China: Technology to protect e‑commerce

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E‑commerce platforms in China are fully banking on technical IP protection measures, says a study by China’s IP office CNIPA. The analysis also warns against the sale of counterfeits via live shopping and gaps in brand protection in cross‑border trade.

Apparently, Chinese e‑commerce platforms are increasingly taking action against IP infringements in online trade – and are focusing entirely on technical solutions. This is one result of the 2021 Report on the Development of IP in China’s E‑commerce Industry, which has now been published by the China National IP Administration (CNIPA), as the trade magazine WTR currently reports. In the CNIPA publication, the Chinese IP office analyzes the IP protection measures of Chinese e‑commerce platforms and warns of relevant challenges and possible gaps.

According to the CNIPA report, online marketplaces almost exclusively focus on technology to monitor, identify, and remove potentially IP‑infringing products. Online retailers also use machine learning and artificial intelligence (AI) to do this. For example, Chinese internet retail giant Alibaba has introduced its “IPR Protection Technology Brain” in 2019, which aims to combine AI, cloud computing, and blockchain in order to monitor potentially trademark‑infringing activities. Since then, the group has further developed its image, text, and voice recognition models. In contrast, Pinduoduo, one of China’s largest e‑commerce platforms, also employs dedicated teams to analyze identified IP‑infringing products and continuously develop the parameters of the technologies used.

The CNIPA report sees a new challenge in brand protection through livestreams and live shopping events by counterfeiters. Since such livestreaming sales have developed rapidly as a channel for online trade during the coronavirus pandemic, they have also been exploited by counterfeiters for their illegal business. Accordingly, Chinese web platforms apparently focus on technology to identify illegal offers in real time. For example, the well‑known video network TikTok, known in China as Douyin, uses technologies for optical, textual, and semantic recognition – in addition to manual checks. This is how infringing goods, suspicious sellers, as well as conspicuous live streamers and live broadcasts are to be detected automatically.

According to the Chinese authorities, the technologies used by online platforms in China are proving to be successful. Alibaba, for example, apparently handled around 98% of IP infringement complaints within 24 hours in 2021, and consumers reported around 33% fewer suspicious web links to the group. Pinduoduo reports having removed about 158 million alleged IP infringing products, taking consequences against merchants in about 760,000 cases. And TikTok/Douyin has reportedly sanctioned more than 2,300 counterfeiting merchants since 2020.

However, this apparent progress in IP protection in the Chinese e‑commerce market currently excludes cross border trade, according to CNIPA; a key hurdle here is seen in the circumstance that IP rights are not protected in the same way in all regions. A product that is protected in one country might not enjoy the same protection in another country – which could also pose the problem of parallel imports or grey marketing products, for example. In response, the CNIPA report suggests establishing a technology-based information system. The strong position of Chinese e‑commerce platforms in IP protection could then also serve as a model for online retailers from other countries, the report says. Finally, the agency considers that international IP systems do not meet the needs of the fast‑developing e‑commerce industry and advises extending technology‑based IP protection systems to cross‑border trade.

Sources: World Trademark Review (WTR), China National IP Administration (CNIPA)

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