With the e-commerce booming in China, online illegal operation and false advertisements are also going up rapidly. On May 5, 2016, China's State Administration for Industry and Commerce (SAIC) announced an action plan for strengthening supervision over online market. The action plan mainly targets to illegal activities on e-commerce platforms, online trademark infringement, sale of counterfeits, false advertisements, etc., and shall last from May to November 2016.

One of the emphasis of the plan is to strengthen the punishment towards online counterfeits/infringement of famous trademarks and foreign-related trademarks. The e-commerce platform operators are required to carry out self-checking and self-rectification. Also, the credentials of the online merchants are to be inspected, registered, and made public.

In addition, the SAIC calls for full cooperation among different government functional departments. For instance, the local AICs should work closely with the public security bureaus to ensure criminal liabilities be timely investigated in case of crimes. The local AICs should also cooperate with the Customs and postal departments to jointly supervise on cross-border e-commerce.

At the end of the campaign in November, typical cases shall be selected and publicized, to alert and deter online illegal operation, and to raise the awareness of the customers against counterfeits and false advertisements. The AICs shall draw lessons from their handling of the online illegal practice to guide their future enforcement work. In the meantime, more regulations will come out to enhance regulating the online business activities, such as the Provisional Regulations of Supervision and Management on Internet Advertisement (draft of the regulation already published in July 2015 for discussion and comments).

This new campaign is carried out among all levels of AICs all over China. For right holders who are badly troubled by online counterfeits or infringement, they can take this "golden opportunity" to crack down the infringement. For those who failed in previous legal actions, they may try again during this period from May to November, and may expect to have better chance of success. If there are a bunch of counterfeits/infringement activities ongoing, right holders may firstly tackle with the "big deals" both online and offline, say conducting onsite investigation to find out the manufacturer of the counterfeits, so as to curb the source. With some successful landmark cases, the right holders can more easily enforce other cases in the future.

Details of the SAIC's action plan for strengthening supervision over online market is summarized below:

Purpose:

  • To strengthen supervision on online market and to maintain online market order
  • To protect the legal benefit of consumers
  • To promote the healthy development of online market economy

Period:

May 2016~November 2016

Tasks:

  1. To strengthen supervision over key commodities such as products for elders and children, electrical and electronics, construction and decoration products, auto parts, clothing and chemical fertilizers;
  2. To implement the real-name registration policy of online stores so as to better regulate online business activities; and to tackle down websites operated by illegal entities (i.e. using fake company names or illegally using others' names);
  3. To carry out periodical quality spot check on products for online sale, communicate with online stores with problematic products and severely strike illegal behavior;
  4. To strike online trademark infringement activities especially those relevant to well-known trademarks and foreign trademarks;
  5. To regulate false advertisements on online market;
  6. To maintain fair competition order and crack down unfair competition behavior including online false advertisements, using special names, packages and decoration of other's famous products, unfair prize-giving sales, etc.;
  7. To supervise and urge platform operators to carry out self-checking and self-rectification; to require platform operators to exam the business qualification of third-party merchants using their platforms so as to regulate the merchants' business activities;
  8. To smooth the right-protection channels and to strike those behaviors infringing consumers' legal benefits;
  9. To strengthen supervision of credibility system and discipline against discredited online operators.