LONGAN LAW FIRMThe Latest Issuances and Amendments of Laws and Regulations Related to Intellectual Property in China
(Supplement 3)
(April 1, 2022 to April 1, 2023)
www.longanlaw.com
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Introduction
We have previously compiled the intellectual property regulations issued and amended from January 1, 2019 to March 31, 2022 into the report of “The Latest Issuances and Amendments of Laws and Regulations Related to Intellectual Property in China” and its Supplement 1 & 2. Since then, legislatures at all levels in China have further amended the intellectual property laws and regulations, and issued 5 judicial interpretations of intellectual property laws and regulations, as well as departmental regulations, and normative documents (including drafts for comment). We have collected and organized these new developments into the report of “The Latest Issuances and Amendments of Laws and Regulations Related to Intellectual Property in China (Supplement 3)” for your reference.
The report is divided into 3 sections according to the types of intellectual property: “patent”, “trademark” and “anti-unfair competition”. The “patent” section contains 1 departmental regulation, the “trademark” section consists of 3 departmental regulations (2 of which are drafts for comments), and the “anti-unfair competition” section includes 1 draft revision for comment.
We hope that the report can help you gain a quick and comprehensive understanding of the recent changes in the intellectual property laws and regulations in China. If you are interested in the specific content and impact of any issuance or amendment, please feel free to contact us. We are happy to provide you with further explanations and communications via online meetings.
BEIJING LONGAN LAW FIRM
April 23, 2023
Report
Part 1. Summary of issuances and amendments of laws and regulations related to intellectual property
Ⅰ.Patent
- Announcement on the Interim Measures for the Handing of the Relevant Examinations after the Implementation of the Revised Patent Law
This Announcement (No. 510 of the CNIPA) was newly issued on January 4, 2023, and came into effect on January 11, 2023.
Ⅱ.Trademark
- Measures for the Administration and Protection of Collective Trademarks and Certification Trademarks (Draft for Comment)
The Measures were newly issued by the CNIPA on June 7, 2022 and the deadline for feedback was July 21, 2022. They have not yet been implemented.
- Provisions on the Supervision and Administration of Trademark Agency
These Provisions (Order of the State Administration for Market Regulation No. 63) were newly issued by the CNIPA on November 1, 2022, and came into effect on December 1, 2022.
- Trademark Law of the People’s Republic of China (Draft Revision for Comment)
The Draft was newly issued by the CNIPA on January 13, 2023 and the deadline for feedback was February 27, 2023. It has not yet been implemented.
Ⅱ.Anti-unfair competition
- Anti-Unfair Competition Law of the People’s Republic of China (Draft Revision for Comment)
The Draft was issued by State Administration for Market Regulation on November 22, 2022 and the deadline for feedback was December 22, 2022. It has not yet been implemented.
Part 2. Key points of issuances and amendments of laws and regulations related to intellectual property
Ⅰ.Patent
- Announcement on the Interim Measures for the Handing of the Relevant Examinations after the Implementation of the Revised Patent Law
This Announcement (No. 510 of the CNIPA) was newly issued on January 4, 2023.
Key points:
The interim measures consist of 12 articles, which aim to ensure the implementation of the revised Patent Law and respond to the urgent needs of innovators for the examination of partial appearance designs and domestic priority rights of designs. The main contents are as follows:
（1）Application documentsfor partial appearance design: When filing an application for a patent for partial appearance design, the applicant shall submit a view of the whole product and indicate the content for which protection is sought by combining dotted and solid lines or by other means. If the part claimed for protection has a three-dimensional shape, the view submitted shall include a three-dimensional drawing that clearly shows the part. If the view of the whole product does not indicate the content to be protected by combining dotted and solid lines, the part claimed for protection shall be indicated in the brief description.
（2）Appearance designs claiming domestic priority: For an application for an appearance design patent filed after June 1, 2021, the applicant may make a written priority claim for the sameappearance design patent in their home country. The earlier application shall be deemed to have been withdrawn on the date of filing the later application, unless the applicant claims that the domestic priority is based on an application for a patent for an invention or utility model.
（3）The term of protection for an appearance design patent: The term of protection is ten years, commencing from the date of application, forapplications made on or before May 31, 2021.
（4）Additional provisions on duration of patent right: For invention patents that have been authorizedsince June 1, 2021, the patentee may, in accordance with Paragraph 2 of Article 42 of the Patent Law, claim compensation for the patent period in paper form within three months from the date of announcement of patent authorization, and then pay the relevant fees in accordance with the payment notice issued by the CNIPA. The CNIPA shall examine the above-mentioned claim after the implementation of the newly revised Implementing Rules of the Patent Law.
（5）Additional provisions on the duration of patent right in regard to compensating for the time occupied in new drug marketing review and approval: From June 1, 2021, the patentee may, in accordance with Paragraph 3 of Article 42 of the Patent Law, claimcompensation for the patent period in paper form within three months from the date of new drug marketing license approval, and pay the relevant fees in accordance with the payment notice issued by the CNIPA. The CNIPA shall examine the above-mentioned claim after the implementation of the newly revised Implementing Rules of the Patent Law.
Link: https://www.cnipa.gov.cn/art/2023/1/5/art_527_181246.html
Ⅱ.Trademark
- Measures for the Administration and Protection of Collective Trademarks and Certification Trademarks (Draft for Comment)
The Measures were newly issued by the CNIPA on June 7, 2022 and the deadline for feedback was July 21, 2022. They have not yet been implemented.
Key points:
The revised Draft for Comment consists of 35 articles in total. 13 provisions were amended and merged, and 21 provisions were added. The main revisions are as follows:
（1）Amending the title of the regulations and improvingthe legislative purpose
To highlight the important role of collective trademarks and certification marks in promoting the development of local characteristic industries and the significance of strengthening protection, the title of the Measures has been adjusted to Measures for the Administration and Protection of Collective Trademarks and Certification Trademarks. The purpose of the legislation is to regulate the use and management of collective trademarks and certification trademarks, strengthen the protection of trademark rights, safeguard social and public interests, and promote the development of characteristic industries. (Article 1)
（2）Further standardizing the application for registration
According to the Civil Code and the Trademark Law, qualification requirements for applicants are further clarified. The Measures emphasize that groups and associations established for public welfare purposes or other non-profit purposes can be applicants for collective trademarks and certification trademarks. In view of the current booming rural collective economy, they clarify that farmers’ professional cooperatives can apply for registration of collective trademarks other than geographical indications as other organizations. They integrate geographical indications as special requirements for the registration of collective trademarks and certification trademarks. At the same time, the procedures and examination requirements for registration of collective trademarks and certification trademarks are deleted and integrated, and only the principled provisions are retained in the Measures, and the specific content are in the Guidelines for Trademark Examination and Trial. (Articles 2 to 4)
（3）Strengthening the administrative requirements for registrants and users
Given that the users and registrants of collective trademarks and certification trademarks are not the same subject, and generally have multiple subjects, in order to maintain a good order of trademark registration and use, it is necessary to further strengthen the use management obligations of registrant and the use requirements of user: on the one hand, the registrant shall carry out daily management in accordance with the use management rules, including allow members and others to use collective trademarks and certification trademarks, timely disclose collective member and user information and use management rules, check whether the use behavior of others complies with the requirements of use management rules and whether the goods or services of the trademark meet the quality requirements, and disqualify users who do not comply with the use management rules from using collective trademarks and certification trademarks in a timely manner. The registrant of a collective trademark cannot authorize non-collective members to use the collective trademark, and the registrant of the certification trademark cannot use the certification trademark on his/her goods. At the same time, for the needs of normal operation, the registrant can charge reasonable fees based on the principle of equity and justice, and negotiate and determine the amount of fees, payment methods, payment deadlines, etc., but the interests of consumers must not be damaged. On the other hand, the user may only use the collective trademarks and certification trademarks after completing the procedures stipulated in the use management rules, and ensure that the goods using the collective trademarks and certification trademarks meet the quality requirements of the use management rules. Users can use collective trademarks and certification trademarks with their own registered trademarks at the same time. (Articles 10, 11, 14 to 16)
（4）Adding the provisions on the registration and fair use of trademarks containing geographical names
In order to implement the requirements of the National Plan for Protection and Application of Intellectual Property Rights During the 14th Five-Year Plan Period to develop regional brands and meet the needs of the development of local characteristic industrial clusters, the Measures add the registration requirements for collective trademarks and certification trademarks that include geographical names other than geographical indications, and clearly define that the sign should have distinctive features and is easy to identify. Considering that geographical names belong to public resources, it is stipulated that collective trademarks and certification trademarks containing geographical names must not infringe public interests. Focusing on the concerns of the general public, the Measures refine the situations where others legitimately use trademarks containing geographical names in accordance with Article 59 of the Trademark Law, including using factual descriptions in store signs to objectively indicate the geographical origin, using geographical names in enterprise names, and indicating the origin of the product and its raw materials in the list of ingredients, packaging bags, etc. Another legitimate use case is for others to use the geographical names and product names in the collective trademarks and certification trademarks in a factual description on special snacks and dishes. The Measures improve the requirements for the fair use of geographical names in geographical indications, and at the same time stipulate that if there is malicious intent or derogatory trademark reputation, disturbing the order of market competition, and damaging the legitimate rights and interests of the trademark registrant when implementing the fair use behavior, they shall bear the corresponding legal responsibility to safeguard the interests of the owner of the exclusive right to use the registered trademark in accordance with the Anti-Unfair Competition Law. (Articles 8, 21 to 24)
（5）Promoting the use of trademarks and improving public services
In order to give full play to the important role of collective trademarks and certification trademarks in industrial development, promote the use of trademarks, and promote brand building, the Measures stipulate that registrants can formulate measures to carry out brand building, promote and standardize the use of trademarks, enhance the value of trademarks, maintain business reputation, and promote the development of local characteristic industries; local governments or industry authorities should rationally allocate public resources according to the requirements of local economic development, and strengthen regional brand building; intellectual property management departments should support regional brands to obtain legal protection, guide registration, management and protection of collectives trademarks and certification trademarks to promote high-quality economic development and services. The CNIPA should strengthen the disclosure of collective trademarks and certification trademarks and provide public inquiry services; local intellectual property management departments should strengthen the dissemination and open sharing of collective trademarks and certification trademarks to facilitate relevant parties to inquire and obtain relevant information. (Articles 17 to 20)
（6）Improving administrative protection and intensifying punishment measures
Registrants, collective members, and users may request administrative protection against infringements in accordance with the law. Combined with the development of e-commerce, the Measures refine the use of Internet trademark infringement. Where using signs that are identical or similar to collective trademarks and certification trademarks as domain names, screen names, QR codes, website or application names and their logos, etc., and conducting related commodity transactions that cause the relevant public to be confused, it shall be included in the act of causing other damage to the exclusive right to use a registered trademark of another person according to Article 57 (7) of the Trademark Law. The Measures further clarify the punishment measures for selling goods that are unknowingly infringing, and allow sellers to prove their legal acquisition and disclose the provider. After being ordered to cease sales by the department in charge of trademark law enforcement, the infringing goods should be confiscated and destroyed, and the law enforcement information should be shared with the law enforcement department where the provider of the infringing goods is located. (Articles 25 to 27)
According to the protection practice of collective trademarks and certification trademarks, the Measures specify and supplement the circumstances in which the registrant fails to fulfill its management obligations, including negligence in performing trademark management duties that cause damage to the interests of consumers, maliciously preventing others from using geographical names in trademarks legitimately, allowing non-collective members to use collective trademarks, and using certification trademarks on their own goods, etc. The specific penalties shall be adjusted according to the revised Administrative Penalty Law. The Measures add administrative penalties for misleading the public by using geographical indications in unregistered trademarks that do not match the origin of the goods. If the registrant fails to exercise its rights, resulting in the loss of distinctive features of collective trademarks and certification trademarks, anyone may apply for revocation in accordance with Article 49 of the Trademark Law. At the same time, the means of administrative law enforcement are expanded, and it is stipulated that in addition to Article 62 of the Trademark Law, official powers shall also be exercised in accordance with the Interim Provisions on Administrative Punishment Procedures for Market Supervision and Management. The Measures improve the credit supervision system, disclosing administrative punishment information to the public via the national enterprise credit information publicity system in accordance with the law, and including in the list of serious violations and dishonesty those who deliberately infringe on the exclusive right to register collective trademarks and certification trademarks, and whose acts are malicious in nature, serious in circumstances, and relatively harmful to society, and who receive relatively heavy administrative punishments in accordance with the law. (Articles 28 to 33)
Link: https://www.cnipa.gov.cn/art/2022/6/7/art_75_175908.html
- Provisions on the Supervision and Administration of Trademark Agency
These Provisions (Order of the State Administration for Market Regulation No. 63) were newly issued by the CNIPA on November 1, 2022, and came into effect on December 1, 2022.
Key points:
In order to solve the outstanding problems of the current trademark agency industry, such as low entry barriers, excessive number of institutions, irregular operation and management, and uneven service levels, the State Administration for Market Regulation has issued the Provisions, which are divided into five chapters, including general principles, filing of trademark agencies, code of conduct for trademark agencies, supervision of trademark agencies, and handling of illegal acts of trademark agencies, with a total of 43 articles. The main contents are as follows:
(1) Filing of trademark agencies: Stipulate that a trademark agency that engages in trademark agency business under the jurisdiction of the CNIPA shall file a record with the CNIPA in a timely manner in accordance with the law, and stipulate the materials required and the validity period of the record.
(2) Code of conduct for trademark agencies: Further standardize the trademark agency behavior, stipulate the basic principles of trademark agency business, the obligations to be performed and the publicity of the basic matters of the agency, require trademark agencies to establish and improve the business management system and business file system, and strengthen the professional ethics and professional discipline education for employees.
(3) Supervision of trademark agencies: Enrich regulatory means, such as establishing credit files for trademark agencies and trademark agency practitioners, and requiring trademark agencies to submit annual reports in accordance with relevant regulations. Improve the coordination and cooperation mechanism between the market supervision department and the intellectual property management department, such as information sharing, investigation notification, and operational guidance, and refine the relevant regulations on supervision of trademark agencies.
(4) Handling of illegal acts of trademark agencies: Provide detailed regulations on the illegal acts of trademark agencies in the Trademark Law of the People’s Republic of China and its implementation regulations in combination with practice, which enhances its operability. Clarify the illegal acts of engaging in trademark agency business via the Internet. Stipulate the supervisory responsibility of the intellectual property management department, as well as the disciplinary requirements and accountability of personnel engaged in trademark registration and management.
Link: https://sbj.cnipa.gov.cn/sbj/zcwj/202211/t20221110_23355.html
- Trademark Law of the People’s Republic of China (Draft Revision for Comment)
The Draft was newly issued by the CNIPA on January 13, 2023 and the deadline for feedback was February 27, 2023. It has not yet been implemented.
Key points:
The draft further rationalizes the law system, expanding the Trademark Law to 101 articles in 10 chapters, of which 23 articles are added, 6 are formed by rearranging the existing clauses, 45 are materially revised, and 27 are basically kept unchanged. The main revisions are as follows:
（1）Following the latest trends and serving the high-quality economic and social development
Following the needs of technological progress and economic and social development, the Draft for Comments provides market entities with great convenience. First, with the updated concepts and sound tenet of the legislation and stressed protection of property rights, the Draft for Comments takes promoting the high-quality development of the socialist market economy as the institutional goal (Article 1), and emphasizes the leadership by the CPC over trademark work (Article 2). Second, adapting to the changed functions of government bodies upon institutional reforms, it defines the responsibilities of trademark competent departments and local intellectual property administrations, and enhances coordinated governance capacity in the field of trademarks (Article 3). Third, it clarifies the trademark concept, and makes public the elements constituting trademarks (Article 4). Fourth, it optimizes the structure of the Trademark Law system, simplifies the general provisions, and adds “Conditions of Trademark Registration” and “Promoting the Trademark Use, Service and Trademark Brand Building” (Chapter 2 and Chapter 9). Fifth, it implements trademark brand strategy and reinforces the building of the public service system (Article 91); gives full play to the role of the trademark system in legally supporting the building of trademark brands, and encourages the subject of each party to carry actively out measures so as to push forward the building of trademark brands, thus boosting regional and industrial economy (Articles 92, 93 and 94); better electronifies and facilitates business processing, guides and advances the effective utilization of trademark information, and makes the file management of trademark registration more standardized (Articles 95, 96 and 97).
（2）Safeguarding social fairness and justice and creating a market order of fair competition
First, the Draft for Comments further regulates the malicious trademark registration, and stresses that trademarks applied for registration shall not contravene public order and good custom (Article 14); sets out specific circumstances where trademarks are maliciously applied for registration (Article 22); incorporates trademarks “violating core socialist values”, “harming excellent Chinese traditional culture” and involving “domestic place names known by the public” in the scope of prohibited use and registration (Article 15); specifies that where any trademark involves only the common name, graphic, model, and technical term of a specific commodity, the trademark shall neither be registered, nor obtain the significant features through use (Article 16); sets up the mandatory transfer system for malicious pre-emptive trademark registration (Articles 45, 46 and 47); expressly provides that if a maliciously registered trademark is declared invalid, the party concerned shall assume the legal liability for any infringement after the registration and before the declaration for invalidation (Article 48); imposes a more fine on malicious trademark registration (Article 67); provides that if a party causes losses to others due to any malicious application for trademark registration, the party shall provide civil compensation, and that if a malicious application for trademark registration harms national interests, social and public interests or produces a great adverse impact, the procuratorial authority shall lodge a lawsuit (Article 83). Second, it strengthens the integrity building of trademarks, defines an application for trademark registration through fraud or other wrongful means as a malicious registration application of a trademark, and deems this as a reason for rejection and dispute (Article 22, Item 2); punishes dishonest acts such as fabricating or concealing important facts or intentionally providing false materials (Article 32); and intensifies credit supervision and credit punishment (Article 87). Third, it regulates the exercise of rights to prevent the misuse of rights, and adds the principle provision under which no trademark rights shall be misused to damage national interests, social and public interests or legitimate rights and interests of others (Article 9); specifies that if the wrongful exercise of the right to exclusively use a trademark seriously damages public interests and results in a great adverse impact, the registered trademark concerned may be canceled (Article 49); defines the exercise scope of the right to exclusively use a trademark, improves the provision on the descriptive use of trademarks, and adds the circumstances for the justified use of trademarks, such as the use in good faith of names, titles and addresses, and the indicative use of trademarks (Article 62); and introduces the system for counterclaims against malicious lawsuits (Article 84). Fourth, it intensifies the social attributes of trademark examination and trial to protect public interests, and provides that if any trademark is found to have any great adverse impact in the acceptance, the relevant department may refuse to accept and handle the trademark case (Article 27); and states that if any trademark is found to have violated the prohibited use provisions upon the preliminary examination, the preliminary examination announcement may, according to the corresponding function and power, be canceled (Article 37). Fifth, it strengthens the supervision and management of the trademark agency industry, defines the access requirements for trademark agencies to improve the trademark agency services (Article 68); intensifies the responsibilities and obligations of trademark agencies and their employees to standardize the acts of trademark agencies (Article 69); improves the responsibilities and obligations of trademark agency industry organizations to give better play to the role of the industry self-discipline (Article 70); further clarifies the violations of trademark agents, and adds some restrictive requirements for the principals and the direct persons liable of trademark agencies committing such violations, and the new positions of those shareholders liable for managing such violations (Article 86).
（3）Improving the procedures for trademark authorization and right confirmation and reinforcing the results of the reform of “streamlining administration, delegating power and strengthening regulation and improving services”
First, the Draft for Comments raises the quality and efficiency of trademark examination, and the efficiency of dispute resolution, and shortens the period in which a dispute application is filed (Article 36); when optimizing the dispute examination mode, cancels the process for disapproval of registration review, and lowers the costs of right acquisition and protection of parties (Article 39). Second, it promotes the coordination between procedures, avoids the idle running of procedures and the waste of administrative resources, and provides that if an applicant does not pay relevant fees in applying for trademark registration, the application of that trademark registration shall be deemed not to have been submitted (Article 27); uniformly specifies the suspension circumstances of relevant procedures, and adds the provision according to which the trial of administrative cases concerning authorization and right affirmation of trademarks at people’s courts does not apply to the principle of situation change (Article 42); includes the provisions on the prohibition of repeated registration (Articles 14 and 21); improves the same day application procedure, and allows a further investigation of the priority of use only when the application time sequence is unidentifiable (Article 25); and defines the applicable circumstances and time limit of the one-year isolation period after a trademark is canceled, withdrawn or not renewed (Article 50). Third, it adds some provisions on the withdrawal of applications (Article 41) and the cancellation of trademarks (Article 58).
（4）Reinforcing the obligations in trademark use and guidingtrademark registration to follow the rules
First, the Draft for Comments improves the concept of trademark use, highlights the basic position of trademark use, and adds the provision on how to use service trademarks, and on the trademark use in an Internet environment (Article 59). Second, it adds the requirements for trademark use or commitment to use trademarks at the application stage (Article 5); establishes the system under which the trademark registrant shall actively state the use of the trademark once five years upon trademark registration, and where the trademark registrant fails to do so or to state the justified reason, the registrant shall be deemed to have waived the right to exclusively use his or her registered trademark, and where the statement by the trademark registrant is found false in the random inspection, his or her registered trademark may be canceled (Article 61). Third, it improves the trademark cancellation system, and when maintaining the cancellation system applicable to the trademarks not used for three years running, adds the following three trademark cancellation circumstances to better protect public interests. The three circumstances include: “The use of the registered trademark leads the public to mistake the quality, origin or other features of a commodity or service”, “The use of the registered trademark or the exercise of the right to exclusively use a registered trademark seriously damages public interests, and causes a great adverse impact”, and “The improper management or use of a collective mark or a certification mark harms consumers or causes a negative social impact”. According to the Draft for Comments, under the aforementioned last two circumstances of damaging public interests, the relevant department may, according to its function and power, cancel the registered trademark concerned (Article 49).
（5）Enhancing the protection of trademark exclusive rights and cracking down on trademark infringement
First, the Draft for Comments strengthens the protection of the right to exclusively use a trademark, and combats the acts that infringe upon the right to exclusively use a registered trademark through e-commerce activities (Article 72); perfects the diverse resolution mechanism for trademark disputes, and adds the provision on arbitration, administrative determination and confirm of lawsuits concerning no infringements (Article 74); reinforces the connection between punishments, and defines the two way transfer mechanism in investigating and dealing with administrative and criminal cases concerning trademark infringements (Article 75); improves the law enforcement measures to investigate and deal with trademark violations (Article 76); offers the better methods of calculating the compensation amount of trademark infringements, clearly includes reasonable expenditure of right holders in the compensation amount, and modifies the applicable conditions for punitive compensation from “maliciously” to “intentionally” to ensure consistency with the provisions of the Civil Code (Article 77); introduces the public interest litigation of trademark infringements so as to combat trademark infringements that damage national interests or social or public interests (Article 78). Second, it reinforces the protection of well-known trademarks against “leaning on famous brands”, “piggyback” and other acts that impede fair competition, and changes “identification of well-known trademarks” to “confirmation of well-known trademark condition” so as to further downplay the quality of administrative identification, and sets forth the scope and intensity of protection appropriate for the significance and popularity of well-known trademarks (Article 10); strengthens the protection of unregistered well known trademarks, and offers anti-dilution protection to well-known trademarks known by the public (Article 18).
（6）Strengthening trademark supervision and management, and punishing trademark violations
First, the Draft for Comments defines trademark violations and legal consequences thereof, and adds the provision on the fine imposed on the independent change of the registered trademark and on the treatment of trademark infringements (Article 64). Second, it strengthens the protection of geographic indications, and provides that where an unregistered trademark added or used contains a geographic indication of the goods but the goods do not originate from the region indicated thereon, thus misleading the public, an administrative punishment shall be carried out, and at the same time the sales of illegal goods and acts that assist trademark violations shall be investigated (Article 65). Third, in accordance with the practice of law enforcement and the principle of proportionate punishment to crimes, it modifies the fine amount on the illegal use of the words of well-known trademarks to less than RMB 100,000 from the fixed RMB 100,000 (Article 66). Fourth, it strengthens the supervision and management of registrants of collective marks and certification marks, and specifies the restrictive requirements for the transfer of collective marks and certification marks (Article 57); sets expressly forth the legal liability that registrants of collective marks and certification marks shall assume because of their failure to fulfill the management obligation or correctly exercise the corresponding right (Article 63).
（7）Proposing miscellaneous revisions
First, the Draft for Comments strengthens the supervision and inspection of such civil servants and relevant personnel as are engaged in the registration, management, review and trial of trademarks (Articles 88, 89 and 90). Second, it adds the provision on the official sign recordation (Article 99). Third, on the basis of the Civil Code, it revises the expression of civil subjects from “natural persons, legal persons, or other organizations” to “natural persons, legal persons, or unincorporated organizations”.
Link: https://www.cnipa.gov.cn/art/2023/1/13/art_75_181410.html
III. Anti-unfair competition
- Anti-Unfair Competition Law of the People’s Republic of China (Draft Revision for Comment)
The Draft was issued by the State Administration for Market Regulation on November 22, 2022 and the deadline for feedback was December 22, 2022. It has not yet been implemented.
Key points:
The Draft consists of a total of 48 articles, aiming to create a fair competitive market environment, protect the legitimate rights and interests of operators and consumers, and safeguard the public interests of society, as well as address prominent issues in practices and expedite the improvement of the legal system for anti-unfair competition. The main modifications proposed in the Draft are as follows:
（1）Improving the anti-unfair competition rules in the digital economy to regulate and govern the acts that disturb competition order emergingin the development of new economy, new formats and new modes;
The Draft incorporates the characteristics of competition in the digital economy field. It introduces provisions such as Article 4 and Articles 15 to 22, which specifically regulate unfair competition behaviors in data acquisition and utilization, unfair competition practices utilizing algorithms, and new forms of unfair competition that hinder open sharing in the online environment. Given the complexity in determining unfair competition acts in the digital economy field, the Draft establishes criteria for assessing whether certain behaviors constitute unfair competition, aiming to enhance the predictability of the legal system and the standardization of law enforcement. Additionally, it stipulates responsibilities of platform operators to strengthen competition compliance management and promote social governance of anti-unfair competition.
（2）Supplementing and improving the manifestation of existing unfair competition acts in response to the outstanding problems in the practice of regulation and law enforcement;
First, the Draft improves provisions on commercial confusion. In response to requirements of law enforcement practices, Article 7 of the Draft introduces additional types of identifiers that constitute commercial confusion, including self-media names and application software names. It also brings sales of confusing goods and facilitation of infringement within the scope of regulation, distinguishing subjective intent and establishing corresponding legal responsibilities. Next, in Article 8 of the Draft concerning commercial bribery, prohibitory regulations are imposed on behaviors of accepting bribes. Third, Article 9 of the Draft provides further details on false advertising, describing various types of commercial propaganda to assist law enforcement in distinguishing commercial promotion from advertising. It strengthens efforts to combat organizations that facilitate false advertising through activities such as organizing false transactions or fabricating evaluations. Fourth, it emphasizes the protection of trade secrets. Article 10, paragraph 5 of the Draft stipulates that the state shall promote the establishment of a comprehensive system for the protection of trade secrets, which includes self-protection, administrative protection, and judicial protection. The last, Article 12 of the Draft brings acts of instigating others to engage in commercial defamation within the scope of regulation.
（3）Filling in the legal gap byadding new types of unfair competition behaviors;
Firstly, the Draft introduces provisions to regulate unfair trade practices that harm the legitimate rights and interests of small and medium-sized market entities, aiming to enhance their protection. Given that market entities with relative advantages sometimes impose unreasonable restrictions or attach unfair conditions on their transaction counterparts, particularly on small and medium-sized enterprises or operators within platforms, in order to gain illegal benefits or unfairly expand their competitive advantage, the Draft in Article 13 categorizes and enumerates six types of such harmful practices, including “choose one of two” and mandatory tie-in sales, and also provides the guidelines on determining “relative advantages” in the annex to the Draft. Secondly, the Draft introduces provisions on malicious transactions. Article 14 addresses intentional malicious transactions that trigger disciplinary measures against other operators under relevant rules, thereby impeding or undermining the normal business operations of other operators, and such behavior is explicitly prohibited.
（4）Improving the legal liability to meetthe requirements of strengthening anti-unfair competition.
First of all, Articles 34 to 36 of the Draft establish corresponding penalties for new illegal behaviors, including unfair trade practices, malicious transactions, and new forms of online unfair competition. Besides, legal liabilities are introduced for certain illegal behaviors. Article 28, paragraph 2 of the Draft sets administrative penalties for those who knowingly or should have known about others engaging in confusing practices but continue to sell confusing goods or intentionally provide facilitation for such practices. Furthermore, Article 29 of the Draft increases penalties for receiving bribes in commercial bribery cases. What’s more, the penalties for illegal behaviors are adjusted scientifically. In order to ensure proportionate punishment, Article 30 of the Draft lowers the minimum penalty for false advertising based on law enforcement practices. Additionally, Article 38 of the Draft strengthens the sanctions for serious cases of unfair trade practices and online unfair competition that severely undermine fair competition order or social public interests.
Link: https://www.samr.gov.cn/hd/zjdc/202211/t20221121_351812.html