Intellectual Property in the Internet age is hard to police, writes Reuben Kaufman, but a new e-commerce law might go some way to find a solution

On the 1^st of January 2019, a new e-commerce law will come into effect in China, and it could spell important changes for British businesses in the country. Under the new regulations, e-commerce operators are encouraged to provide increased protection, including in the field of intellectual property, for all parties that choose to trade online. In theory, this means increased security for all British brands that sell via e-commerce platforms such as Taobao and JD.com, and peace of mind for business owners worried about counterfeiting, trademark infringement and patent protection.

Although the new law is a welcome development for the general regulation of e-commerce platforms, in terms of intellectual property, it has certain limitations. Tom Duke, UK IP Attaché to China & Hong Kong, is sceptical about the role it will play in combating infringement.  “IP provisions [in the new e-commerce law] are at best neutral,” he says. While the law may represent “a departure from previous norms,” the pace of change in Chinese legislature is such that improvement to IP protection still constitutes a significant challenge.

Currently, regulatory standards in China provide fewer assurances compared to their British counterparts. However, does the relative lack of IP protection in the country actively discourage British businesses from entering the market? “Yes, sometimes,” Duke recognises that “there are IP challenges to doing business in China.” But with a carefully-planned entry strategy, the risks to prospective newcomers can be mitigated. “Risk can be kept to tolerable levels,” provided that necessary action is taken during the IP registration process. Since China adheres to a “first-to-file” policy, this typically means filing a trademark with a registered Chinese agent, as trademarks filed abroad offer no protection within the country.

If these new regulations were to be enforced, both British businesses and the Chinese economy would stand to benefit

In recent years, CBBC has invited a range of British companies to discuss their concerns at a series of roundtables dedicated to examining IP infringement on e-commerce platforms. One of the guests this October was social media company WeChat, which has developed a Brand Protection Platform (BPP) to address rights owners’ concerns over counterfeit goods sold via the network. It is hoped that features such as WeChat moments, the content-sharing function that allows the quick circulation of photos, videos and links between friends, will from now on be protected by the BPP from exploitation by illicit sellers. Similarly, although official WeChat accounts can currently feature branded keywords such as “Peppa Pig” or “Barbie”, regardless of whether these accounts are verified as representing the brand, WeChat is working with CBBC and rights owners to progress towards fuller trademark protection on the social network.

British businesses have another reason to be hopeful: they are not the only party that will benefit from more effective IP provisions in China. The government itself views the new e-commerce law as crucial to its wider programme of economic development, which will rely in part on IP protection to increase productivity and promote innovation. In particular, Article 3 of the new law “gives full play to the role of e-commerce in promoting quality development, satisfying people’s ever-growing demands for a better life and building an open economy”, while Article 5 specifies that IP protection is included in this programme. If these new regulations were to be enforced therefore, it can be assumed that both British businesses and the Chinese economy would stand to benefit.

Flora Fan, Assistant Director and Legal Counsellor at CBBC, is cautiously optimistic concerning the outcome of the new law. “It is encouraging to see that the e-commerce law will require platforms to cooperate with brands on IP protection, and that these platforms will bear legal obligations for brand protection,” she says. “But we can also see that the law is behind current practice.” Uncertainty remains over how the new law will intersect with e-commerce platforms’ current efforts to protect rights owners. “There is still more to be done concerning the implementation of the e-commerce law,” she concludes. Although far from being a new frontier, it appears that the proposed law will nevertheless be a welcome step forward for IP in the internet age.
For more information on IP in China please contact Paulo Lopes on Paulo.Lopes@cbbc.org.cn