New Law in China Promotes Protection of Intellectual Property Rights on Online Marketplaces

In January, a new law took effect in China that requires eCommerce operators to better protect the intellectual property rights of their users.

According to a press release by the Library of Congress, the People’s Republic of China’s new Electronic Commerce Law divides “e-commerce operators” into three categories:

1. Platform operators, including individuals or entities that provide “virtual places of business, transaction matching, information release, and other services . . . to enable them to carry out independent transaction activities,” like on the Chinese online marketplace Taobao;
2. Operators on platforms, who are individuals or entities that sell goods or services to customers on eCommerce platforms, like those who operate storefronts on Taobao; and
3. Other eCommerce operators, who sell goods or services through self-established websites or channels other than the platforms.

What does this mean?

In short, the law covers a broad range of “electronic commerce” conduct, including all business activities involving selling goods or providing services on the Internet.

The law requires all eCommerce operators to file certain business registrations, protect users’ personal data, and take responsibility for products or services offered on their platforms that the operators know or should know are unsafe or otherwise infringing.

This law is significant in its requirement that eCommerce operators create and enforce policies that protect the intellectual property rights of third parties. Under the law, eCommerce operators will be required to respond to third-party requests to remove or screen infringing items. The law also punishes operators who know or should know that their platforms contain infringing content but fail to take necessary preliminary measures by making them jointly and severally liable for infringement damages.