Overview
To tackle the increasing problem of trademark violations in China rapidly expanding e-commerce industry, the State Administration for Market Regulation (SAMR) has introduced draft regulations titled Regulations on E-commerce Platforms’ Assistance in Investigating and Handling Trademark Infringement Cases (Draft Regulations). This initiative supports China wider intellectual property (IP) protection goals outlined in the Outline of the National Intellectual Property Strategy (2021–2035) and directives from the Communist Party of China and State Council on strengthening IP enforcement.
The Draft Regulations focus on closing enforcement loopholes, especially concerning ghost online stores — sellers using fake or untraceable information — which have complicated IP protection efforts. For foreign companies operating in or exporting to China, understanding these proposed rules is crucial for protecting trademark rights and navigating the changing regulatory environment. This article analyzes the background, main provisions, and practical effects of the Draft Regulations for international businesses.
Background: The Need to Enhance IP Enforcement in E-commerce
China e-commerce market is the largest worldwide, with annual transactions reaching trillions of yuan. However, this growth has been accompanied by a rise in trademark infringement. In the first nine months of 2024, SAMR investigated 27,000 IP-related cases involving illicit gains of 468 million RMB and referred 742 criminal cases to courts.
A major challenge is the widespread presence of ghost online stores, where sellers provide false addresses or contact details, making enforcement difficult. For instance, a recent crackdown on 14 stores across platforms such as Pinduoduo, Taobao, Kuaishou, and JD.com targeting infringement of the Pang Dong Lai trademark found that 10 stores operated from nonexistent addresses and 8 were completely untraceable. These issues harm legitimate businesses, including foreign brands, and damage consumer confidence. To address these problems, SAMR began drafting the Draft Regulations in October 2024, incorporating input from government bodies, local regulators, e-commerce platforms, and legal experts. The proposed rules aim to clarify platform responsibilities and improve cooperation with authorities.
See https://www.zhichanli.com/p/781205571; https://www.iprdaily.cn/news_41071.html
Key Elements of the Draft Regulations
The Draft Regulations specify duties for e-commerce platforms and outline procedures for trademark enforcement. The four main components are:
1.Reporting Suspected Infringements to Platforms
When there is preliminary evidence of trademark infringement, market regulators may issue a Notice of Suspected Trademark Infringement (Appendix 1) to the relevant platform. This notice includes evidence such as product links, notarized purchase records, or blockchain-verified data, and requires the platform to respond within 5 working days detailing actions taken.
- Duties of E-commerce Platforms
- Verification and Reporting: Platforms must verify the identity details of platform operators and ensure their accuracy. Upon request, they are required to submit relevant information to market supervision authorities within 15 working days.
- Enforcement Actions: When notified by market supervision authorities about suspected trademark infringement, platforms must act within 5 working days by measures such as limiting the infringing account activities or removing infringing products.
2. Handling Ghost Online Stores
If a seller address or contact information is found to be false, regulators will issue a Notice of Inaccurate Seller Information and Request for Assistance (Appendix 2). Platforms must display a clear warning on the seller storefront and product pages (e.g., Address information verified as false by market regulators), notify the seller to provide accurate information and cooperate within 48 hours, and report compliance to regulators within 5 working days.
- Duties of E-commerce Platforms:
- Warning Notices: If a platform operator address is incorrect and they cannot be reached, platforms must prominently display a warning on the operator store page and product listings, and notify the operator to update their information and cooperate with investigations.
- Preventing Unauthorized Closures: Platforms must take necessary steps to prevent operators from unilaterally shutting down their accounts in violation of regulations, to avoid loss of illegal profits from trademark infringement and to ensure smooth investigation and enforcement.
3. Jurisdiction and Cross-Regional Cooperation
For sellers operating across multiple regions, the Draft Regulations state that the main jurisdiction lies with the market regulator where the seller actual business is located (e.g., warehouse, shipping site, or device). Jurisdiction disputes must be resolved within 7 working days, with higher authorities stepping in if needed.
- Duties of Market Supervision Authorities:
- Case Transfer: If the operator actual business location is outside the jurisdiction of the authority that received the case, the case must be transferred to the appropriate local authority.
- Jurisdiction Coordination: Any jurisdictional disputes must be resolved within 7 working days or escalated to a higher-level authority for decision.
4. Penalties for Non-Compliance
Platforms that repeatedly fail to cooperate may be held responsible for facilitating trademark infringement under Article 9, facing administrative sanctions and possible criminal referral.
- Legal Consequences:
- Penalties for Non-compliance: Platforms that fail to comply without valid reasons may be considered as facilitating trademark infringement and assisting in violations. Market supervision authorities will investigate and impose legal sanctions.
Recommended Actions for Foreign Companies
To benefit from these new rules, foreign brands should:
- Enhance Evidence Collection: Use advanced methods like blockchain or time-stamped digital records to document infringements. Collaborate with local legal experts to ensure evidence meets Chinese procedural standards.
- Engage with Platforms: Register trademarks with major platforms (e.g., Alibaba, JD.com) to access their IP protection tools. Monitor platforms for counterfeit products and report violations promptly.
- Cooperate with Authorities: Build relationships with local regulators to speed up investigations. Participate in public consultations on the Draft Regulations (open until December 14, 2025) to influence final policies.
- Educate Consumers: Run awareness campaigns to help customers recognize authorized sellers and counterfeit risks.
Summary of Key Provisions
1. Duties of E-commerce Platforms
- Verification and Reporting: E-commerce platforms must verify the identity details of platform operators and ensure their accuracy. Upon request, they are required to submit relevant information to market supervision authorities within 15 working days.
- Enforcement Actions: When notified by market supervision authorities about suspected trademark infringement, platforms must act within 5 working days by measures such as limiting the infringing account activities or removing infringing products.
- Warning Notices: If a platform operator address is incorrect and they cannot be reached, platforms must prominently display a warning on the operator store page and product listings, and notify the operator to update their information and cooperate with investigations.
- Preventing Unauthorized Closures: Platforms must take necessary steps to prevent operators from unilaterally shutting down their accounts in violation of regulations, to avoid loss of illegal profits from trademark infringement and to ensure smooth investigation and enforcement.
2. Duties of Market Supervision Authorities
- Evidence Submission: Authorities must provide proof of trademark infringement, including ownership of trademark rights, evidence of infringement, and evidence of consumer confusion.
- Reporting Actions: After platforms take enforcement measures, they must notify the authorities in writing within 5 working days.
- Case Transfer: If the operator actual business location is outside the jurisdiction of the authority that received the case, the case must be transferred to the appropriate local authority.
- Jurisdiction Coordination: Any jurisdictional disputes must be resolved within 7 working days or escalated to a higher-level authority for decision.
3. Legal Consequences
- Penalties for Non-compliance: Platforms that fail to comply without valid reasons may be considered as facilitating trademark infringement and assisting in violations. Market supervision authorities will investigate and impose legal sanctions.
4. Additional Provisions
- Scope: The regulations also apply to infringement cases involving geographical indications and special marks.
- Interpretation and Enforcement: The State Administration for Market Regulation (SAMR) is responsible for interpreting the regulations, which take effect upon issuance.
Conclusion
The Draft Regulations mark a significant advancement in China fight against trademark infringement in e-commerce. By defining platform responsibilities and addressing enforcement challenges, they provide foreign companies with a stronger framework to protect their IP rights. Success will depend on proactive involvement from rights holders, platforms, and regulators. Foreign businesses should closely follow the finalization of these rules and adjust their strategies accordingly. With a combination of legal vigilance, technological tools, and collaboration among stakeholders, the Chinese market can become a safer and more profitable space for global brands.
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