China’s State Administration for Market Regulation Releases Draft of Amendments to the Anti-Unfair Competition Law

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On November 22, 2022, China’s State Administration for Market Regulation (SAMR) released the Anti-Unfair Competition Law of the People’s Republic of China ( Revised Draft for  Comments ) (中华人民共和国反不正当竞争法(修订草案征求意见稿)). The Draft mainly focuses on the digital economy with a new article 4 stating “Operators must not use data and algorithms, technology, capital advantages, and platform rules to engage in unfair competition.”  Articles focusing on trade secrets and other areas are also added.

With respect to the digital economy, Article 7 adds two new types of unfair competition for the digital economy.

Operators shall not engage in the following confusing acts, causing people to mistakenly believe that it is another person’s product or has a specific connection with another person:

(3) Using without authorization logos or pages that are identical with or similar to those of the main part of the domain name, website name, page design, DBA  name, application software name or icon, etc., which have a certain influence on others;

(4) Illegally setting up any other person’s commercial mark that has a certain influence as a search keyword to mislead the relevant public;

New Articles 19 and 20 also address the digital economy.

Article 19 Operators shall not use algorithms to implement unreasonable differential treatment or unreasonable restrictions on transaction counterparties in terms of transaction conditions by analyzing user preferences, transaction habits and other characteristics, and damage the legitimate rights and interests of consumers and other operators and social public interests, disrupting the order of fair competition in the market.  

Article 20 Operators shall not violate the provisions of this Law by engaging in other acts of unfair online competition, disrupting the order of market competition, affecting fair market transactions, and harming the legitimate rights and interests of other operators or consumers and social and public interests.

With respect to trade secrets, new Article 18 states,

 Business operators shall not conduct the following acts to improperly obtain or use commercial data of other business operators, damage the legitimate rights and interests of other business operators and consumers, and disrupt the order of fair competition in the market:

(1) By means of theft, coercion, fraud, electronic intrusion, etc., undermining technical management measures, improperly obtaining commercial data of other operators, unreasonably increasing the operating costs of other operators, and affecting the normal operation of other operators;

(2) Obtaining and using other people’s commercial data in violation of an agreement or a reasonable and legitimate data capture agreement, which is sufficient to substantially replace the relevant products or services provided by other operators;

(3) Disclosing, transferring or using commercial data of other business operators obtained by improper means, which is sufficient to substantially replace the relevant products or services provided by other business operators;

(4) Improperly obtaining and using other people’s business data in other ways that violate good faith and business ethics, seriously damaging the legitimate rights and interests of other operators and consumers, and disrupting the order of fair competition in the market.

The term “commercial data” as used in this law refers to data collected by business operators according to the law, which has commercial value and for which corresponding technical management measures have been taken.

Obtaining, using, or disclosing the same data as the information that the public can use without compensation does not fall within the category of improperly obtaining or using other business operators’ commercial data as mentioned in the first paragraph of this article.

The full text of the amendment can be found here (Chinese only). A comparison between the original and draft amendment can be found here (Chinese only) courtesy of  知识产权那点事.  Comments are December 22, 2022.

Author: Aaron Wininger

Aaron Wininger is a Principal and Director of the China Intellectual Property at Schwegman Lundberg & Woessner.

Author: Aaron Wininger

Aaron Wininger is a Principal and Director of the China Intellectual Property at Schwegman Lundberg & Woessner.