Following the example of other countries, the Chinese government and legislature have to date largely left the policing of online trade platforms, websites and social media to the platform operators and IP owners, with the hope that notice and takedowns and cooperation among them would keep the problem in check, thereby limiting the involvement of police and other government authorities. the very broad definition of e-commerce activities/operators and the explicit reference to cross-border operation could likely grant the administrative authorities … The framework of the new law is comprehensive. Consumers will now have stronger legal protections under the new e-commerce law. He is also a Uniform Domain-Name Dispute-Resolution Policy arbitrator. Article 38 further requires platforms to examine the qualifications of vendors, while Article 27 requires them to verify that vendors maintain accurate records of administrative licences. For even the most sophisticated and well-resourced IP owners, online policing is daunting in its scale and complexity, with few companies reporting a satisfactory return on investment from their enforcement work. e-commerce, to regulate e-commerce conduct, to preserve the order of the marketplace, and to promote the sustainable and healthy development of e-commerce. Infringing goods often fail to meet government-imposed standards for protecting consumer health and safety, and IP owners thus have the option to file administrative and criminal complaints based on the Product Quality Law and corresponding provisions of the Criminal Code. Merchants must clearly disclose any clauses or bundles they have placed on sales and cannot assume consent from the consumer. It remains unclear for now just how thoroughly these provisions will be enforced. Among the other issues yet to be clarified in Article 28 is whether it will be deemed binding on Chinese platforms that mainly focus on export buyers, such as DHGate and made-in-china.com, or whether it applies only to platforms targeting local buyers. However, the law’s provisions on IP protection seem to have attracted the most attention – both positive and negative. China's Cyber Security Law came into effect on June 1, 2017 and dealt with personal data protection, privacy and personal data protection. The E-commerce Law aims to protect the rights and interests of the parties, regulate e-commerce behaviour, maintain market order and promote the development of e-commerce in China. Article 2 This Law applies to the e-commerce activities within the mainland territory of the People's Republic of China. On January 1, 2019, China's new e-commerce law took effect. A discussion on China's first e-commerce law from the perspective of intellectual property protection. The report concludes that infringements will increase by 70% in the next five years, perhaps taking the current global level to in excess of US$1.5 billion. The E-commerce Law clarifies uncertainties in Article 36 of China’s Tort Law and establishes a complaint procedure for e-commerce platforms. the apparent obligation of platforms to release enforcement measures, rather than merely the discretion to do so. In most cases, the enforcing authority is the local market supervision bureau. While the reasons for this are unclear, it is reasonable to assume that they simply followed prevailing practices overseas and were encouraged by the arguable success of Alibaba and other platforms in controlling IP violations through proactive measures adopted on a voluntary basis. Under the new e-commerce law, the overseas seller must designate a Chinese “responsible party”, which will be held directly accountable by the Chinese authorities for consumer complaints, product recall and other product quality or safety obligations. Almost all of the provisions in the E-commerce Law relating to IP protection leave critical questions unanswered, and there are no guarantees that the future implementing regulations will be issued soon or, if they are, that they will resolve these questions in a manner friendly to IP owners. Article 38 of the E-commerce Law imposes a clear duty of care on platforms to protect consumer safety, specifying that joint and several liability will be imposed where they fail to “take necessary measures” against goods or services that “do not meet personal or property safety requirements” when the platform operator “knew or should have known” of such sales taking place. ​China's new and wide-reaching e-commerce law has come into effect. Also, Article 42 imposes joint and several liability on online trade platforms that knowingly allow the sale of goods that pose a risk to consumer health and safety – thereby offering a potentially powerful tool for addressing items that are not deemed by platforms to infringe IP rights. But IP owners may well enjoy faster and more satisfying results if they can present platforms with evidence that an infringer either does not have the required certifications (eg, the China Compulsory Certificate) or that test results issued by government-approved labs (financed by the IP rights holders, of course) confirm that the goods fail to meet relevant standards. Social media platforms are also likely to argue against measures that would require them to compromise the privacy of users who establish closed areas for communication. Joseph Simone is a partner with SIPS, a firm focused mainly on IP protection in greater China. The new law also creates a higher cost of entry which may dissuade some small players from entering the e-commerce market. The new law further enhances China's regime of privacy protection. For example: Business registration: except for very few types of rare and small person­al businesses, Article 10 of this law requires all e-commerce operators to handle businesses’ registration (市场主体登记 in Chinese). However, the law’s provisions on IP protection seem to have attracted the most attention – both positive and negative. The new law further fosters consumer protection and competition by requiring the e-commerce operator to disclose accurate product/service information and to avoid engaging in misleading and deceptive practices. Article 80 meanwhile grants market supervision bureaux the power to impose fines on platforms that fail to verify vendor information. The implementation of these new regulations commenced on January 1, 20… It seems reasonable to assume that platforms would be required or have the discretion to terminate service to any vendor that fails to comply with these requirements. E-commerce has grown rapidly around the globe, especially in China, which boasts the world's largest e-commerce market, currently worth over US$1 trillion. Instead, Article 10 simply requires that platforms forward any identifying information that they receive to the local market supervision bureaux and to remind vendors of their obligations to undergo company registration locally. Article 17 E-commerce operators shall comprehensively, truly, accurately and timely disclose the information of goods or services, protect information rights and selection rights of consumers. Administrative fines by the market supervision bureaux are likely to be rare, as the threat of action will probably be sufficient to change behaviour. E-commerce platform providers will have to be more diligent in regulating the information, content and conduct on their platforms. On the positive side, Article 15 of the law seems to … In late November, the State Council released new policies promoting cross-border e-commerce, which came into effect on January 1, 2019. Many Chinese platforms have been lauded for their willingness to thoughtfully consider more complex infringement cases, but there is now palpable fear that those platforms will feel compelled to side with infringers due to the seemingly mandatory language in Article 43. pushing for more favourable interpretations of the law through test cases. But how then are platforms, government authorities and IP rights holders to monitor for violations? While Alibaba and certain other smaller Chinese platforms have achieved a great deal through the current regime of self-policing, the overall levels of infringement even on those with the best systems in place remain deeply concerning. China has made enormous progress over the past two decades in developing its IP protection laws and systems. This includes the need to address issues of counterfeit goods, consumer fraud, privacy, intellectual property (IP) theft, tax evasion and promotion of competition and consumer protection. China will implement a new e-commerce law from 1 January 2019 with the intent to further enhance legal protection for consumers and brands, especially in relation to curbing the counterfeit goods market, for which China has gained an unhealthy reputation. These proposals were clearly rejected by drafters of the E-commerce Law. Consumer interest groups, standards bodies, industry organizations, citizen action groups and others will have to be prepared to play their part in using the new legislation to better protect consumers, challenge bad actors and redress consumer grievances. After several years of preparation, China’s first e-commerce law officially took effect on January 1 st, 2019. For example, many questions remain about how all of this will be implemented, especially in regard to foreign entities that seek to enter the Chinese e-commerce market. Article 10 of the new law requires vendors that have not obtained business licences to do so, and in parallel register with local tax authorities. Platforms should also consider experimenting with new ways of resolving disputes that they regard as too difficult, for example, through accelerated arbitration and the use of China’s new internet courts. Legitimate product manufacturers and designers will also be encouraged to join China's online environment, knowing that they will be protected against the counterfeiting of their designs and theft of intellectual property. While these efforts have had a definite effect, they have taken place largely behind closed doors and their impact on the total level of infringements is clearly limited. Mr Simone has been advising clients on China IP matters since 1988. For example, the new law holds liable both the counterfeiters, as well as e-commerce operators who fail to "take necessary measures" to prevent and stop sellers in violation of intellectual property rights . Michael Tan and Lynn Zhao, Partner and Associate respectively at Taylor Wessing LLP, told DataGuidance, “The E-commerce Law had been on the Chinese legislator’s schedule for several … Foreign participation in owning or controlling e-commerce … E-commerce in China has grown to about 19% of the total USD 5.8 trillion retail sales. China's cross-border e-commerce trade saw its turnover rise 80.6 percent from 2016 to 90.24 billion yuan last year. A new Chinese e-commerce law that went into effect January 1 may provide some relief, though some of its provisions are murky and its enforcement has yet to be tested. The legislation also strengthens intellectual property protection and addresses the problem of manufacturing and sale of counterfeit goods. While establishing a set of laws and regulations, aiming to regulate the vast online retailing business and to protect the rights of consumers and intellectual property is a step in the right direction, there is clearly room for improvements. On the not so positive side, Article 43 seems to require platforms to refrain from acting against alleged infringements where the vendor has filed a counter-notice containing prima facie evidence of non-infringement – a provision widely criticised by IP owners during the consultation phase for the draft law based on fears that it will be abused on a grand scale by bad-faith operators. The Law clarifies e-commerce operators into e-commerce platform operators such as Taobao (淘宝), merchants on e-commerce platforms, e.g., Walmart having its own e-commerce platform, as well as those doing business on their own websites or via other web services, such as individuals who might be selling goods via social networks such as the popular chatting app WeChat. On the positive side, Article 15 of the law seems to target long-standing concerns over vendor anonymity by requiring sellers to display their business licence (or links thereto) on their home page. The new e-commerce law compliments this by also placing restrictions on abuses of consumer profiling, such as forcing consumers to "opt-out" of particular services. One important feature of the new law is the requirement that online businesses must register their business and acquire all necessary licenses regulating particular activities, such as sale of therapeutic drugs. integrating bricks-and-mortar and online enforcement programmes and teams; intensifying cooperation with the trade platforms and social media providers; and. Platform operators are also prohibited from imposing unreasonable restrictions, conditions or fees on merchants. The world of e-commerce and the underling technological advancements, especially in areas such as artificial intelligence (AI), will require that laws, regulations, standards and other administrative machinery be continually revised and adapted to new realities. But the new law does not explicitly state either proposition. Mr Simone speaks Mandarin Chinese and Italian. By means of making the world a global village with an ease to do business, e-commerce trading has gained ground. First, e-commerce in China shall be conducted in accordance with Chinese law in a manner firmly under the control of the central government. E.g. One of the hottest topics is e-commerce platform operators (EPOs) liability for … Over the past few years, e-commerce in Chinahas developed at a rapi… The new regulation however contains a lot of ambiguous points such as the “low-value transactions” threshold. Chinese platforms will meanwhile need to continue investing greater resources to build their IP protection teams and technical capabilities in order to achieve more cost-effective results and keep the level of complaints by consumers, IP owners and governments in check. It is of no surprise that the Chinese government has implemented a new regulation on cross-border e-commerce. Businesses will have to engage in significant compliance program development, training and implementation to ensure their systems are compliant with the new regime. Individual chapters cover: e-contracts and e-payments; guarantees for e-commerce transactions; data protection and promotion of consumer protection, fair competition and mechanisms for dispute resolution; cross-border commerce; and the provision of substantial civil and criminal penalties. And while it may be argued that the most deeply affected are small and medium-sized enterprises, larger brand names also lack the resources to pursue IP violations on a scale that can keep pace with the challenges that they face. The new law requires all online businesses to register with the government, and those that … The article of most relevance for IP protection provides that in case a platform fails to take necessary measures against IP violations, the market supervision bureau must first provide a warning and opportunity for the platform to rectify the violation within a prescribed period, failing which a fine of between Rmb50,000 and Rmb2 million (approximately between $7,300 and $295,000) will be imposed. The new law builds upon earlier reforms of China's legal system. Free Practical Law trial To access this resource, sign up for a free trial of Practical Law. E-commerce operators must also meet their tax obligations and are now required to issue a tax invoice (fapiao). The new e-commerce law raises the standard of commercial conduct in cyberspace and thus constitutes an important step along the road to the continued growth of China's e-commerce market. One important aspect of the E-commerce Law is obviously to better regulate the mar­ket and protect consumers. Where a special licence is required (e.g. Questions have also been raised as to whether the law applies to social media platforms, including messaging services and video and photo sharing services. Second, e-commerce in China shall be conducted by Chinese companies. The reasons for this are unclear, but it may be due to the lack of implementing regulations clarifying their precise obligations. Again China takes a very pragmatic approach to roof all these topics under the E-commerce Law, which however could trigger quite some practical implications which international operation shall pay special attention to. For those seeking maximised results, there are several best practices to consider, including: Cooperation among brand owners operating in the same industry in investigations, reporting to authorities and policy work is also advisable where feasible, including collective engagement with platforms on salient problems. The provision in the new law which has stimulated the most controversy to date is set out in Article 43, which appears to require online trade platforms to release IP protection measures for given listings if the vendor files a counter-notice containing “prima facie evidence of non-infringement” and the IP owner does not submit evidence within 15 days of its having filed a civil or administrative complaint. the lack of clarity over whether the platform is obliged to conduct a reasonable review of the legal merits; the lack of a right by the IP owner to file a rebuttal to the vendor’s, the short 15-day window for the filing of formal infringement complaints to relevant authorities; and. By Joseph Simone. As a result, the timeline for issuance of the implementing regulations remains unclear. Under the new law, online shoppers will be further protected from fake products and … The E-commerce Law of the People’s Republic of China passed by the Fifth Session of the Standing Committee of the 13th National People’s Congress on 31 August 2018 is hereby promulgated and shall be implemented with effect from 1 January 2019. Therefore, it is important that China takes steps to protect this market, and ensure it has a regulatory framework in place that will promote its continued development. China’s new E-commerce Law (which entered into effect on 1 January 2019) regulates a wide array of matters, including antitrust, data protection, consumer protection, payment and delivery services, among others. E-commerce in China On 31 August 2018, the Standing Committee of the National People’s Congress passed Electronic Commerce Law of the People’s Republic of China (hereinafter the ‘E-commerce Law’), which is China’s first comprehensive legislation governing the field of e-commerce and has taken effect on 1 January 2019. Due to the huge potentials provided by cross border e-commerce. China’s new E-commerce Law (which entered into effect on 1 January 2019) regulates a wide array of matters, including antitrust, data protection, consumer protection, payment and delivery services, among others. The new e-commerce law of China is a step forward toward a more regulated and stable environment for China’s e-commerce development. During the consultation phase for the new law, industry groups raised a number of concerns over Article 43, including – but not limited to – the following: Concerns have also been expressed over potential real-world consequences of Article 43, including the likelihood that counterfeiters and sellers of clones will exploit the new provisions by flooding platforms with flimsy counter notices. For more information please visit: http://www.china.org.cn/opinion/eugeneclark.htm. China is one of the countries that has embraced e-commerce. Most major platforms in China are yet to implement Article 28. @WTRmagazine RT @WebTMS: Some important tips here for practitioners in the post-Brexit landscape courtesy @HGF_IP via @WTRmagazine https://t.co/9yk2YF43… Read more, @WTRmagazine RT @MarksmenTweets: Dealing with cut budgets and fighting fakes during a pandemic: interview with @Starbucks’ Batur Oktay | @WTRMagazine ht… Read more, @WTRmagazine RT @globalIPcenter: [email protected] is partnering with the Girl Scouts of Greater Los Angeles to promote the importance of #trademarks + educate abo… Read more, @WTRmagazine RT @MarksmenTweets: “A logical step” – Gleissner #trademarks set to be auctioned in Latvia | More via @WTRMagazine https://t.co/b4uSIE7X86… Read more, © Copyright 2003-2020 Law Business Research. It is noteworthy the 38th clause of the law stipulates the e-commerce platform operators assume joint liabilities if the commodities and services retailers provide through them encroaches on consumers' legal rights and interests. In this regard, trade associations representing mainly US and EU companies argued for the establishment of a higher duty of care for trade platforms, one that goes beyond the mere notice-and-takedown model and instead requires platforms to implement proactive measures to address violations (ie, actions that would prevent future infringements, such as insertion of filters relying on Big Data software, strengthened intake procedures and more systematic auditing). The new law encourages self-regulation, the establishment and strengthening of industry and network codes of conduct. Consistent with recent trends in Chinese law, this Guiding Opinion shows two underlying primary themes. He also works with stakeholders towards the creation of pilot programme for the use of accelerated arbitration of IP disputes occurring on online trade platforms. By reducing counterfeit goods, consumers will have greater trust in the system. But there are fears – even among some sympathetic platforms – that the plain language will make this impossible. Article 28 of the E-commerce Law requires platforms to publish the identifying information of vendors. To its credit, the Chinese government has sought to guide online trade platforms and social media through both formal and informal persuasion, although largely out of the public eye. An e-commerce law has come into force in China that seeks to regulate online business, protect intellectual property rights and increase cybersecurity. Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn. Of course, the ills of Article 43 may well be cured in part by the future implementing regulations to the E-commerce Law. By contrast, prior to the law, vendors had the option of identifying themselves by simply offering the public an unregistered trade name, thus making it difficult for IP owners and consumers to locate and investigate their illegal behaviour. Most IP owners are already overwhelmed by the number of online ads for counterfeits and clones, and few have the resources to file civil or administrative complaints against even a fraction of the vendors of those products detected. While official data shows a sharp rise in complaints lodged related to cross-border e-commerce. And while in China administrative enforcement is viewed as an inexpensive and fast way of resolving most trademark infringement cases, the market supervision bureaux have generally proved unwilling to take enforcement action in routine online cases, arguing difficulty in asserting jurisdiction where location of the infringer and its stocks are unknown. Web The ban of fake reviews includes not only those reviews written by hired agents, but also positive reviews written by customers in exchange for monetary rewards. http://www.sips.asia. SIPS has offices in Beijing, Shanghai and Hong Kong. For example: prohibiting misleading promotions, fake reviews and other attempts to manipulate the market. While the end result seems predictable in hindsight, it was hoped that Chinese drafters of the E-commerce Law would be swayed by the views of their own judiciary. 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