On January 26, 2014, the State Administration for Industry and Commerce released "Measures for the Administration of Online Transactions" (hereunder referred to as "the Measures"), to further strengthen the regulation of online transactions. The Measures have come into force on March 15 and the previous "Interim Measures for the Administration of Online Commodities Trading and the Relevant Services" (hereunder referred as to the "Interim Measures") are revoked.
The Measures (1) strengthen the protection of consumers interest and personal information, (2) regulate the competition between business operators, (3) defines what is a trading platform (marketplace) and other relevant service operators (storage service, courier service, etc), and clarify their obligations with regards to protecting intellectual property rights. Moreover, the Measures reinforce the AIC's supervision on network transactions. Unfortunately, they make no change to the administrative jurisdiction (which was in the Interim Measures) which will seriously affect the effectiveness of enforcement against infringements in the online marketplaces.
Strengthening the protection of consumers rights and personal information:
Upon request of the consumer, the business operator must issue an invoice. In case of complaint, the consumer may use an electronic shopping voucher to prove the transaction. Furthermore, the consumer may return the goods within 7 days without any reason.
The Business operator is prohibited from leaking, selling or providing customers' personal information to others without the permission of the customer. In the event such information is leaked or lost, the business operator must immediately take remedial actions. Likewise, the business operator may not send commercial electronic messages to customers.
Regulation of the competition between operators:
The Measures reveal, and prohibit, certain practices: self promotion of commercial reputation of operators by using virtual transactions or deleting negative evaluations; damaging the reputation of their competitors by posting malicious evaluation; conducting technical attacks on the website or webpage of competitors.
Clarification of the obligations of operators providing online trading service:
The marketplaces shall bear the following liabilities: systematically examine the real identity of business operators; ensure the transparency of management regulations and guarantee that the users can easily access to these regulations; assist the AIC in stopping infringement, provide registration information and transaction records upon the AIC's request; keep the registration information until at least 2 years after cancellation of registration; keep the transaction records until at least 2 years after completion of the transaction.
Service operators providing network access, server hosting, virtual space renting and website and webpage design and building, shall examine business qualification and personal identity information, and keep such information until at least 2 years after the termination or fulfilment of the service contract. Anyone who promotes products or services via blog or microblog, against a remuneration, shall disclose the for-profit nature of such promotion; service providers for network access, payment and settlement, logistic and express delivery should actively cooperate with the AIC and provide information concerning infringers, upon the AIC request.
Reinforcing the supervision of the AIC:
The Measures provide that technical monitoring records can be used as digital evidence to initiate raid actions or make penalty decisions.
However, the main issue concerning jurisdiction remains unchanged: an infringement occurred in the marketplace shall be dealt with by the AIC at the place where the marketplace is located. Taking Taobao.com as an example, all infringements found must still be dealt with by the Hangzhou AIC, while most of the infringers are located elsewhere. We will, therefore, still be facing the situation that the AIC having jurisdiction over the infringement is incapable of taking any action due to the geographical distance, because the AIC of the place where the infringer is located has no jurisdiction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.