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Internet the focus of revised Law Against Unfair Competition

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As reported by The Supreme People’s Court, legal professionals have welcomed revisions to China’s Law Against Unfair Competition that aim to tackle the growing number of lawsuits related to the Internet and smartphone apps.

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Law Against Unfair Competition

The Law Against Unfair Competition of The People’s Republic of China first came into effect in 1993, and often served as an additional or alternative basis for claims in trademark disputes.

On February 25, 2016 the Legislative Affairs Office of the State Council released a draft revision of The Law Against Unfair Competition for public review (the Law had not been updated for 23 years). The original unfair competition law was implemented at a time when the China mainly produced for an export market, whereas in modern China the local market has become more important and there is a fierce competition for Chinese customers.

Cyberlaw revisions

Revisions to The Law Against Unfair Competition take effect in January 2018. Revisions include those that specifically target unfair competition online, from where so many unfair competition complaints now arise.

Specifically, Article 6 has been amended to add new types of unfair competition, such as using the principal part of another’s domain name or website name in a way that results in misleading people.

Article 6: A business shall not commit the following acts of confusion to mislead a person into believing that a commodity is one of another person or has a particular connection with another person:
第六条 经营者不得实施下列混淆行为,引人误认为是他人商品或者与他人存在特定联系:

(1) Using without permission a label identical or similar to the name, packaging or decoration, among others, of another person’s commodity with certain influence.

(2) Using without permission another person’s name with certain influence, such as the name (including abbreviations and trade names) of an enterprise, the name (including abbreviations) of a social organization, or the name (including pseudonyms, stage names and name translations) of an individual.

(3) Using without permission the principal part of a domain name, the name of a website, or a web page with certain influence, among others, of another person.

(4) Other acts of confusion sufficient to mislead a person into believing that a commodity is one of another person or has a particular connection with another person.

Article 14 enumerates additional forms of unfair competition clause in the field of the Internet.

Article 14: Business operators must not use network technology or application services to carry out the following acts influencing user choices and interfering with other business operators’ normal operations:

(1) Using technological means to impede users’ normal use of another business operator’s network application services without the user’s consent;

(2) without permission or authorization, inserting links in network application services provided by other business operators, causing forced target jumping;

(3) misleading, deceiving, or compelling users to modify, close, uninstall or irregularly use network application services lawfully provided by others;

(4) without permission or authorization, interfering with or disrupting the normal operation of other network application services lawfully provided by others.

China Internet disputes

The demand for smart mobile devices has soared in China in the past five years, creating a highly lucrative app market. Yet the rush to profit has resulted in rogue business tactics, such as copying well-known brands or creating apps that block users from downloading rival software.

A report last year from the Supreme People’s Court showed that courts nationwide filed 2,181 lawsuits over unfair competition in 2015, up by about 54 percent year-on-year. Those related to the Internet increased sharply, it said.

In 2015, the Chaoyang District People’s Court in Beijing ordered a technology company to pay 200,000 yuan ($30,190) to a media company because an app designed by the defendant had the same name that the plaintiff had used in its WeChat public account.

China’s mobile app market has proven a hotbed for unfair competition, because mobile devices have become a major way to surf the internet, and so many apps are developed domestically.

We look forward to seeing how revisions to The Law Against Unfair Competition are interpreted by courts and in future legal documents.

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