IP issues related to internet sales by foreign enterprises

In contemporary business, the disadvantage of running physical stores without taking account of the internet is very obvious, and virtual online commodity trading unsupported by physical presence can hardly gain a foothold. For this reason, there has been a trend towards integration between physical stores and the internet. Internet companies have begun to develop physical stores, and physical businesses are leveraging the power of internet platforms.

There are roughly two modes of internet sales: (1) selling one’s own products or providing one’s own services via the internet; (2) providing business services for others by setting up internet platforms. There are some internet platforms that provide business services for both oneself and others. This article explores the main points of concern regarding intellectual property involved in sales conducted by foreign-invested enterprises in China through the internet.

Internet content provider (ICP) licensing and recordal. By setting up an internet product sales channel (such as a website), one inevitably becomes an internet content provider. Under the existing law, selling one’s own products or providing one’s own services through the internet is regarded as an extension of traditional sales and only requires ICP recordal; foreign-invested manufacturing enterprises or commercial enterprises approved and registered in accordance with the law may directly engage in online sales. If one sets up an internet platform to provide services for third-party transactions (including providing services for both oneself and third parties), one shall apply for an ICP licence. In practice, it’s relatively easy to obtain ICP recordal. But obtaining an ICP licence is quite difficult – even if one meets the basic requirements, one may not be able to obtain a licence.

Author: Frank Liu is a partner at Jincheng Tongda & Neal