China's E-Commerce Law
Updated: Oct 17, 2019
E-commerce has created a global marketplace, changed both retail and B2B in local markets and globally, and has become a vital part of today’s economy.
E-commerce has grown rapidly around the world, and there is an understanding that this new sector needs regulation and protection to keep booming. Focused regulation of e-commerce should address issues such as counterfeit goods, intellectual property rights, consumer privacy and protection, as well as other issues.
This is true especially in China, where e-commerce is thriving and is expected to continue to expand.
The new e-commerce law
On January 1, 2019, China’s new e-commerce law took effect. This comprehensive law is intended to apply to all e-commerce activities. Some examples of important issues covered by this law are business registration and taxation and keeping records, as well as issues like e-contracts and e-payments, data protection, cross-border commerce, and penalties.
The new law has a broad definition of “e-commerce” as “business activities of sale of goods or provision of services through the internet or other information networks.” [see here] It covers most online associated sales activities by individuals, organizations or companies that sell goods or services through their own websites or other network services.
The new law also addresses consumer protection. It requires e-commerce operators (such as Alibaba, Taobao, and JD.com) to disclose certain information, avoid misleading consumers, post consumers comments, and have safeguards in place to ensure accurate information, such as fighting fake reviews.
Intellectual property protection
An important feature of the new e-commerce law is that it strengthens intellectual property protection and addresses the issue of the manufacture and sale of counterfeit goods. For example, the e-commerce law does not only hold counterfeiters liable, but also the e-commerce platform operators. It states that an e-commerce platform operator who is aware or should be aware that a business operator using the platform has infringed on any intellectual property right should “take necessary measures” to ban this seller, such as “deleting, blocking, or disconnecting links and terminating transactions or services.” Under the new law, e-commerce platform operators may also be liable for harm caused to consumers by vendors who deal with consumers’ health, if the platform operator did not act on its obligation to review and verify the vendors’ qualifications.
The new e-commerce law also provides a standardized take-down procedure for intellectual property right owners, although big e-commerce operators already have such systems in place. The new law deals with take-down all the way from approaching the platform, to lodging a complaint with the relevant authorities or filing a lawsuit in court. The law also increases fines on e-commerce operators for severe intellectual property right infringements. On the other hand, to avoid misuse of the take-down procedure, the law provides civil liability for any wrong notice filed against a business operator who suffers damages from the loss of business during the take-down procedure.
This IP regulation is targeted at fighting counterfeiting and protecting intellectual property, with the target of gaining the trust of both consumers and brand owners, and encourage them to take part in China’s e-commerce market. This is true especially for foreign brands.
E-commerce platforms will have to abide by the law, and businesses will have to make sure they are compliant with it. But most importantly, government agencies will have to implement and enforce the law. As it lacks specificity, it will most likely require practical guidelines. Hopefully, China will find a path towards more e-commerce regulation and better IP protection.
Currently, although the law states that e-commerce entities should respect and protect intellectual property, fake goods are still common on e-commerce platforms [see our blog posts covering this issue], and there’s no doubt that combating the counterfeit trade is a tough task.
Wiser anti-counterfeit agency
The fight against counterfeits is far from over. As the extent of enforcement and effect of the new law become clearer, protecting your brand is vital.
Wiser Market's brand protection service continue's the battle against counterfeits in online marketplaces, social networks and eCommerce sites, staying on top of intellectual property laws and regulations, as well as e-commerce platforms’ take-down procedures.
Wiser Market offers proactive and preventative intellectual property protection to brands of all sizes on Chinese platforms, such as Pinduoduo, Alibaba, JD.com, as well as across multiple other channels.
Our IP protection services result in over 90% success rate in taking down counterfeits.
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