Judicial protection of IP relating to ‘internet plus’

Digital Creativity: Culture Reimagined is the theme of this year’s World Intellectual Property Day. New technologies and new business landscapes such as the internet, big data, cloud computing, etc., are profoundly changing modes of production and living, while also throwing up new problems in intellectual property (IP) protection.

According to the Supreme People’s Court’s (SPC) annual report on IP cases (2015), patent, trademark and copyright infringements and unfair competition cases relating to online applications are increasing, and e-commerce platform service providers, network technology companies, etc., have become entities involved in IP disputes at a high frequency.

Recently, the SPC issued the 10 major IP cases and 50 typical IP cases of Chinese courts in 2015, and such regions as Beijing, Shanghai, Guangzhou and Zhejiang also issued 10 major typical IP cases for the same year, many of them relating to the internet. The Beijing Municipal Higher People’s Court also recently issued the Guidelines for Trying Intellectual Property Cases Involving Networks.

JOINT LIABILITY

“The term ‘platform service provider’ means an entity that provides online platform services for trading information and trading acts” (article 17 of the guidelines). Based on this, it can be said that Taobao.com and JD.com fit the definition of platform service providers. In practice, there has been a certain amount of debate as to whether a platform service provider is guilty of joint infringement when a third party uses it to engage in IP infringement.

The guidelines now clarify that, “under normal circumstances, a platform service provider does not have an obligation of examining the lawfulness of trading information or trading acts in advance; however, it is required to take necessary, reasonable and appropriate measures, based on the nature, method and content of the services provided by the industry in which it operates, and the information management capabilities and operating capabilities that it is normally required to have, to prevent the occurrence of trademark infringement.” This provides a test for determining the liability of platform service providers in a trademark infringement case.

NECESSARY MEANSURES

A similar principle also applies to patent infringement cases. In the Weihai Jiayikao Life Appliance v Yongkang Jinshide Engineering and Trading and Zhejiang Tmall Network invention patent infringement appeal case, the Zhejiang Higher People’s Court expanded the interpretation of “necessary measures” in the Tort Liability Law, holding that, in addition to deletion, masking and removal of links, “notice forwarding” is also a necessary measure.

As to which measure is to be taken, that depends on the nature of the infringed right, the specifics of the infringement and the technical conditions. The authors would argue that the judicial system’s judicial principles for the determination of liability at present, after having dealt with a large number of cases involving platform liability, have gradually become clearer.

ACT PRESERVATION MEASURES

The positive act preservation system added to the new Civil Procedure Law implemented in 2013 is an important system. Act preservation is particularly significant for the constantly changing and fiercely competitive internet sector. In the Blizzard Entertainment and Shanghai NetEase Network Technology Development v Chengdu Qiyou Technology et al copyright infringement and unfair competition interlocutory injunction case, the Guangzhou Intellectual Property Court fully considered that the uploading of the game in question would seize market share from the plaintiff’s newly released game. Given that online games have a short lifespan, and are communicated quickly and widely, the application of an interlocutory injunction offered the rights holder prompt relief.

In the Taobao.com v B5M.com unfair competition case, which occurred before the shopping frenzy on 11 November, the court held that Taobao.com had a huge trading volume, that 11 November was fast approaching, and that if the unfair act was not promptly halted, it could cause irreparable harm to the applicant’s competitive advantages and market share.

Accordingly, it issued a pre-trial injunction, becoming the first unfair competition pre-trial act preservation case involving an e-commerce platform in the country. The authors think that the inclusion of this case reveals that the judicial authorities are strengthening act preservation measures in internet-related cases.

CALCULATION OF DAMAGES

The virtual nature of networks and the difficulty in gathering evidence have caused the prominent issue of excessively low damages. In the “pre-filter” patent dispute case (10 major typical IP cases in Shanghai in 2015), the Shanghai Intellectual Property Court held that, considering that the defendant claimed that the product was “the pride of the store”, with a huge sales volume, it rendered a judgment to the effect that the defendant compensate for the plaintiff’s economic losses and reasonable expenses at the maximum statutory damages, totalling RMB1 million (US$153,000), revealing a trend towards heavier damages.

The guidelines push the provisions of the Trademark Law on increasing the burden of proof on the infringer, in respect of the benefits derived by it, onto the Law Against Unfair Competition, by analogy: “Where the plaintiff has provided preliminary evidence on the profit derived by the defendant, and the account books, information and back-office data relating to the act of unfair competition are mainly in the possession of the defendant, the defendant may be ordered to provide such account books, information and back-office data; if the defendant refuses to provide the same without just cause, or provides false account books, information or back-office data, the profit derived by the defendant may be determined based on the plaintiff’s claims and the evidence provided by it.” It is clear that the judicial authorities’ policy of imposing heavier damages likewise applies in internet cases.

The internet poses challenges for the judicial protection of IP. However, with the judgments in the typical cases and more thorough relevant research, the handling of similar cases is gradually gaining precedents to follow, which will be helpful to rights holders and practitioners in better protecting their rights and interests on the basis of an understanding of the rules.

Wang Yadong is the executive partner and Lu Lei is a partner at Run Ming Law Office