The economic dynamics of China is worlds apart from the rest of the world. China strives on its invincible manufacturing capacity, untiring workforce and economical advancements in technology to make up its robust economy. It has recently been reported that e-commerce retailing in China accounts for more than 20% of China's retail sale of 2017. China is the home of some of the giant e-commerce platforms such as Alibaba, Taobao, B2C, etc. However, China is also infamous for the mushrooming of a huge market of counterfeit.
To regulate this issue with respect to e-commerce retail sale, China in August 2018, introduced a legislation which, inter alia, prescribes for the accountability of all stakeholders involved in the e-commerce transactions. This law has been enforced from January 2019.
Other than the provisions relating to protection of intellectual property, this comprehensive legislation also prescribes provisions for registration and licensing of e-commerce operators, taxation, electronic payment and e-commerce dispute resolution, online disclosure registration and licenses of the entity, of such information important contractual obligations between the sellers and the e-commerce entities, taking measures towards information security etc.
What is an ecommerce entity?
The law defines e-commerce as business activities of selling commodities or providing services via the Internet or any other information network. It does not apply to financial products and services, as well as news information, audio and video programs, publications, cultural products, and other content services provided via information networks.
Who are e-commerce operators?
The 'e-commerce business operators' refers to persons/ entities that engage in selling commodities or providing services via the Internet or any other information network. In other words there are 3 main types of e-commerce business operators i.e. a. the e-commerce platform operators, b. third-party merchants and c. those providing services on the e-commerce platform, online vendors operating their own websites or selling through other websites.
Regulations against infringement of intellectual property:
The law makes E-commerce platform operators jointly liable along with the sellers for selling counterfeit merchandise on their websites.
The proprietors of intellectual property in the products being sold on the e-commerce platforms can now notify the e-commerce operators to take measures such as deleting, blocking or disconnecting links and terminating transactions or services whenever they perceive sale of counterfeit goods or violation of their rights in trademarks etc. along with preliminary evidence of the infringement constituted.
Upon receipt of such notices, the on-platform business operators are to submit declarations of non-infringement of any intellectual property right to e-commerce platform business operators along with preliminary evidence of non-infringement within 15 days. Once these declarations are handed over to the intellectual property rights holders they are required to institute legal proceedings within 15 days, failing which the e-commerce operators shall promptly terminate all measures they have taken.
The law also prescribes heavy punishment for violators. Violators of these provisions related to intellectual property can be fined from 50,000 yuan to 5,00,000 yuan; or in case of serious and severe circumstances from 500,000 yuan to 2 million yuan.
Such legislation will be welcomed all over the world. Considering the already full-blown and relentless manufacturing capacity of China, will such a legislation drive Chinese local manufacturers and merchants towards building their own brands instead of selling the products as counterfeits remains to be seen!?
Compiled by: Adv. Sachi Kapoor | Concept & Edited by: Dr. Mohan Dewan
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.