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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

We recently issued a reminder of the September 1 effective date of China’s new Data Security Law (DSL) and its potential impact on all business operators in China, including multinational corporations. But the DSL is not the only development from Chinese regulators that affects technology companies operating in the country, specifically ecommerce companies.

In late August, the State Administration for Market Regulation (SAMR), China’s market regulator, issued proposed revisions to China’s ecommerce law that would impose harsher penalties on ecommerce platform operators that fail to appropriately respond to violations of intellectual property rights through their platforms. The amended ecommerce law would retain the potential monetary penalties for violations under the current law, up to a maximum of two million yuan (approximately $309,521), while adding the potential for more serious penalties in certain circumstances. Those additional penalties, which include restricted online business operations or revocation of requisite operating licenses, would apply to situations where the site operators fail to take the necessary actions to respond to and remediate infringement of IP rights by vendors selling through the platform.

SAMR indicated that, among other things, the revisions to the ecommerce law are intended to strengthen the protection of intellectual property rights and promote the sustained and healthy development of ecommerce. The proposed amendments are consistent with Chinese regulators’ increasing focus on regulatory control over technology companies operating in the country, including the DSL and antitrust issues.

SAMR is soliciting public comment on the proposed amendments until October 14, 2021.