Most major platforms in China are yet to implement Article 28. 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 . 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. 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. 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. 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. 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. 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. Where a special licence is required (e.g. 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. 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-commerce platform providers will have to be more diligent in regulating the information, content and conduct on their platforms. The new regulation however contains a lot of ambiguous points such as the “low-value transactions” threshold. 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. 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. 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. 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. Businesses will have to engage in significant compliance program development, training and implementation to ensure their systems are compliant with the new regime. Free Practical Law trial To access this resource, sign up for a free trial of Practical Law. 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. SIPS has offices in Beijing, Shanghai and Hong Kong. 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. The implementation of these new regulations commenced on January 1, 20… 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. 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. E-commerce operators must also meet their tax obligations and are now required to issue a tax invoice (fapiao). 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 legislation will also protect consumers against fake reviews. 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. The new law further enhances China's regime of privacy protection. 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. By reducing counterfeit goods, consumers will have greater trust in the system. Joseph Simone is a partner with SIPS, a firm focused mainly on IP protection in greater China. 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. Consistent with recent trends in Chinese law, this Guiding Opinion shows two underlying primary themes. 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. By Joseph Simone. The Frontier Report (commissioned by the International Trademark Association and the Business Action to Stop Counterfeiting and Piracy) estimated that as of 2013 the scale of counterfeiting and copyright piracy worldwide was approximately $900 billion, with just over half estimated to emanate from China. E-commerce in China has grown to about 19% of the total USD 5.8 trillion retail sales. http://www.sips.asia. 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. It is of no surprise that the Chinese government has implemented a new regulation on cross-border e-commerce. E-commerce operators shall not deceive or mislead consumers through false or misleading commercial promotion by means of fictitious sale, making up E.g. It also puts the onus on platform operators to remove listings, disable web pages and terminate transactions if IP rights infringement is detected. 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. Over the past few years, e-commerce in Chinahas developed at a rapi… The framework of the new law is comprehensive. For example: prohibiting misleading promotions, fake reviews and other attempts to manipulate the market. 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. ​China's new e-commerce law: A step in the right direction. 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. 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 new Chinese e-commerce law, which was passed after four rounds of debates, is believed to have consulted different stakeholders in the legislative process. 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. 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