Perspective | The Impact of the New Anti-Unfair Competition Law on the Boundaries of Responsibility and Compliance Practices for Multiple Parties in Live-Streamed E-commerce

The legality and compliance of traffic acquisition methods in the live-streaming e-commerce sector have consistently been a focal point of judicial disputes. The newly revised “Anti-Unfair Competition Law of the People’s Republic of China” (hereinafter referred to as the “New Anti-Unfair Competition Law”), effective from 2025, provides a crucial interpretation in Article 7—the provision on confusing acts constituting unfair competition—directly impacting the traffic investment and operational strategies for live-streamed product sales.

The new Anti-Unfair Competition Law explicitly stipulates: Business operators may not arbitrarily set commercial identifiers with a certain level of influence—such as product names, company names, and business signs—as search keywords in a way that could mislead others into believing that the products are those of another party or that there is a specific connection between them.

This revision will replace the past judicial practice of making individual determinations based on “general provisions.” Hidden drainage The act is explicitly and directly classified as a specific “confusing conduct,” completely eliminating any legal ambiguities surrounding such confusing behaviors and reducing both the cost and uncertainty of judicial determinations. This means that setting competitor keywords or using suggestive terms like “affordable alternative” in the backend of livestreaming rooms will no longer leave room for legal ambiguity—rather, it will directly cross the legal red line prohibiting unfair competition.

The new law has established a coordinated mechanism with the "Interim Provisions on Anti-Unfair Competition in the Internet Domain," thereby strengthening accountability measures against intermediary entities—such as MCN agencies and platforms—that assist in infringing activities or fail to fulfill their due diligence obligations. Offending entities will not only be liable for civil damages, compensating the rights holders for their economic losses, but will also face corresponding administrative penalties, including hefty administrative fines (which may be calculated based on multiples of the illegal business turnover) and, in severe cases, even revocation of their business licenses. This “penetrative” approach to accountability breaks away from the traditional perception that platforms and MCN agencies are merely intermediaries, driving the liability system to shift from “single-entity accountability” toward “full-chain accountability.”

A series of court precedents that have become effective in recent years indicate that, when determining liability for livestreaming infringement, judicial authorities have gradually shifted their core reasoning toward a comprehensive assessment that takes into account multiple factors, such as the “deprivation of trading opportunities” suffered by the rights holder and the infringer’s “subjective malice.”

[Case No.] (2022) Supreme People's Court Min Re No. 131, Supreme People's Court Hailiang Case ”

1. Ruling Rules

In this case, the defendant set the trademark of its competitor, “Hailiang,” as a keyword in the backend of the search engine. Although these keywords were not displayed on the front end, they nonetheless captured traffic through the search mechanism. In the retrial, the Supreme People’s Court held that even if the competing keywords were not shown on the front end, such conduct fundamentally amounted to exploiting the competitor’s long-standing goodwill by manipulating the backend settings to mislead algorithms and users, thereby seizing potential business opportunities that rightfully belonged to the rights holder. This “free-riding” behavior violates the principle of good faith and constitutes unfair competition.

2. Practical Implications

This case clarifies the illegality of “implicit traffic diversion” in livestreaming e-commerce, meaning that merchants and MCN agencies must conduct comprehensive compliance reviews throughout the entire process of implicit operational activities—such as keyword settings and hashtag selections—in the backend of livestreaming rooms. They must meticulously screen each and every keyword and hashtag intended for use, strictly prohibiting the inclusion of any commercial identifiers belonging to competitors; otherwise, such practices will directly constitute unfair competition.

[Case No.] (2023) Zhejiang Min Zhong No. 460, Zhejiang Higher People's Court Baili Case ”

1. Ruling Rules

The defendant sold counterfeit “BELLE” products via live streaming and employed a “guerrilla tactics” strategy—frequently closing old stores and opening new ones—to evade platform oversight. The court found that the defendant acted with extremely malicious intent. Given the rapid spread and wide reach of livestreaming sales, as well as the severe consequences of the infringement, the court fully upheld the rights holder’s claim for triple punitive damages, awarding damages exceeding 2.2 million yuan.

2. Practical Implications

This case clarified that “evading regulation” is one of the key criteria for determining “subjective malice”—if a company attempts to do so through... Matrix Number Techniques such as anti-ban measures are used to evade regulatory oversight and avoid accountability. Once sued, such actions will be directly deemed “malicious infringement.” According to the new Anti-Unfair Competition Law’s provisions on punitive damages, if these acts involve intentional and serious infringement of trade secrets, the infringer could face liability for damages amounting to up to five times the actual losses incurred or the profits gained by the infringer through the infringement—effectively deterring such infringing behavior.

In the live-streaming e-commerce ecosystem, merchants (brand owners), MCN agencies, and platforms often attempt to disclaim legal liability through contracts. However, in judicial practice, based on the “joint tort” provisions of the Civil Code, the victim of the infringement can claim joint and several liability.

1. The joint risks of “general authorization”

Merchants commonly fall into a cognitive misconception: they believe that as long as they authorize an MCN agency or livestreamer to sell their products, any legal issues arising from the operation of the livestreaming room will be borne solely by the livestreamer himself. However, judicial practice has made it clear that internal agreements on liability between merchants, MCN agencies, and livestreamers cannot shield merchants from claims brought by external rights holders. The key criterion for determining liability lies in whether the merchant has tacitly approved, condoned, or assisted in the infringing behavior. If the authorization letter issued by the merchant to the MCN agency is overly vague—such as simply stating “authorizing the sale of our store’s products”—and fails to explicitly prohibit the use of other people’s trademarks or the conduct of false price comparisons, then once the livestreamer violates these rules, the merchant will often be deemed to have tacitly approved or condoned the infringement. In such cases, the merchant and the MCN agency will be considered joint tortfeasors and jointly liable for damages. Rights holders can directly seek compensation from the merchant, which typically has greater financial resources.

2. Data traffic is presumed to “knowingly” violate regulations.

If a merchant, upon detecting obvious abnormal traffic in the backend (such as search traffic originating from competitor keywords), fails to take action to stop it, or knowingly continues to cooperate with an MCN agency despite being aware that the agency is using improper sales tactics, the court will presume that the merchant acted with subjective intent and thus rule that the merchant bears joint and several liability.

As livestreaming e-commerce regulation becomes more detailed, the legal status of MCN agencies has shifted from being merely “intermediaries or supporters” to becoming “the primary entities responsible for content planning and operation.” The key factor in determining their liability lies in whether they “led or participated in the planning and execution of infringing acts.”

1. Joint Infringement in Planning and Execution

The key to determining the liability of an MCN agency lies in identifying who the actual content producer is. If the script, backdrop, and traffic-driving copy for a livestream are primarily planned and orchestrated by the MCN agency, or if the MCN agency provides guidance on the streamer’s violations, then the MCN agency is considered a joint perpetrator of the infringement. For example, if an MCN agency designs phrases such as “the same style as XX’s top brand” or “officially affordable alternative” into the script, even if these phrases are spoken by the streamer, the primary responsibility still rests with the MCN agency. Any “exemption agreements” signed internally between the MCN agency and the streamer are invalid against third parties.

2. Risk of fund commingling

Some MCN agencies have financial management issues with merchants and livestreamers—for example, sharing bank accounts or using the same official seal. In litigation, such practices can easily be deemed as confusion of legal personalities or joint operation, thereby exposing the MCN agency to joint and several liability for all of the merchant’s debts.

According to Article 1195 of the Civil Code, after receiving a complaint, a platform must take measures within a “reasonable period” to establish its minimum standards. Specifically, if an infringement is clearly evident—for example, if counterfeit goods are obviously being sold during a livestream or well-known products are being sold at unreasonably low prices—the online service provider (the livestream platform), even if it has not received a complaint from the rights holder, must still fulfill its basic duty of care and proactively take appropriate remedial measures. It may not rely on the defense of “lack of knowledge.” Given the real-time nature of livestreaming, the “reasonable period” is significantly shortened. If the platform fails to respond within the reasonable review period, it shall bear joint and several liability for any increase in sales generated during the delay.

Based on the new law enacted in 2025 and the aforementioned case precedents, it is recommended that all relevant parties build compliance systems from the following dimensions:

1. Authorized Penetration Verification Mechanism (Merchant-side Core): ① Review Entity: Led by legal or professional compliance personnel, the review entity shall conduct a line-by-line examination of each authorization document—from the brand owner down to its own level. ② Key Review Points: Verify the qualifications of the authorizing party, the scope of authorization (clearly specifying product categories, distribution channels, and duration), and whether any unauthorized overstepping has occurred; ensure that the authorization chain is complete, authentic, and valid. ③ Retention Requirements: All authorization documents must be filed and retained for a period no shorter than three years after the expiration of the cooperation agreement. ④ Reverse Verification: Simultaneously verify the qualifications of suppliers to prevent liability arising from defects at the source of the supply chain.

2. Establish a “negative list”: The cooperation agreement with the MCN agency explicitly lists prohibited terms (such as “budget-friendly alternative,” “same style,” and “same source”) and prohibits the use of competing product keywords. In the event of a violation, the MCN agency can be held liable for damages under the contract.

1. Live-stream content logging and review mechanism (MCN agency core): ① Review Process: Establish a review mechanism consisting of “Planning—Initial Review—Re-review.” The initial review shall be conducted by content planners, while the re-review shall be handled by legal or compliance personnel. ② Review Content: Focus on verifying whether the live-streaming script, background boards, and traffic-driving copy contain identifiers of competing products, false promotional claims (such as “budget alternative” or “identical product”), or elements that may infringe upon others’ rights. ③ Archiving Requirements: Archive and retain the review records, the final version of the script, and the design drafts of the background boards. ④ Division of Responsibilities: Clearly define the responsibilities of reviewers and planners. If an infringement occurs due to oversight during the review process, the responsible individuals shall be held internally accountable. ⑤ Evidentiary Value: Compliant documentation and records can serve as key evidence in judicial proceedings to demonstrate that the MCN agency was not subjectively at fault, thereby helping to avoid joint liability.

2. Financial isolation: It is strictly prohibited to use the same bank account for both merchants and livestreamers. Maintain financial independence to avoid the risk of joint and several liabilities arising from confusion of legal personalities.

1. Price Anomaly Alert Mechanism (Core Platform Component): ① Definition of high-risk products: Includes luxury goods, products from well-known brands, and intellectual-property-intensive goods, among others. ② Monitoring scope: Covers all products currently being sold in live streaming rooms on the platform, with real-time collection of pricing information. ③ Handling procedure: Upon receiving an alert, promptly initiate manual review to verify the reasonableness of prices and the authenticity of products. If any anomalies are confirmed, immediately implement measures such as traffic restriction, product removal from shelves, or closure of the live streaming room, thereby fulfilling the duty of care.

2. Optimization of the complaint handling mechanism: Establish a rapid-response channel for addressing livestream infringement, ensuring that, upon timely and effective verification of complaint content, affected links are promptly removed or livestreams are promptly shut down, thereby preventing further losses from escalating.