China has revised its Anti-Unfair Competition Law. Many changes in the amended law aim at the protection of fair competition in the Chinese flourishing e-commerce business. Thus, Article 8 prohibits deceiving or misleading consumers by publishing fake sales volumes, user comments, or information regarding prizes and rewards.
Such widely used practices as click farming or brushing will now be illegal, which should bring fairer market order into the still rather chaotic world of Chinese online shopping. Operators that fake sales figures or customer feedback will face hard punitive measures –fines up to two million RMB, or even loss of the business license.
Another significant improvement is the detailed definition of taking free ride on brand’s reputation. Article 6 prohibits misleading or confusing customers by pretending that the products are of another brand or have a specific connection with others. In particular, the Law prohibits such techniques as:
- Unauthorized use of names, package or decorations, as well as same or similar logos.
- Misleading use of names of other influential companies including short forms and indicating words, social organization names and other names such as pseudonyms, stage names or translated names.
- Unauthorized use of the main part of an influential domain name or website.
- Other operations that are confusing enough to mislead customers by pretending the products are from other companies or have a specific connection with others.
An important restrictive aspect is that the imitated logos, packages or domain names should possess certain influence in the relevant industry. It remains to be seen how this “certain influence” in the relevant industry can be proved by the brand owner.
Brand owners will strongly benefit from the new law in course of enforcing their IP-rights in China. Their possibilities for taking legal action against unfair competition is now considerably larger.