China’s State Administration of Industry and Commerce (“SAIC”) has recently announced that it will launch its annual online piracy crackdown campaign, which is –rather cryptically- called the “Red Shield Net Sword Campaign” (红盾网剑专项行动). The campaign promises to take a heavy hand against online sales of counterfeit and sub-par goods, and will mainly target infringements on e-commerce platforms. The campaign will last from July through November 2015. Brand owners who time their enforcement efforts with the campaign may see better results.
According to the SAIC’s Notice, the SAIC and the AICs at local levels will focus on the following points:
- Enhancing inspection over operators of online stores to ensure operators register their real identity with online sales platforms and show their business license on their online stores if they are registered companies.
- Increasing supervision and scrutiny over online sales of goods that are frequently counterfeited, including electronics, automobile parts, clothing and accessories, etc.
- Strengthening supervision and regulation over online-sales-platform operators to ensure they are performing their legal duties, including the review of the identity of online-store operators, the inspection of product quality, the efficiency and availability of notice-and-take-down procedures, etc.
That online-sales-platform operators are targeted doesn’t come as a surprise after the SAIC’s public criticism of Alibaba for lax scrutiny over counterfeits in a report published in January. Moreover, among the SAIC’s 10 model cases in the 2014 “Red Shield Net Sword” Campaign, four cases involved offences that took place on Alibaba’s online sales platform.
It is also against this backdrop that the Zhejiang AIC recently issued its “Opinion on AIC Support to Alibaba’s Sound and Rapid Development”, which provides that the AIC will give “guidance” to Alibaba on its identity review of online store operators and on effectively protecting IP and consumer rights on its platforms. The Zhejiang AIC also entered into an agreement with Alibaba for “cooperation” on anti-counterfeiting on 6 June 2015. According to that agreement, the AIC and Alibaba will share information and “cooperate” in investigating and deterring counterfeit goods on Alibaba’s platforms. We regularly communicate with Alibaba’s online anti-counterfeiting officers, and are looking forward to seeing how effective these measures are.
During the campaign (and hopefully continuing thereafter), IP owners should benefit from:
- easier identification of infringers given online store operators are required to show their business license information online and/or register their real identity;
- swifter and more effective enforcement of IP rights via administrative complaints;
- a higher level of deterrence as the administrative authorities will publish online the identity of infringers and details of punishment decisions within 20 working days of the decision (accessible to the public under the SAIC’s Interim Provisions on the Disclosure of the Information on Administrative Punishments, which took effect on 1 October 2014).
Whatever its name means and however effective it may be during its short term, the “Red Shield Net Sword Campaign” is not a panacea for the serious online counterfeiting problem that persists in China. IP owners must continue to be proactive and dedicate resources to enforcing their IP rights on China’s booming e-commerce platforms. Nevertheless, the SAIC’s annual “Red Shield Net Sword Campaign” is a commendable effort by the government, and offers an opportunity for IP owners to work with the administrative authorities and the online-sales-platform operators toward more efficient and effective online enforcement of IP rights in China.