In the news: Bad news for foreign tech companies, SIPO boosts enforcement and Tencent inks NBA deal

New cybersecurity rules upset foreign tech companies

China has adopted new regulations requiring companies that sell computer equipment to Chinese banks to turn over secret source code, submit to invasive audits and build backdoors into hardware and software, which has affected foreign tech companies that do billions of dollars' worth of business in China. Many companies would be unwilling to disclose source code to Chinese officials for concerns about IP, security and export laws. The draft antiterrorism law calls for companies to store all data related to Chinese users on servers in China, create a way to monitor content for terror threats and provide encryption keys to authorities. Foreign companies view these measures as acts of obvious protectionism and attempts to force them out of the market. While the government wants foreign servers gone for whatever reason, domestic companies simply cannot yet produce the higher-end hardware and software relied on by banks to manage transactions. But the government has taken a tough stance on cybersecurity and it is unlikely to change its mind.

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SIPO issues draft Patent Administrative Enforcement rules

SIPO released a revised draft of its Patent Administrative Enforcement rules for public comment on January 27. It will be accepting comments until March 15. The purpose of the amendments is to address matters such as reducing the time frame for patent administrative litigation, improving procedures and enhancing enforcement in the online environment. Great strides have been taken on the judicial front, with the establishment of the specialised IP courts, proposed training and education of judges and, most recently (see below), the issuance of guidelines for the IP courts' technical investigation officers. But effective enforcement requires judicial and administrative balance, and it looks like the administrative system is stepping up its efforts – will it be able to catch up?

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Tencent inks five-year NBA deal

Tencent will become the exclusive digital partner of the NBA in China from July 1. The social media company will record and deliver live NBA games and highlights to its audiences. The deal includes the launch of the first-ever NBA League Pass in China, which provides fans with access to a full season of live and on-demand NBA games online and through mobile devices. Tencent and the NBA will jointly manage and operate the NBA's digital assets in China, including NBA.com/China and sites for all 30 NBA teams, events and merchandise. Tencent will launch the NBA Game Time app for mobile and dedicate an NBA gaming section within the Tencent Games platform. The deal puts pressure on China to ensure that live broadcasting and webcasting of sports games is subject to copyright protection and improves the distribution channels for legitimate NBA merchandise. It also follows Tencent's partnerships with Sony Music Entertainment, HBO and Warner Music and comes at a time when China's major internet companies are competing for media content deals. The race goes on…

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Rules for IP Courts' technical investigation officers

The Supreme People's Court released guidelines for the technical investigation officers of the specialised IP courts on January 21. This is the first time China has made rules for these officers, who are introduced into court proceedings to help judges resolve technical issues that the judges may not be familiar with. Some practitioners have questioned whether the number and ability of the officers will be enough to support the technical breadth and scope of the patent cases, and in jurisdictions like Taiwan, the IP courts have faced criticism for their judges relying too often on the officers for legal opinions. According to the rules, the officers appear to have large responsibilities and do all but “vote on case adjudication”. Hopefully the roles of the judges and officers stay clear.

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E-commerce regulation gives Taobao headache

Regulators are attempting to establish order in the e-commerce industry amid a dispute with Alibaba over an official survey commissioned by the SAIC last autumn which showed that only 37.25% of goods sold on Taobao are authentic. The SAIC increased its monitoring of online shopping in March last year, when it issued the Measures for the Administration of Online Trading, which allowed consumers to return goods without fault within seven days and imposed liabilities on e-commerce websites for vendors infringing consumers' rights. The SAIC has also just issued its draft implementing rules for the Law on the Protection of the Rights and Interests of Consumers (Consumer Protection Law) for comments, which takes effect on March 15 and grants substantial enforcement authority to the local AICs. Taobao has disputed the SAIC's requirements but latest reports have said Jack Ma has met with regulators and pledged to weed out fake goods from the platform.

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