China tightens grip on unfair competition
On November 22, 2022, the China State Administration for Market Regulation released draft amendments (the Draft) to the Anti-Unfair Competition Law (AUCL).
It has been three years since the last round of amendments in 2019, which were mostly intended to implement promises China made in the US-China Economic and Trade Agreement, especially on enhancing trade secret protection.
This time, the proposed amendments seem to be very thorough, almost touching upon all aspects of the anti-unfair competition law, from general principles and specific forms of unfair competition conduct, to legal liabilities. Below are highlights of the Draft.
General policies
As background, the first section of the AUCL is general principal provisions, which set the tone of the law by laying out its fundamental values, purposes and principles. In practice, law enforcement agencies may heavily rely on these general provisions to deal with certain conduct not covered by any specific provisions.
For example, in the absence of clear rules, the good faith principle is the common go-to provision to prohibit data crawling, a new yet growingly popular way of exploiting others’ data-enabled competition advantage.
The Draft adds public interests as one of the values AUCL is designed to safeguard in the general provisions. This shows the intention of further emphasising the public nature of the law and may give law enforcement agencies more leeway to regulate conduct that seriously jeopardises public interest.
It also echoes several specific provisions, which list public interests as one factor to consider and impose harsher liabilities on such conduct.
Secondary infringement
Another notable change is that the Draft has expressly included secondary infringement-type acts as unfair competition. This change is in line with existing provisions in the Patent Law and Trademark Law on contributory or inducement infringement.
The Draft adds several provisions to give examples of what secondary infringement conduct could be in different situations. For instance, the Draft prohibits business operators to help or make it convenient for others to confuse consumers by providing storage, transportation, courier, printing, office space, or other services.
Such provisions have existed in trademark laws and other IP statutes for a while. Now it seems that China is going to include such secondary infringement in its unfair competition law regime.
Consumer protection on origin of product
Art. 7 expands the forms of unfair competition conduct that may confuse consumers. This provision is deemed to offer supplementary protection of commercial marks where the Trademark Law falls short. Specifically, the Draft:
