On March 17, 2022, the Supreme People's Court released the Interpretation on Several Issues Concerning the Application of the PRC Anti-Unfair Competition Law (the "new interpretation"). The new interpretation took effect on March 20, 2022 and replaced the Interpretation of the Supreme People's Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition issued in 2007. With 29 articles, the new interpretation clarifies conditions for application of the PRC Anti-Unfair Competition Law and other IP laws, defines "business operators" and "business ethics", addresses imitating and confusion, false publicity, online unfair competition acts and other popular issues related to the implementation of Anti-Unfair Competition Law.
The key contents of this new interpretation are summarized as follows for your reference.
Application of Anti-Unfair Competition Law or specific IP laws
Article 2 of the Anti-Unfair Competition Law is considered as a catch-all general clause by which unfair competition acts not specified in the law could also be dealt with under the framework of the Anti-Unfair Competition Law. In practice, there are different understandings on the application of this clause. In Article 1 of the new interpretation, it sets forth that this general clause can apply to an act that "disrupts market competition order, infringes the legal rights and interests of other business operators or consumers" but is not regulated or included in Chapter II of the Anti-Unfair Competition Law or in provisions of the Patent Law, Trademark Law, Copyright Law, etc. In this way, the new interpretation distinguishes between circumstances where the general clause of the Anti-Unfair Competition Law and other provisions under the Anti-Unfair Competition Law or other specific IP laws shall apply.
Definition of "other business operators" and "business ethics"
Article 2 of the new interpretation defines "other business operators" as the entities that may potentially compete for trading opportunities and cause damages to the competitive advantages of a business operator in production or commercial activities. Though it seems that Article 2 does not require the “other business operators” to be in the same industry with the business operator potentially competed or damaged, they shall be involved in competition activities.
Article 3 specifies that "business ethics" in the Anti-Unfair Competition Law do not equal to daily ethical standards, and it may be a code of conduct that is commonly followed and recognized in a specific business field. Article 3 stipulates that in determining whether a business operator violates the business ethics, the people's court shall take into consideration of the industry rules or business practices, the operator's subjective state, the choice of the counterparties in the transactions, the impacts on consumers' rights and interests, the market competition order and public interests, etc. The people's court may also refer to the practice standards, technical standards, self-regulatory conventions formulated by the competent industry authorities, industry associations or self-regulatory organizations.
Recognition of "imitating and confusion"
In the new interpretation, there are 11 articles relating to "imitating and confusion", which is regulated in Article 6 of the Anti-Unfair Competition Law.
The meaning of "certain influence" and factors influencing the recognition of "certain influence" are defined in Article 4 of the new interpretation. It is required that signs with "certain influence" shall have "certain market reputation" and "distinctive features distinguishing the source of goods". The factors the people's court shall consider in determining "certain market reputation" include public awareness of the signs, the time, area, amount, and target customers of the sale of goods, the duration, degree, and geographical scope of publicity, and the protection afforded to the signs, etc. Besides, the new interpretation clarifies that signs that are prohibited from registration under the Trademark Law cannot be protected by the Anti-Unfair Competition Law.
The scope of market entities whose names can be protected is also refined. The new interpretation clearly states that an overseas enterprise's name that is commercially used within the territory of China could be recognized as the "enterprise name" protected by the Anti-Unfair Competition Law.
Online unfair competition acts
In Articles 21 and 22, the new interpretation further explains and defines two online unfair competition acts: forcing a URL forwarding with inserted link and interfering with users' use of network services and products. In these two articles, ”without users' approval" is included as an important factor in determining unfair competition acts.
As explained by the Supreme People's Court, due to the fast development of internet related technologies and business modes, the new interpretation does not list more online unfair competition acts but specifies the conditions for application of the law and provides necessary guidance, and leaves room for market adjustments and technology innovations.
The following is the English translation of this interpretation prepared by our firm for your comprehensive understanding.
Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the PRC Anti-Unfair Competition Law
(Adopted at the 1862th meeting of the Judicial Committee of the Supreme People's Court on January 29, 2022 and shall come into force as of March 20, 2022, No. 9 [2022], SPC)
For the purpose to correctly try civil cases arising from acts of unfair competition, this Interpretation is formulated in accordance with the Civil Code of the People's Republic of China (hereinafter as the “PRC”), the PRC Anti-Unfair Competition Law, the PRC Civil Procedure Law and other relevant laws and regulations, and in light of trial practices.
Article 1 Where a business operator disrupts market competition order, infringes the legal rights and interests of other business operators or consumers, but not in violation of Chapter II of the Anti-Unfair Competition Law or provisions of the Patent Law, Trademark Law, Copyright Law, the people's court may apply Article 2 of the Anti-Unfair Competition Law to determine.
Article 2 For market participants in a relationship of potentially competing for trading opportunities or diminishing competitive advantages with business operators in production or business activities, the people's court may identify such market participants as “other business operators” as stipulated in Article 2 of the Anti-Unfair Competition Law.
Article 3 A code of conduct commonly accepted and recognized in a specific business field can be identified by the people's court as “business ethics” as stipulated in Article 2 of the Anti-Unfair Competition Law.
The people's court shall, in light of the specific circumstances of a case, take into account factors such as industry rules or business practices, the operator's subjective state, the choice willingness of the counterparties in transactions, any impact on consumers' rights and interests, the market competition order, social and public interests, etc., while judging in accordance with the law whether a business operator violates business ethics.
When determining whether a business operator violates business ethics, the people's court may also refer to the practice standards, technical standards, and self-regulatory conventions, among others, formulated by industry regulation authorities, industry associations, or self-regulatory organizations.
Article 4 For a sign with a certain market reputation and with distinctive features distinguishing the source of goods, the people's court may determine it as a sign “with a certain influence” as stipulated in Article 6 of the Anti-Unfair Competition Law.
In determining whether a sign specified in Article 6 of the Anti-Unfair Competition Law has a certain market reputation, the people's court shall consider the degree of awareness by the relevant public in PRC, the time, area, amount, and target customers of the sale of goods, the duration, degree, and geographical scope of publicity, the protection afforded to the sign, and other factors.
Article 5 Where a sign specified in Article 6 of the Anti-Unfair Competition Law falls under any of the following circumstances, the people's court shall determine that it does not have distinctive features that distinguish the source of goods:
(1) The generic name, graphic and model of the goods.
(2) The sign only directly indicates the quality, main raw material, function, use, weight, quantity, and other characteristics of the goods.
(3) Shape arises only from the nature of goods themselves, the shape of goods which is necessary to obtain a technical effect, or the shape which gives substantial value to the goods.
(4) Other signs lacking distinctive features.
Where a sign specified in subparagraphs (1), (2) and (4) of the preceding paragraph acquires distinctive feature through use and gained a certain market reputation, and a party requests protection of the sign in accordance with Article 6 of the Anti-Unfair Competition Law, the people's court shall uphold.
Article 6 Where the following signs are fairly used for the purposes of objective description and introduction of goods, the people's court shall not uphold a party's claim that such uses fall under Article 6 of the Anti-Unfair Competition Law:
（1） A sign consisting of the generic name, graphic, and model of goods.
（2） A sign directly indicating the quality, main raw material, function, use, weight, quantity, and other characteristics of goods,
（3） A sign containing a place name.
Article 7 Where the signs or the distinctive identifying parts of the signs specified in Article 6 of the Anti-Unfair Competition Law fall within signs that shall not be used as trademarks under Article 10 Section 1 of the Trademark Law, and the party requests for protection of such signs or parts of signs according to Article 6 of the Anti-Unfair Competition Law, the people's court shall not uphold.
Article 8 In case the decoration of the business premises, the pattern of tools used in business, the clothes of sales personnel and etc. of the business operator constitutes an overall business image with a unique style, the people's court may recognize it as “decoration” specified in Article 6 Section 1 Subsection 1 of the Anti-Unfair Competition Law.
Article 9 An enterprise name registered with the administration in charge of market participants registration, and a foreign enterprise name used in business within the territory of PRC may be determined by the people's court as the “enterprise name” specified in Article 6 Section 1 Subsection 2 of the Anti-Unfair Competition Law.
For the name (including abbreviations, trade names, etc.) with a certain influence of an individual business, a farmers' professional cooperative (cooperative union) and other market participants stipulated in the relevant laws and regulations, the people's court may determine in accordance with Article 6 Section 1 Subsection 2 of the Anti-Unfair Competition Law.
Article 10 For using signs with a certain influence within the territory of PRC on goods, packaging or container of goods, and goods transaction documents, or for advertising, promotion, exhibitions and other commercial activities for identifying the source of goods, the people's court may determine the act as “use” specified in Article 6 of the Anti-Unfair Competition Law.
Article 11 Where a business operator uses without authorization a sign similar to an enterprise name (including an abbreviation or a trade name, etc.), a social organization name (including an abbreviation, etc.), a personal name (including a pseudonym, a stage name, and a name translation, etc.), the main part of a domain name, a website name, or a webpage, among others, of another party with a certain influence, misleading others into believing that the goods belong to or are specifically related to the other party, and a party contends that such an act falls under circumstance specified in Article 6 Section 1 Subsections 2 and 3 of the Anti-Unfair Competition Law, the people's court shall uphold.
Article 12 The people's court may refer to the principles and methods for judging the identicalness or similarity of trademarks in determining the identicalness or similarity of the sign at issue to a sign “with a certain influence” as stipulated in Article 6 of the Anti-Unfair Competition Law.
“Mislead others into believing that the goods belong to or are specifically related to another party” stipulated in Article 6 of the Anti-Unfair Competition Law includes the misunderstandings that there is a business cooperation, licensed use, commercial sponsorship, advertising endorsement or other particular connections.
The use of a name of goods, packaging, decoration, or any other sign identical to or visually indistinguishable from the one another party's used on the same types of goods shall be regarded as being sufficient to cause confusion with the sign with a certain influence of another party.
Article 13 Where a business operator commits any of the following acts of confusion, sufficient to cause a misunderstanding that the goods belong to or are specifically related to another party, the people's court may uphold that the circumstances falls under Article 6 Section 1 Subsection 4 of the Anti-Unfair Competition Law:
(1) Using a sign with a certain influence other than those specified in Article 6 Section 1 Subsections 1, 2, and 3 of the Anti-Unfair Competition Law without authorization.
(2) Using a registered trademark or an unregistered well-known trademark of others as a trade name in a enterprise name to mislead the public.
Article 14 Where a business operator sells goods bearing a sign in violation of Article 6 of the Anti-Unfair Competition Law, causing a misunderstanding that the goods belong to or are specifically related to another party, and a party contends that such an act falls into the circumstances stipulated in Article 6 of the Anti-Unfair Competition Law, the people's court shall uphold.
Article 15 Where warehousing, transportation, mailing, printing, concealment, business premises or other facilitating conditions are intentionally provided by certain parties for the convenience of others to commit acts of confusion, and a party makes a claim under Article 1169 Section 1 of the Civil Code, the people's court shall uphold.
Article 16 Where during the course of commercial publicity, a business operator provides untrue information on goods to defraud or mislead the relevant public, the people's court shall determine such an act as false commercial publicity under Article 8 Section 1 of the Anti-Unfair Competition Law.
Article 17 Where a business operator commits any of the following acts, to defraud or mislead the relevant public, the people's court may determine the act as “misleading commercial publicity” as stipulated in Article 8 Section 1 of the Anti-Unfair Competition Law:
(1) Conducting one-sided publicity or comparison of goods.
(2) Using a scientifically inconclusive viewpoint or phenomenon, among others, as a conclusive fact in promotion of goods.
(3) Using ambiguous language for commercial publicity.
(4) Other misleading acts of commercial publicity.
The people's court shall determine any misleading acts of commercial publicity in accordance with factors such as daily life experience, the general attention of the relevant public, the facts misunderstood, and the actual situation of the publicized objects, etc.
Article 18 Where a party contends that a business operator violates Article 8 Section 1 of the Anti-Unfair Competition Law and claims compensations for its loss, it shall submit evidence to prove that it suffers losses resulting from a false or misleading act of commercial publicity.
Article 19 Where a party contends that a business operator commits an act of commercial defamation under Article 11 of the Anti-Unfair Competition Law, it shall submit evidence to prove that it is the specific victim of the act of commercial defamation.
Article 20 Where a business operator intentionally disseminates false or misleading information fabricated by others to damage the goodwill and products reputation of a competitor, the people's court shall determine in accordance with Article 11 of the Anti-Unfair Competition Law.
Article 21 The people's court shall determine a direct URL redirection without the consent of other business operators and users as “forcing a URL redirection” specified in Article 12 Section 2 Subsection 1 of the Anti-Unfair Competition Law.
If only a link is inserted, and the URL redirection is triggered by the users, the people's court shall take into account the specific method of inserting the link, whether there is a reasonable reason, the impact on the interests of users and other business operators and other factors in determining whether the act is a violation of Article 12 Section 2 Subsection 1 of the Anti-Unfair Competition Law.
Article 22 Where a business operator, without providing explicit prompts in advance and users' approval, by way of misleading, deceiving, or coercing users into modifications, close, uninstallation or other means, maliciously interferes with or undermines the network products or services legally provided by other business operators, the people's court shall underdetermine in accordance with Article 12 Section 2 Subsection 2 of the Anti-Unfair Competition Law.
Article 23 For an unfair competition act specified in Articles 2, 8, 11, and 12 of the Anti-Unfair Competition Law, if the actual loss suffered by the right owner resulting from the infringement and the benefits obtained by the infringer resulting from the infringement are difficult to determine, and the party contends that the amount of compensation shall be determined in accordance with Article 17 Section 4 of the Anti-Unfair Competition Law, the people's courts shall uphold.
Article 24 For an infringement committed by one infringer against the same party at the time within the same region, if the people's court has determined that there is an infringement of a copyright, patent or trademark right and ordered the infringer to bear civil liabilities, and the party raises claims against the infringer for civil liabilities on the grounds of unfair competition, the people's court shall not uphold.
Article 25 Where in accordance with Article 6 of the Anti-Unfair Competition Law, a party's claim for an order to stop using or modify the enterprise name shall be legally upheld, the people's court shall order the stoppage of the use of the enterprise name.
Article 26 A civil action against an unfair competition act shall be under the jurisdiction of the people's court at the place of infringement or the place of the defendant's domicile.
The people's court shall not uphold a party's claim that a delivery address that may be arbitrarily chosen by an online buyer shall be the place of infringement.
Article 27 Where the unfair competition acts occurred outside the territory of PRC, but the infringement results occurred within the territory of PRC, and a party contends that the court at the place where the infringement results occurred shall have jurisdiction, the people's courts shall uphold.
Article 28 For a civil case of unfair competition accepted by the people's court after the Revision of the Anti-Unfair Competition Law (hereinafter as the “Revision”) came into effect, the Anti-Unfair Competition Law before the Revision shall apply if the act involved occurred before the Revision came into force, while the revised Anti-Unfair Competition Law shall apply if the act involved occurred before the Revision came into force but continues after the implementation of the Revision.
Article 29 This Interpretation comes into effect on March 20, 2022. The Interpretation of the Supreme People's Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition (No.2 [2007], SPC) is abolished in the meantime.
This Interpretation shall apply to cases which await last instance after this Interpretation comes into force; and this Interpretation shall not apply to cases which have been closed for last instance before this Interpretation comes into force.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
