detention of the shipment. The process also requires the applicant to provide a legal contact for service of process within China, ensuring that the IP holder can initiate a legal claim. This operational link between the port and the judicial system ensures that the release of the goods does not leave the rights holder without a remedy.
If the goods are part of a larger shipment, the bond must cover the entire portion that is subject to the IP claim.
Detention Boundary
Regulatory limits on the use of these guarantees are designed to prevent the bypass of legitimate intellectual property protections. The customs seizure release bond cannot be used if the IP holder has already obtained a court order for the continued seizure of the goods. Furthermore, the bond is not a substitute for a license, and the release of the goods does not grant the importer the right to sell them if they are eventually found to be infringing.
If a court later determines that the goods are counterfeit, the bond funds are used to pay the IP holder, and the importer may still face administrative fines. This boundary ensures that the bond serves as a temporary commercial tool rather than a legal shield for illegal activity. Foreign companies should monitor the status of their trademarks in the customs database to prevent their own goods from being detained by mistake.
The effectiveness of this system depends on the accurate valuation of the goods at the time of the initial customs declaration.