Introduction
ISPs
E-commerce platforms
Comment


Introduction

After six years of preparation, the E-commerce Law entered into force in January 2019. The new law provides, among other things, an important enforcement tool – the "notice and takedown" system, which was introduced in the Civil Code and entered into effect on 1 January 2021.

However, the delisting procedure offered by e-commerce platforms does not seem to be user-friendly for stakeholders. Criticism has also arisen regarding the lack of effective actions by major e-commerce platforms to prevent IP infringements. On 12 September 2020, in response to these issues, and following the trade agreement between the United States and China signed in January 2020, the Supreme People's Court released two judicial documents:

  • the Official Reply to Several Issues Concerning the Application of Law in Online IP Rights Infringement Disputes, which is generally applicable to all internet service providers (ISPs); and
  • the Guiding Opinions on the Trial of Civil IP Rights Cases involving E-commerce Platforms, which targets e-commerce platforms.

ISPs

Rights holders may apply for a court injunction ordering the ISP to take measures to remove, block or disconnect the complained-about links.

If the user of the online service submits a non-infringement statement in response to the notice of the rights holder, the ISP or e-commerce platform operator may terminate the measures of removing, blocking or disconnecting the complained-about links, provided that the rights holder does not file a civil litigation or administrative complaint within a reasonable period. Delays that may be caused by circumstances beyond the control of the rights holder, such as notarisation and legalisation of procedural documentation, are not included in the calculation of a reasonable period. However, such period must not exceed 20 working days.

If a non-infringement statement is filed in bad faith, the rights holder is entitled to claim punitive damages.

If the rights owner erred on the factual aspect in the takedown notice but can justify that the complaint was filed in good faith, they should be exempt from liability.

E-commerce platforms

A seller running an operation on an e-commerce platform may also apply for a court injunction ordering the e-commerce platform to restore the link removed on the request of a rights holder if, given the urgency of the circumstances, its legitimate interests would be irreparably damaged.

Regarding complaints or non-infringement statements involving patents, the e-commerce platform may require the submission of a description of the comparison of the technical or design features. Where a design or utility patent is involved, the e-commerce platform may further request the submission of an appraisal report on the novelty of such patent issued by the China National Intellectual Property Administration.

The Guiding Opinions on the Trial of Civil IP Rights Cases involving E-commerce Platforms defines the criteria to be considered when deciding whether:

  • bad faith can be ascertained;
  • e-commerce platforms have taken reasonable measures; and
  • e-commerce platforms knew or should have known of the infringing activity.

Comment

In general, these two judicial documents are relatively friendly to rights holders in the following respects:

  • court injunctions are specifically mentioned;
  • more time is provided for taking legal action;
  • punitive damages may be claimed in the case of a bad-faith non-infringement statement; and
  • in the case of a good-faith error, the liability of the rights holder in a complaint is waived.

For further information on this topic please contact Zhigang Zhu or Wei He at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected] or [email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.

This article first appeared in Anti-counterfeiting and Online Brand Enforcement: A Global Guide 2021, a supplement to World Trademark Review, published by Law Business Research - IP Division. To view the guide in full, please go to www.WorldTrademarkReview.com.