Supreme People’s Court of China issues first comprehensively revised judicial interpretation of anti-unfair competition law since 2007

On 16 March 2022, the Supreme People’s Court of China (SPC) issued the Judicial Interpretation by the SPC on Several Issues Concerning the Application of the Anti-Unfair Competition Law (AUCL; see the translation by WIPO Lex here) of China (JI 2022; full context here in Chinese), which took effect on 20 March 2022. 

This post serves as a brief introduction to the JI 2022.* 

As shown in the chart below, the first AUCL was enacted in 1993 and remained in force for more than two decades before its first revision in 2017. 

There was no JI on the AUCL until 2007. The subsequent JI (i.e. JI 2020) was a minor one with only one change to the JI 2007, i.e., replacing one of the legislation’s grounds from the General Principles of the Civil Law to the Civil Code of China (See the IPKat post on the Civil Code of China here).

In contrast, the JI 2022 consists of 29 articles and is the first comprehensive revision since 2007:

Articles 1–3 of the JI 2022: Clarification of Article 2 of the AUCL** 

Article 2 of the AUCL reads as follows: 

Businesses shall, in their production and distribution activities, adhere to the free will, equality, fairness, and good faith principles, and abide by laws and business ethics. 

For the purposes of this Law, “act of unfair competition” means that in its production or distribution activities, a business disrupts the order of market competition and causes damage to the lawful rights and interests of the other businesses or consumers, in violation of this Law. 

For the purposes of this Law, “business” means a natural person, a legal person, or a non-legal person organization that engages in the production or distribution of commodities or the provision of services. (emphasis added) 

Article 2 of the AUCL, generally speaking  and setting aside academic debates, is a general clause for the judiciary to regulate various new types of unfair acts that are not explicitly stipulated in Chapter II of the AUCL. To that end, the JI 2022 provides clarifications on three aspects: 

(1) On its applicable conditions when other IP laws are involved: Where a business disrupts the market competition order and affects the lawful rights and interests of other businesses or consumers, without breaching the provisions of Chapter II of the AUCL, the Patent Law, the Trademark Law, and the Copyright Law, among others, a court may make a determination according to Article 2 of the AUCL. 

(2) On ‘other businesses’: For market participants in a potential relationship of competition for trading opportunities or advantages, among others, with businesses in production and business activities, the people’s court may determine the market participants as ‘other businesses’ in Article 2 of the AUCL. 

(3) On ‘business ethics’: The JI 2022 provides that business ethics shall be the code of conduct generally followed and recognised in the commercial sphere (thus not concerning individuals’ personal lives). The court may determine the breach of business ethics with reference to the ‘practice standards, technical standards, and self-regulatory conventions, among others, formulated by industry authorities, industry associations, or self-regulatory organizations’. Furthermore, the JI 2022 provides that a court’s determination shall take into account multiple factors, such as industry rules or business usage, the subjective condition of a business, the will to choose transaction counterparts, the impact on the rights and interests of consumers, the order of market competition, and the public interest. 

Articles 4–15 of the JI 2022: On acts of ‘confusion through imitation’ 

Article 6 of the AUCL forbids several acts of confusion committed by a business that may mislead a person into believing that a commodity is one of another or has a particular connection with another. 

As introduced by a SPC judge in the press release of the JI 2022, in 2021, courts at all levels across China concluded 8,654 cases of unfair competition disputes, wherein the number of ‘confusion through imitation’ cases accounted for a large proportion. In response to the case volume and for consistency in the judiciary, the JI 2022 uses 11 articles to provide judicial guidance. Clarifications are given on three aspects in particular: 

(1) On the definition and criteria of ‘the signs with certain influence’. 

(2) Article 6 of the AUCL does not protect the signs, or their distinctive identifying parts, that are forbidden from use by Article 10(1) of the Trademark Law of China. 

(3) Guidance is added in defining the market subjects whose names are protectable under Article 6 of the AUCL. 

Articles 16-18 of the JI 2022: On acts of false publicity (Article 8 of the AUCL) 

Articles 19 and 20 of the JI 2022: On acts of damaging the goodwill (Article 11 of the AUCL) 

Articles 21 and 22 of the JI 2022: On acts of unfair competition on the Internet (Article 12 of the AUCL) 

In response to recent and significant developments in online business, the AUCL 2017 Revision incorporated the following Internet-related unfair competition acts in Article 12. The AUCL 2019 Revision retained the original text, which reads as follows: 

A business entity engaged in production or distribution via the internet shall abide by the provisions of this Law. A business entity shall not, by using technical means to interfere with users’ choice or otherwise, commit any of the following acts that affect or sabotage the normal operation of any online product or service lawfully provided by another business entity: 

(1) Without consent of another entity, inserting a link or forcing a URL redirection in an internet product or service lawfully provided by the said other business entity; 

(2) Misleading, tricking or forcing users to alter, shut down, or uninstall an internet product or service lawfully provided by another business entity; 

(3) Causing, in bad faith, incompatibility with an internet product or service lawfully provided by another business entity; or 

(4) Any other act that interferes with or sabotages the normal operation of internet products or services lawfully provided by another business entity. 

Article 12 of the AUCL has been widely criticised as being too vague to practically tackle disputes. Accordingly, the JI 2022 made efforts in providing further details to clarify the conditions for the provision’s application. 

Articles 23–28 of the JI 2022: Miscellaneous, e.g., on liabilities and jurisdictions 

* For an introduction of the SPC JI itself, see Dr Susan Finder’s post on her blog SPC Monitor. 

** Unless stated otherwise, in the following passages, the ‘AUCL’ refers to its 2019 Revision.