When goods are shipped internationally but seized and destroyed by foreign customs, who should be held accountable for the infringement?

Case Review

On January 26, 2022, Company B engaged Company A to ship a batch of solid wood chairs to Japan, assigning it full responsibility for import customs clearance, overseas warehouse delivery, and storage services. The two parties signed an international freight forwarding and customs clearance agreement, which explicitly stated: if the cargo list provided by Company B contains infringing products and the goods are seized by customs, all resulting costs and losses shall be borne solely by Company B.

However, unexpected issues arose. On February 3, the shipment was subjected to strict inspection by Japanese customs, which revealed major discrepancies. The physical goods differed significantly from the submitted customs declaration documents. Worse still, the labels on the chairs were found to be nearly identical or even identical to registered local trademarks and were thus deemed infringing. The goods were ultimately destroyed by the local customs authority.

After covering the related fees, the local import agent sought reimbursement from Company A, which, under pressure, paid the amount. Company A later faced objections from Company B, which claimed that the issue arose from errors in the customs declaration documents and that the destruction fees were unreasonable, refusing to pay.

Consequently, Company A filed a lawsuit against Company B, demanding payment of the customs clearance agency fees, warehouse inspection fees totaling JPY 411,080, destruction costs of JPY 1.32 million, and applicable interest.

Who should ultimately bear responsibility for this dispute? And who would receive a fair judgment?

Court Decision

After trial, Guangzhou Maritime Court found that the goods commissioned by Company B were inconsistent with the customs declaration materials it had provided, and were identified by Japanese customs as infringing items. Company B was therefore in breach of the contractual agreement and was held liable. The Court ruled that Company B shall pay Company A JPY 411,080 in customs clearance and warehouse inspection fees, JPY 1.32 million in destruction costs, and applicable interest.

Dissatisfied with the first-instance judgment, Company B appealed. The Guangdong High People's Court, in the second instance, upheld the original ruling, holding that the first-instance judgment had a sufficient factual and legal basis. The court noted the existence of customs documents and chat records confirming that the goods were confiscated and destroyed due to infringement. Company B's argument—that the documents submitted by Company A had not undergone formal authentication and thus the destruction was unproven—was unconvincing. Furthermore, the fees related to customs clearance, warehouse inspection, and destruction were all supported by payment vouchers and substantiated by facts and law. The appeal was dismissed, and the original judgment was upheld.

Key Significance

This case involved a contractual dispute over ocean freight forwarding. The goods were destroyed by foreign customs during import clearance due to trademark infringement, resulting in significant handling costs. Since the key evidence in the case originated abroad, both trial courts conducted a meticulous review and ultimately found the consignor in breach of contract, ordering it to compensate the freight forwarder for the destruction-related expenses. The case serves as a cautionary tale for enterprises engaged in import-export trade or acting as freight agents: due diligence on intellectual property status of goods is essential to avoid infringement risks at home and abroad. Materials submitted for customs clearance must be carefully verified. Oversight can be costly. To promote the high-quality development of the marine economy and contribute to the building of a "New Maritime Guangdong," cross-border e-commerce companies and maritime logistics enterprises alike must operate with integrity and in full compliance with the law, jointly upholding Guangdong's favorable maritime business environment.