Protecting IP in China’s booming eCommerce marketplace

5 June 2020: Protecting your intellectual property (IP) rights in China’s booming cross border eCommerce marketplace was the focus of the third webinar in a special Victorian eCommerce Network series.

The online events were delivered by Global Victoria – in partnership with Asialink Business – and brought together industry experts to explore the intellectual property related issues associated with doing business in China’s vast digital economy.

The latest webinar was again moderated by Nick Henderson (Director, China Practice, Asialink Business) with introductory remarks from George Di Scala (Deputy Director, International Market Development, Global Victoria). The panel also featured:

  • David Bennett: Counsellor (Intellectual Property), Australian Embassy, Beijing – IP Australia
  • Mick Ryan: Associate Director, Brand Cooperation, Alibaba Group
  • Stephanie Yu: Intellectual Property Rights Protection manage, Alibaba Group
  • Jia Pei: Director, Cross Border Business Australia and New Zealand, H & H Group, Swisse Wellness

IP protection not an automatic right

Mr Bennett said it was important for businesses to be aware that IP was not something that was afforded automatic protection and that IP rights were territorial – a patent or trademark registered in Australia only protects you in Australia.

The three biggest IP risks identified in China were:

  • The bad faith registration of trade marks
  • Bad contracts with local partners
  • Counterfeit and copycat products

China operates a ‘first to file’ trade mark system and with few exceptions the first person to apply for registration gets it.

Mr Bennett said the key lesson for those businesses interested in China was to register your IP as early as possible and it was strongly recommended to use a trade mark attorney with China IP experience.

Separately, design patents were required to protect product design and copyright protects creative works. While copyright applies automatically world-wide, China operates an optional registration system and in-country registration can help simplify local enforcement if necessary.

Mr Bennett said bad contracts that failed to protect business interests were not uncommon in China and it was important to note that Chinese civil law was very different to Australian common law and contracts needed to be prepared accordingly.

Protecting against counterfeit

The production and sale of counterfeit products on China’s eCommerce platforms was also something businesses needed to be vigilant against.

Products can be made more difficult to counterfeit through the use of overt features such as holograms, security threads and watermarks and covert features such as UV fluorescent print or other secret markings.

Alibaba operates one of the world’s largest eCommerce networks with approximately 960 million users globally and an estimated worth of US$1 trillion.


Image: Shutterstock

Mr Ryan said the group was committed to doing all it could to help brand owners protect their IP across Alibaba’s platforms. It operates a comprehensive IP protection program which Ms Yu detailed.

This program includes an online user centre where brand owners can register their IP and also submit complaints about possible breaches by other sellers. These are then investigated with take down notices issued in response to confirmed breaches.

Despite a 20 per cent increase in the number of registered accounts on the Alibaba IP protection portal in 2019, the company is able to process 96 per cent of complaints within 24 hours.

Gauging consumer experience also formed part of Alibaba’s IP protection program, with customers asked if the products they received were as described.

Over the past five years there had been significant reductions in the number of consumer reports about dubious listings, while the number of refunds initiated by customers on suspicion of having purchased infringing goods have dropped 67 per cent.

Ecommerce is driving growth

Swisse Wellness has seen its China business expand from $200 million to $800 million in recent years with strategic partnerships across China’s largest eCommerce platforms helping to drive growth.

Mr Pei said businesses needed to think seriously about their IP protection before entering the Chinese market in order to avoid complications later.

In 2019, Swisse registered specific Chinese language branding as part of its evolving marketing strategy, which was important given that many Chinese consumers were not proficient in English.

Mr Pei said it was also not unusual for Chinese consumers to develop their own nicknames for foreign products and brands and this should also be considered in the effective marketing of products.

In summary, Nick Henderson said China was a market where things could go wrong in terms of the misuse of IP. There had unfortunately been a lot of businesses that had learned the hard way due to such things as bad faith filings of trade marks.

Platform based protection mechanisms such as those provided by Alibaba – in addition to Chinese registration – should be used as part of the IP protection mix of any business looking to operate in the Chinese market.

Established by Global Victoria in 2016, The Victorian eCommerce Network (VeN) offers Victorian companies an opportunity to connect, collaborate and share knowledge with other like-minded businesses interested in taking advantage of global eCommerce opportunities.