The implementation of these new regulations commenced on January 1, 20… But with the growth of online trade and the country’s production capabilities, it is no surprise that China is regarded as the single largest source of infringing goods worldwide. First, e-commerce in China shall be conducted in accordance with Chinese law in a manner firmly under the control of the central government. The new law also creates a higher cost of entry which may dissuade some small players from entering the e-commerce market. 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. 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. According to the policies, China’s Ministry of Finance will add 63 categories of products to the list of goods that are duty-free when purchased via cross-border e-commerce platforms, including popular consumer goods like electronics, small home appliances, food, and healthcare products. In order for all the new law's goals to be achieved, all stakeholders will have to lift their game. Due to the huge potentials provided by cross border e-commerce. In June 2018, China’s internet userbase surpassed the 800 million mark, making it the world’s biggest internet userbase holder and e-commerce market potential in the world. Consistent with recent trends in Chinese law, this Guiding Opinion shows two underlying primary themes. The E-Commerce Law of the People's Republic of China (E-commerce Law) was enacted on August 31, 2018. 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. Of course, the ills of Article 43 may well be cured in part by the future implementing regulations to the E-commerce Law. Administrative fines by the market supervision bureaux are likely to be rare, as the threat of action will probably be sufficient to change behaviour. 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 new law requires all online businesses to register with the government, and those that … These platforms will also benefit from greater cooperation with government and industry groups in experimenting with new technologies and processes, and in responding constructively to concerns over measures they adopt that limit the ability of IP owners to cost-effectively police their markets. It also puts the onus on platform operators to remove listings, disable web pages and terminate transactions if IP rights infringement is detected. In most cases, the enforcing authority is the local market supervision bureau. What does it mean for market platforms and consumers. 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 . Most major platforms in China are yet to implement Article 28. China's cross-border e-commerce trade saw its turnover rise 80.6 percent from 2016 to 90.24 billion yuan last year. 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. The new law further enhances China's regime of privacy protection. 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 … 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. As such, it appears that the power to enforce registration requirements will rest with local market supervision bureaux, which may or may not have the resources or motivation to do so, thus potentially leaving platforms off the hook for enforcement. China is one of the countries that has embraced e-commerce. He is also a Uniform Domain-Name Dispute-Resolution Policy arbitrator. For example: prohibiting misleading promotions, fake reviews and other attempts to manipulate the market. 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. So, what can IP owners do in the meantime? 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. Under the new law, online shoppers will be further protected from fake products and … On the positive side, Article 15 of the law seems to … 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. In late November, the State Council released new policies promoting cross-border e-commerce, which came into effect on January 1, 2019. In recent years, there has been growing concern over the need to provide better and more efficient regulation of e-commerce. Article 80 meanwhile grants market supervision bureaux the power to impose fines on platforms that fail to verify vendor information. By means of making the world a global village with an ease to do business, e-commerce trading has gained ground. 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. The reasons for this are unclear, but it may be due to the lack of implementing regulations clarifying their precise obligations. A discussion on China's first e-commerce law from the perspective of intellectual property protection. The new legislation will also protect consumers against fake reviews. By reducing counterfeit goods, consumers will have greater trust in the system. But the new law leaves it unclear whether these judicial opinions are now good law. While official data shows a sharp rise in complaints lodged related to cross-border e-commerce. 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. âChina's new and wide-reaching e-commerce law has come into effect. 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. This includes more foreign participation which will both expand choice to Chinese consumers and work to address complaints that China has been too soft on IP protection. Mr Simone speaks Mandarin Chinese and Italian. He currently serves as the Chair of INTA’s Global Bad Faith Trademark Registration Task Force. The E-commerce Law clarifies uncertainties in Article 36 of China’s Tort Law and establishes a complaint procedure for e-commerce platforms. food or drug-related), such … Article 2 This Law applies to the e-commerce activities within the mainland territory of the People's Republic of China. 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. Meanwhile, Articles 10 and 11 require individuals who have set up trading accounts to obtain business licences and register with local tax authorities. Finally, e-commerce will account for an ever increasing share of China's foreign trade. 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. 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. IP owners will need to redouble their efforts to build up their internal resources and systems for dealing with online enforcement systems, keeping in mind that conditions online are ever-shifting. China has made enormous progress over the past two decades in developing its IP protection laws and systems. 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. The ‘whac-a-mole’ syndrome is now regarded as the inevitable outcome for most online takedown programmes. The framework of the new law is comprehensive. Government agencies will have to implement the rules and administrative procedures that provide the details for implementation. While it may have been wishful thinking, industry and consumer groups expressed the hope during the E-commerce Law consultation phase that bolder solutions would be introduced, and that perhaps some of these new solutions might serve as a model for other countries. Eugene Clark is a columnist with China.org.cn. 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. Mr Simone has been active since 1990 with International Trademark Association (INTA) committee work focused on legislative reforms and anti-counterfeiting in China. Often, advertising and transactional behaviour takes place behind the veil of members-only chat rooms that cannot be monitored by IP owners or even Chinese enforcement authorities using normal software tools. 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. @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. 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 has grown rapidly around the globe, especially in China, which boasts the world's largest e-commerce market, currently worth over US$1 trillion. E-Commerce Law of the People’s Republic of China 中华人民共和国电子商务法 [CURRENT TEXT: Chinese, English] (adopted Aug. 31, 2018, effective Jan. 1, 2019) Status: Passed; Legislative Body (Vote): NPCSC (167–3–1) Drafter & Submitter: NPC Financial and Economic Affairs Committee; Legislative Plans But the new law does not explicitly state either proposition. 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. 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. In fact, The Diplomat claims the e-commerce law is a mere codification of an already existing law established by China’s courts. 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. Regrettably, the new E-commerce Law does not specifically mention social media, but it is hoped that this gap will be addressed in the upcoming implementing regulations. pushing for more favourable interpretations of the law through test cases. One concern is the impact of the new law on small businesses which have fewer resources to implement the site development, training and business model adaptations required to be compliant in the new regime. After several years of preparation, China’s first e-commerce law officially took effect on January 1 st, 2019. But there are fears – even among some sympathetic platforms – that the plain language will make this impossible. E-commerce platform providers will have to be more diligent in regulating the information, content and conduct on their platforms. E.g. Platform operators are also prohibited from imposing unreasonable restrictions, conditions or fees on merchants. 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. On August 31, 2018, the Standing Committee of the National People’s Congress of the People’s Republic of China promulgated the E-Commerce Law of the People‘s Republic of China (“Law”) which will come into effect on January 1, 2019. 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. 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. 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. 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. integrating bricks-and-mortar and online enforcement programmes and teams; intensifying cooperation with the trade platforms and social media providers; and. Businesses will have to engage in significant compliance program development, training and implementation to ensure their systems are compliant with the new regime. Articles 74 to 88 of the E-commerce Law set out the penalties – monetary and otherwise – that may be imposed in case of non-compliance. 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. An e-commerce law has come into force in China that seeks to regulate online business, protect intellectual property rights and increase cybersecurity. 31 August 2018 E-commerce Law of the People’s Republic of China the very broad definition of e-commerce activities/operators and the explicit reference to cross-border operation could likely grant the administrative authorities … With the new policy, the list of duty-free cross-border e-commerce products c… 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. On January 1, 2019, China's new e-commerce law took effect. E-commerce operators must also meet their tax obligations and are now required to issue a tax invoice (fapiao). 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. E-commerce platforms will also have to establish a system to post consumer comments and introduce other measures to ensure accurate information. 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. The new law builds upon earlier reforms of China's legal system. 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. http://www.sips.asia. 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. 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. Chapter 5 of the E-Commerce Law, Promotion of E-Commerce, provides that China shall promote cross-border e-commerce development, establish and improve the management systems of customs, taxation, entry-exit inspection, payments and other systems relating to cross-border e-commerce, and support cross-border e-commerce platforms in warehousing, logistics, customs … 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. 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. The law came into force on 1 January The new legislation aims to protect the legal rights of all parties in online business activities; maintain 'order' in online markets, and facilitate a healthy development of online business. The new law builds upon earlier reforms of China's legal system. Merchants must clearly disclose any clauses or bundles they have placed on sales and cannot assume consent from the consumer. 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. E-commerce in China has grown to about 19% of the total USD 5.8 trillion retail sales. But how then are platforms, government authorities and IP rights holders to monitor for violations? 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. Questions have also been raised as to whether the law applies to social media platforms, including messaging services and video and photo sharing services. Mr Simone has been advising clients on China IP matters since 1988. The new e-commerce law of China is a step forward toward a more regulated and stable environment for China’s e-commerce development. 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. These associations argue that the shifting of greater legal responsibility to platforms and other intermediaries is the only sensible solution, keeping in mind the intimate knowledge of their markets, products and customers by platforms, their already robust anti-fraud programmes, the balance of convenience and other factors. It notes the need for major e-commerce entities to promote business guides and encourage fair competition and greater trust among all stakeholders. As a result, the timeline for issuance of the implementing regulations remains unclear. In light of that language, social media service providers will likely argue that Article 9 should not be applied to their businesses, as they are not created with the main purpose of facilitating trade in goods and services. 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. 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. Efforts by industry to lobby over the contents of the implementing regulations and influence how the law is otherwise applied in practice are meanwhile likely to be hamstrung by a continuing lack of transparency with rule makers and the strong support that the government continues to give to the e-commerce players as a whole. âChina's new e-commerce law: A step in the right direction. However, the law’s provisions on IP protection seem to have attracted the most attention – both positive and negative. 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. 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. The law has for centuries struggled with and always limped behind advances in technology. Under the new law, operators can be fined up to RMB 2 million ($292000) in serious cases of intellectual property infringement. E-commerce operators shall not deceive or mislead consumers through false or misleading commercial promotion by means of fictitious sale, making up 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. the apparent obligation of platforms to release enforcement measures, rather than merely the discretion to do so. The new e-commerce law enhances the protection of consumers, as merchants must provide greater disclosures, more transparency, and greater monitoring of fraudulent practices. However, the law’s provisions on IP protection seem to have attracted the most attention – both positive and negative. It remains unclear for now just how thoroughly these provisions will be enforced. The provision in the E-commerce Law that provides the clearest clues regarding coverage of social media is Article 9 which defines ‘e-commerce platform operator’ to cover entities that “provide a virtual place of business, transaction matching, information release and other services to parties of e-commerce transactions to enable them to carry out independent transaction activities”. 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. For more information please visit: http://www.china.org.cn/opinion/eugeneclark.htm. Over the past few years, e-commerce in Chinahas developed at a rapi… 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. 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. Without resolution on this point and others in future implementing regulations, test cases may be necessary in the future to force the government and courts to take a stand on these issues. 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. On January 1, 2019, China's new e-commerce law took effect. Authorities were expected to issue implementing regulations to the law before its effective date, but drafters have had difficulty balancing the interests and concerns of the various stakeholders involved. One important aspect of the E-commerce Law is obviously to better regulate the market and protect consumers. 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. 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. 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. 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. In response to more predictable IP enforcement on trade platforms, infringers are increasingly moving to social media to advertise and sell their goods. Web 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. One of the hottest topics is e-commerce platform operators (EPOs) liability for … These proposals were clearly rejected by drafters of the E-commerce Law. Foreign participation in owning or controlling e-commerce … 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. The legislation also strengthens intellectual property protection and addresses the problem of manufacturing and sale of counterfeit goods. SIPS has offices in Beijing, Shanghai and Hong Kong. The Legislature passed the E-Commerce Law, which is due to come into effect from Sept 1st next year. Where a special licence is required (e.g. China's Cyber Security Law came into effect on June 1, 2017 and dealt with personal data protection, privacy and personal data protection. Article 28 of the E-commerce Law requires platforms to publish the identifying information of vendors. 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