Foreign Businesses can Unlock New Opportunities with China’s E-Commerce Law

A number of federal, state, and international laws now govern e-commerce, which can involve complex contract and tax issues, security, and privacy issues. Because technology changes quickly, the laws regulating it are new and developing. Each type of e-commerce company is required to abide by certain laws and regulations just like any other business and can run into legal issues that require help from an experienced e-commerce lawyer. The laws that apply are numerous and can be complex.

In less than a decade, China has become the largest and most dominant e-commerce market in the world, accounting for over 40% of global e-commerce activity. The E-Commerce Law of the People’s Republic of China (E-commerce Law) was enacted on August 31, 2018. One of the hottest topics is e-commerce platform operators (EPOs) liability for third-party patent infringement. The EPOs, which provide platform services rather than participating in a trade directly, must try to maintain the balance between patentees and social interests.

 

According to the China Briefing, the following terms are key to understanding what types of businesses and business operations will be impacted by the legal provisions relating to e-commerce in the PRC Civil Code.

 

  • E-commerce business operators: Consists of e-commerce platform operators, business operators using the platform, and other e-commerce business operators.
  • E-commerce platform operators: Refers to legal persons or non-legal-person organizations who provide online business premises, transaction matching, information dissemination services, etc. for both parties or multiple parties in e-commerce transactions to facilitate both or multiple parties in carrying out transaction activities independently.
  • Business operators using e-commerce platforms: Refers to operators selling goods or providing services through an e-commerce platform.
  • Other affected business operators: Refer to operators selling goods or providing services through their self-built website or other network services other than an e-commerce platform.

 

Take Down Becomes Easier with the China E-Commerce Law

The new law provides a framework for “notice and take-down” procedures which are already enshrined in existing regulations and are already provided for by most e-commerce platforms in China. There has been much discussion as to the nature of the “preliminary evidence” needed to be included in any notice and whether this increases the burden on IP owners. However, since this is not a new concept, we do not expect this to be very different from the notice requirements currently used in practice in China or under other international notice and take-down systems.

 

Businesses attempting to tie in other goods and services into consumer transactions must draw the attention of consumers to this practice and are prohibited from applying default consent to force such purchases. In addition, all online advertisements must comply with all relevant advertising laws in force in China.

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