China has introduced legislation to hold e-commerce platforms responsible for counterfeit goods sold on their site. China-based websites like Pinduoduo and e-commerce giant Alibaba now face fines should they fail to intervene in third-party sellers from selling fake goods. The legislation was adopted by the 13th National People’s Congress on Friday, August 31, with article 41 of the new law stating: “E-commerce platform operators must establish rules to protect IP rights,”
This move gives incentive for companies to police their sites for counterfeit products by extending responsibility from solely the seller to the hosting platform as well. The new legislation dictates that e-commerce operators will be required to act quickly when a violation is reported. Failure to act can result in a fine of between RMB50,000 ($7,328) and RMB500,000 ($73,282); serious violations can go up to RMB2 million ($293,130). The law is due for implementation on January 1, 2019.
The US Trade Representative’s Notorious Markets 2017 list had previously marked a number of Chinese websites for selling counterfeit goods – with Alibaba still reportedly selling large amounts of infringing products as late as last year. Alibaba has since announced that its anti-counterfeiting alliance had tripled in size since and includes alliances with international brands like Louis Vuitton and Samsung.