China may ban e-commerce that violate intellectual property

China plans to strengthen oversight of e-commerce businesses like Alibaba Group Holding and Pinduoduo, including holding companies accountable for intellectual property violations.

E-commerce platforms will be prevented from carrying out certain online transactions and will have licenses revoked if they do not address serious infringements of intellectual property rights by those who sell on their platforms. The new guidelines are in a preliminary review of the e-commerce legislation, which was posted by the State Agency for Market Regulation. The agency presented the text for public consultation until October 14th.

Chinese companies have long been accused of allowing the trafficking of pirated or counterfeit goods on their websites. In 2019, the US government added Pinduoduo (PDD) to the so-called Notorious Markets list for hosting pirated goods on its platform, joining Alibaba and other Chinese companies.

PDD and Taobao, owned by Alibaba, also entered the 2020 list, released in January.

Merchants “found that Pinduoduo’s cancellation system sometimes does not react or is slow to remove identified goods,” the US Trade Representative’s office report said.

PDD also faces problems related to intellectual property at home. Shanghai court documents show hundreds of lawsuits filed against the company on allegations of copyright and trademark infringement.

Jack Ma, co-founder of Alibaba, has even said that it is difficult to eliminate counterfeit products on the company’s platforms because of their high quality. “The problem is that counterfeit products today have better quality, better prices than real products, real brands,” he said.

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