On April 13 2016 the Beijing High People's Court published the Guidelines for the Adjudication of Network-Related IP Cases in a bid to address various issues arising from the adjudication of network-related copyright, trademark and unfair competition cases.

Copyright cases

The copyright section of the guidelines covers the judicial trial of disputes involving topical issues such as information storage, linking, directed searching, webpage 'snapshot' and online real-time broadcasting services.

Information storage

Article 6 of the guidelines governs the provision of information storage space by service providers. Network disk operators engaged in processing acts such as the categorisation, arrangement or ranking of content are prohibited from posing as information storage space service providers.

When entering a plea of non-infringement, the defendant must provide the court with the uploader's information. Defendants cannot refuse to offer such information by citing the privacy policy of their terms of use.

Linking services

Article 7 of the guidelines states that a defendant's act will constitute 'linking services' when the works at issue are "played on a third party website, redirected from the defendant's website… [or] played on the defendant's website, but stored on a third party website". The court follows strict standards when determining whether a 'redirecting' act has taken place and must be satisfied that the user can actually determine the change from one webpage to another. Failure to meet that requirement will most likely lead to a finding of substantial replacement and infringement.

Directed searching

Articles 8 to 11 of the guidelines provide solutions for when an offending website – disguised as a search engine for the purpose of circumventing potential infringement risk – places an automated software program (also known as a 'web crawler') on a specific third-party infringing website (rather than on the whole network, which a search engine usually does), so that any search run through the website is directed to the third-party website (also known as 'directed searching'). Given that the offending website must usually agree to import traffic to the third party's infringing website, both websites should be held jointly and severally liable.

'Snapshot' services

Articles 12 to 14 of the guidelines cover the legal consequences for the provision of webpage 'snapshot' services. The court will not accept pleas of non-infringement based purely on a snapshot service provider's capacity. Previously, the court primarily focused on whether the provision of webpage snapshot services constitutes a substantial replacement of the original webpage. The court's focus for the determination of infringement has shifted to "whether a regular use of relevant works is affected and the right holder's legitimate rights to the works and interests in the works are unreasonably impaired".

Finally, Article 15 clarifies that the right to conduct online real-time broadcasting falls under the category of "other rights that are enjoyed by the copyright owner" as provided by Article 10(17) of the Copyright Law. This is welcomed as it provides a legal basis for copyright owners to enforce such right.

Trademark cases

The trademark section of the guidelines deals with the possible liability of a 'platform service provider' – defined as an entity that provides services for 'transaction information' and 'transaction acts' – where goods bearing an infringing trademark are offered for sale via the service provider's platform (Article 17).

Under Article 18, the general principle for determining a service provider's liability is to take into account the various interests at stake – namely, those of:

  • the platform service provider;
  • the rights holder;
  • the online seller; and
  • the general public.

Articles 20 and 21 provide that when it is preliminarily proven that infringement has occurred on a platform, the platform service provider will not be held liable if:

  • it provides all evidence necessary to identify the online seller (failure to do so may result in it being held liable for directly conducting the infringing act); and
  • it is not at fault.

By 'fault', Article 21 refers to abetting or assisting an online seller to commit trademark infringement (in such case, the platform service provider will be held jointly and severally liable). The words 'abetting' and 'assisting' are respectively defined in Articles 21.2 and 21.3 as to "intentionally induce and encourage" and to be "knowing, without taking necessary measures" to stop the activity.

Article 22 stipulates that a rights holder must notify the platform service provider in writing and provide all information necessary to show that there is a "high likelihood of trademark infringement". Such information includes:

  • the rights holder's details;
  • the location of the infringing content;
  • proof of trademark ownership; and
  • a declaration of authenticity by the rights holder concerning the information provided.

The general liability principle for "knowing and not taking timely reasonable and appropriate measures", which is not new, is reiterated in Article 23. 'Knowing' is defined as having received notification by the rights holder. However, 'timely', 'reasonable' and 'appropriate' are not defined and will be assessed according to the circumstances of each case.

A platform service provider must inform the online seller of an alleged infringement "within a reasonable time" (Article 24). A rights holder that makes an incorrect notification may be liable for the damage caused to the online seller (Article 25).

Article 26 lists the circumstances that may be taken into consideration when determining whether a platform service provider knew or ought to have known that an online seller was infringing a trademark, including whether:

  • the link was on the website's home page;
  • the service provider provided other services (eg, editing or selecting);
  • the notification is deemed to have been sufficiently precise;
  • the acts were repeated;
  • the online seller admitted infringement;
  • the price was obviously unreasonably low; and
  • the platform service provider directly received economic gains from the transaction. Such 'economic gains' relate to advertising, but the definition remains vague. However, Article 27.2 clarifies that ordinary advertising and technical service fees which follow ordinary industry standards are not considered to be 'economic gains' in the sense of Article 26.

Comment

It will be interesting to see the influence that the Guidelines for the Adjudication of Network-Related IP Cases have on other Chinese courts – in particular, those in the jurisdictions in which the main platform service providers are located.

The main problem concerning online counterfeiting is the sheer volume of cases. Rights holders are not dealing with a few dozen cases, for which the procedures detailed in the guidelines would be a good method of action; rather, they are dealing with thousands of cases, which renders the guidelines less effective.

China could seek inspiration from solutions that have been implemented abroad, such as in France, where most online counterfeit sales have been eradicated. In France, platform service providers signed a charter with rights holders, agreeing – most notably – to use filters that automatically eliminate suspicious links. This has removed the need to follow the time-consuming written notice procedure for each online infringement case.

For further information on this topic please contact Paul Ranjard or Nan Jiang at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000) or email (ranjard@wanhuida.com or jiangnan@wanhuida.com). The Wan Hui Da Law Firm & Intellectual Property Agency website can be accessed at www.wanhuida.com.

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