China: New Developments of Judicial Practice
in Internet IP Disputes
Author: Celia Li, Yu Li
Internet developed dramatically and changed traditional business significantly in China, especially when Chinese biggest internet business service supplier, Alibaba Group, was listed on New York Stock Exchange in September, 2014 and the market value broke through $ 230 billion at the first day, Internet business developments in Chian attracted worldwide attention; however, from the point view of IP protection, in January, 2015, China State Administration of Industry and Commerce (SAIC) published the monitoring results of online oriented commodity trading, which, once again, brought the important subsidiary of Alibaba, namely Tabao.com, the most popular internet resale service supplier to the forefront because of the high percentage of counterfeiting goods being sold through Taobao.com. Accompanying with these great developments, internet IP disputes is increasing and challenging the judicial practice in traditional IP disputes solutions as well as remedies, including online trademark infringement, various unfair competitions and domain name disputes among different types of business competitors in Chinese fast developing markets.
PRC Unfair Competition Law (1993)
Regulations on the Protection of Computer Software (2001)
Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Laws to the Trial of Civil Dispute Cases over Domain Names of Computer Network (2001)
Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Dispute Cases Involving Copyright (2002)
Administrative Measures for the Internet Domain Names of China (2004)
Regulations on the Protection of Computer Software and Network Copyright Information Network Transmission Right (2006)
Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Dispute Cases Involving Unfair Competition (2007)
PRC Copyright Law (2010)
Regulations on the Protection of Rights to Information Network Communication (2013)
PRC Trademark Law (2013)
PRC Copyright Law Enforcement Regulations (2013)
Judicial Criteria for Internet Infringement Establishment
1. Domain Name Disputes
Registering domain main when meeting the conditions of Several Issues Concerning the Application of Law to the Trial of Civil Dispute Cases Involving Computer Network Domain Names Interpretation Article 4 will constitute unfair competition, while, for trademark infringement must meet the following factors:
Registering the domain name which was same or similar to other’s registered trademark;
The captioned domain name was actually putting in business use, namely E-commerce designated on relevant goods/service; and
The use of which will confuse the relevant public for the source of goods/service.
2. Webpage copyrights disputes
In order to establish webpage copyrights infringement, the web typesetting should constitute work as provided in Copyright Law of China. Various works, including but not limited to written works; oral works; Musical works, dramatic works, quyi (folk art), choreographic works and acrobatic works; Works of fine arts and architectural works; Photographic works; Cinematographic works and works created by a process analogous to cinematography; Graphic works such as drawings of engineering designs, drawings of product designs, maps and schematic drawings, and model works; Computer software, and their digital form which was prescribed in Article 3 of the Copyright Law should be protected by the Copyright Law. Other intellectual creations with originality, even though not being listed in the said scope of works, also could be protected by the court in judicial practice if they could be copied in a certain physical form under the network environment. For enjoying the protection of work according to Copyright Law, Web typesetting shall meet the criteria of originality and being artistic, rather than simple arrangement of objective facts; Meanwhile, it shall be the embodiment of unique idea, which is the key point for avoiding publishing into public area.
As per the voluntary registration system of Chinese copyright law, author can conduct computer software copyright registration for their webpage work. In case of software copyright dispute or infringement disputes, computer software copyright registration certificate is the preliminary proof for the validity of the captioned software work or truth of statements in filing documents, unless the defendant can provide opposite evidence to overturn them, which is also a powerful weapon and premise for filing litigation and seeking judicial protection under copyright law of China.
Confirmation of Defendant’s Legal Standing
It is common phenomenon that the owner of the website, the actual operator, and the contactor on the website are not the same legal entities and it is always difficult to get the physical identity of the potential infringer because of the nature of the Internet. The confirmation of defendant becomes very critical to fight against the suspected infringers in legal practice, for which it is suggested to conduct search on website recordal information first, analyze the contact information deeply through professional investigation tools, and retrieve judicial judgment data system for getting useful information, which should be the best ways to dig out the physical and legal information of the potential infringer and then take legal action against them. If it could not be dug out through the above investigation and researches or if the right owner wishes to get favorable jurisdiction, filing litigation against all suspected parties would be recommended if there is no negative effect to the right owner’s business, which will also be helpful for confirming the responsible party by defendants’ proof during the litigation and catching the real infringer through the cross examination procedure as well as the court hearing.
Responsibility of Internet Service Provider
Regulations on the Protection of Rights to Information Network Communication Article 23, Where a network service provider provides any searching or linking service for its service objects or cuts off the links to any infringing work, performance or audio-visual product in accordance with these Regulations after receiving a notice from the owner, it shall not be required to assume the liability for compensation; However, when anyone is fully aware or should have known that any of the linked works, performance or audio-visual products constitutes any infringement, it shall assume the liability of joint infringement.
The Internet service provider can be divided into content provider and storage space/link provider, the former of which undertakes direct responsibility of infringement based on its duty of care, for example, v.qq.com; the latter of which undertakes presumption of obligation of infringement, alibaba.com and taobao.com should belong to the latter category. As storage space/link supplier, only when it would not delete the infringing content after receiving the notice such as C&D letter within reasonable period would it undertake the presumption obligation, under such situations internet service provider will not undertake high duty of care which is the results of interests balance as well as technology issue between the development of Internet and public. In practice, considering the responsibility of internet service Provider might influence the choice of jurisdiction which is an key point the right owner should take into account in potential litigation procedure, it became the first consideration to initiate the legal action against the potential IP infringement or counterfeiting for confirming the nature as well as category of internet service supplier, namely content or storage space/link supplier,
Jurisdiction of Internet IP disputes
Considering the openness of website and infinity of cyberspace, Jurisdiction of internet IP disputes becomes an issue well worth exploring. According to the Interpretation of China Supreme Court, the place of the people’s court enjoying jurisdiction should be the locations where the infringement was committed including the place where the infringement is committed physically and the place where the infringing consequence takes place, or where the defendant is domiciled; only when the above jurisdictions could not to confirm or is overseas, the place where the computer terminals or other facility containing infringing content could be served as jurisdiction.
Illustration Case: Copyright Infringement of Webpage, Ruide vs. Dongfang (1999)
In the case of Rui De (Group) Company (hereinafter refer to as “Ruide”) vs. Dong Fang Information Service Limited (hereinafter refer to as “Dongfang”), Ruide filed lawsuit before Beijing Haidian District Court claiming that Dongfang copied the overall typesetting, colors, patterns, column sets, column titles, and programs of Ruide’s webpage, while, the link of which is different from those of Ruide, which damaged the reputation and visiting volume of Ruide, and therefore led to the losing consumer of Ruide. The behavior of Dongfang should infringe the copyright of Ruide and business reputation.
Dongfang filed opposition against Beijing City Haidian District Court’s jurisdiction, which were all refused by first and second instance trials of the Courts. Donfang argued that Intermediate Court of Sichuan Province Yibin City should enjoy the jurisdiction which is defendant’s domicile, while, the place where Ruide’s network server or computer terminals locates should not enjoy jurisdiction because it is not the place of an infringing act when website users visit Ruide’s webpage. Technically speaking, when a user visits a webpage, the webpage will be downloaded to the user’s computer by digital transmission technology trough the webpage’s remote computer or server, and then temporarily stored on the random access memory of the user’s computer, which will finally be displayed on the user’s browser. The key for visiting or copying the website is to enter into the terminal computer or network server. In this case, only Dongfang enters into Ruide’s terminal computer or network server could Dongfang copy Ruide’s webpage, which determines that Beijing City Haidian District Court should enjoy the jurisdiction of the case.
According to Interpretation of the Supreme Court on Several Issues concerning the Application of Law in the Trial of Civil Dispute Cases Involving Copyright, Article 5, with regard to a joint action against multiple defendants which involves different places where the infringements are committed, the plaintiff may, for the jurisdiction over the action, choose the court at the place where the infringement of any one of the defendants is committed; if it is an action filed only against one of the defendants, the court at the place where such defendant commits the infringement shall have jurisdiction over the action, which means that the place of other defendant(s) which are not filed will not enjoy the jurisdiction any longer. In practice, if the right owner does not file the lawsuit against those defendants who occupy important market position taking future corporation into account, it will correspondently lead to the reduction of courts enjoying jurisdiction.
Possibility of Preliminary Injunctions
The factors that will influence the court to issue the order of preliminary injunction, including pre-filing the litigation and pre-hearing injunction, should be the successful rate of plaintiff who files the litigation, the necessary of injunctions, say whether there will be irreparable damages without the preliminary injunction, and the balance of interest between the application and the public.
Illustration Case: Preliminary Injunction permitted by the Court, Letv vs. Funshion TV (2014)
In the case of Letv vs. Funshion TV involving the disputed of Rights to Information Network Communication, Letv applied preliminary injunction before the hearing. Letv enjoyed the rights to Information Network Communication and Broadcasting rights of the program of I AM A SINGER. Without authorization, Funshion TV played the program, for whivh Letv filed litigation against the infringment.
After filing the litigation while before the court hearing, Letv claimed that if the behavior of Funshion were not prohibited timely, it would cause serious damage to Letv’s advertisement incomes considering the strong timeline of the program, and also provided the court with security. Before the Court hearing, Beijing City Haidian District People’s court ruled that Funshion TV should stop broadcasting the program immediately in view of the strong timeline of the program; the irreparable damage of Letv considering Funshion TV cannot prove its authorization.
Facing the diversity Internet IP disputes with rapid development of Internet, for safeguarding the company’s legal IP rights through internet, before taking legal actions, it becomes critical to confirm the cause of action, and choose favorable jurisdiction which is mostly related to choose qualified defendant(s). Preliminary injunction as an effective method to avoid irreparable damages should be available in Judicial Practice, the applications of which were approved by certain courts in recent years. Furthermore, the right owner shall also note that, compared with copyright’s statutory limit of compensation, namely RMB 500,000, the trademark’s high limit of statuary compensation is RMB 3 million according to the 2013 Trademark Law of China, and the compensation of judgment involving trademark infringement is usually much higher than that of copyright infringement and unfair competition, based on which filing trademark infringement litigation would be highly recommended for getting more compensation under certain situations.