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New Measures to Address Online Counterfeiting

Infringements of IP rights attract the attention both of the Chinese governmental authorities and Chinese courts. While the governmental authorities are taking more actions to address online infringements of IP rights and more regulatory measures to restrict online trading in health-related items, Chinese courts are issuing progressive decisions to clarify the duty of care trading platforms have in responding to complaints by IP owners.

 

The following is a quick review of newly issued rules and regulations governing infringements of IP rights and the decisions in some important IP rights infringement cases.

 

Q: What’s different about the newly revised Trademark Law and The Implementing Rules?

 

A: According to the newly amended article 56(5) of The Trademark Law, a party which “intentionally …..provides facilitating conditions, thereby assisting another to infringe” will incur secondary liability for trademark infringements. Additionally, according to article 75 of the Implementing Rules, an online commodities trading platform may be subject to secondary liability as a result of these new laws.

 

The new provisions don’t introduce new obligations for a trade platform, although they clearly help to emphasis the legislature’s concerns over online trademark violations.

 

Q: What’s this I’ve heard about the China FDA’s newly drafted rules on Online Sales of Health-Related Products?

 

A: Pursuant to the draft rules, online sales of food, health food, cosmetics and medical equipment are governed by these regulations and the manufacturers and wholesalers of such products must apply for permits from the FDA before they market such products online.. Additionally, manufacturers and wholesalers will be prohibited from selling these products directly to customers.

 

Q:  How will the new SAIC campaign effect online counterfeiting?

 

A: On June12, 2014 the State Administration for Industry and Commerce issued a notice emphasizing an enforcement campaign targeting online counterfeiting, especially on of electronic goods, children’s goods, auto parts, clothing, cosmetics and agricultural goods. The new regulations should make it easier for brand owners to enforce Intellectual Property, and stop online counterfeiting.

 

Q:  What is the National Leading Group action plan?

 

A: Several days after the notice of SAIC, the National Leading Group for Fighting Intellectual Property Rights Infringements announced an online anti-counterfeiting action plan. Pursuant to this action plan, from June of this year (2014), agencies are to focus on the following objectives:

(1)   Supervising key websites and e-commerce platforms;

(2)   Shutting down illegal websites;

(3)   Warning and educating business operators and consumers; and

(4)   Encouraging information sharing and cooperation between sectors, regions and law enforcement agencies.

 

The action plan pays special attention to the following:

(1)   Enhanced focus on cross-border enforcement initiatives to halt online infringements, with Customs, China Post and the Ministry of Public Security meant to work with each other and corresponding agencies outside China;

(2)   Development of advanced technology to improve authorities’ enforcement capabilities and to create an effective e-commerce supervision network, tracking and tracing technologies, etc; and

(3)   Improving internet governance, regulations and standards, including through the development of judicial interpretations on issues unique to online enforcement, such as evidence collection processes, and fixing gaps in relevant laws and regulations.

 

Q: What actions are being taken by the SIPO?

 

A: As of May, 2014 the State Intellectual Property Office commenced a five-month campaign to support complaints by patent owners in their efforts to have advertisements for infringing goods taken down by Chinese trade platforms. And the campaign is aimed at encouraging local intellectual property offices to assist by providing advice and instructions to trade platforms to take down offending ads where infringements are deemed clear, and also to mediate disputes where the existence of an infringement is less clear.

 

Q:  Have recent court decisions affected how counterfeiting is handled on online trade platforms?

 

A: 

(1)     E-Land (Shanghai) Clothing Trade LLC VS. Zhejiang Taobao Internet LLC (2013), lowers the evidentiary requirements for IP holders when the circumstances of an online sale make it clear that the goods are infringing an IP right.

 

(2)     The “safe harbor” defense which permits trade platforms to avoid liability if they remove infringing offers may not be applied where the infringers are repeat offenders on that platform. As a result, platforms will need to do more than just delist infringing sales each time they pop up. Stronger actions will need to be taken, and may include termination of the infringer’s account.

 

(3)     Zhejiang Pan-Asia E-commerce LLC VS. Beijing Baidu Internet LLC (2012). The court suggested that internet platforms be more more flexible in their requirements and should help verify information as needed to support take-down requests.

 

(4)     Beijing Sanmianxiang Copyright Agency VS Beijing Qihoo Tech LLC (2014), Beijing Qike Fantasy IT LLC VS. Guangdong Aufei Cartoon Culture Inc (2014), Shanghai Wenqin Recreation LLC VS. Zhejiang Taobao Internet LLC (2012), Shanghai HeWeiTang Medical Devices LLC VS. Zhejiang Taobao Internet LLC (2012), Hangzhou Guxiu Clothing LLC VS. Zhejiang Taobao Internet LLC (2010).

All support the position that the standard to determine whether a trade platform bears “fault” includes not only actual knowledge, but also constructive knowledge.

 

Finally, the famous Chinese e-commerce platform Alibaba announced that it will be introducing a three-strike rule to strengthen the deterrence against repeat offenders on its Alibaba and Aliexpress platforms. Specifically, the first strike will be a warning letter, and the second will be removal of the listings for seven days, and the third will be closing the account of the infringer.

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