The ‘Notice-delete’ rule of e-commerce intellectual property

By Mi Tai, Wan Rui Law Firm
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According to the China E-Commerce Report 2019 issued by the Ministry of Commerce, the online retail sales of e-commerce in China reached RMB10.63 trillion (US$1.56 trillion) in 2019, and the scale of the e-commerce market continues to lead the world. At the same time, intellectual property (IP) infringement cases in the field of e-commerce are increasing year by year. According to the Investigation Report on Legal Liability of Intellectual Property in E-commerce, released by the Joint Research Group of Zhejiang High People’s Court, from 2014 to 2018 the average annual increase in the number of first-instance civil cases of IP involving e-commerce platforms accepted by Zhejiang courts reached 88.46%.

Mi Tai Wan Rui Law Firm intellectual property
Mi Tai
Patent attorney
Beijing Wanrui Law firm

At present, Chinese courts mainly deal with IP infringement cases involving e-commerce platforms based on the “Notice-delete” rule. This rule was first established by the US to solve copyright infringement disputes under the network environment. Since 2000, China has gradually adopted it at the level of administrative regulations, and the Tort Liability Law implemented in 2010 established the rule for the first time at the law level.

In accordance with article 36 of Tort Liability Law, if a network user commits infringement by using a network service, the infringed person shall have the right to notify the network service provider to take necessary measures such as deleting, shielding and disconnecting the links. If the network service provider fails to take necessary measures in time after receiving the notice, it shall bear joint and several liability for the expanded part of the damage. Therefore, the Notice-delete rule becomes the basic rule to deal with general network infringement.

However, the Notice-delete rule was originally established for dealing with copyright infringement cases, and the expansion of its application scope results in certain incompatibility when dealing with other types of rights, such as patent infringement cases. Moreover, with the rapid development of e-commerce, there arises some controversy in the specific application of the Notice-delete rule established in the Tort Liability Law because of its generality and the lack of necessary remedies for the respondent against which necessary measures have been taken.

Definition of qualified notice. In case of flawed, unstable or even forged rights, for example, the decision on invalidating a trademark has been made but not announced, and a patent evaluation report has not been issued for a design patent, so how is the validity of the notice given by the right-holder to the e-commerce platform to be judged only based on the above rights? In practice, false complaints and malicious complaints arising from this often occur.

Whether the e-commerce platform has the obligation and ability to judge infringement, and then takes necessary measures. For example, the judgment on infringement of invention and utility model patents requires strong professional ability, but whether the e-commerce platform has the ability to examine, or whether it should undertake necessary examination obligations, is controversial. If the platform does not have the examination ability or obligation for complaints of invention patent infringement, should necessary measures be taken to completely separate the complained goods from ordinary consumers?

In this regard, the Supreme People’s Court expanded the interpretation of the relevant provisions of the Tort Liability Law by issuing Guiding Case No. 83, that is, (2015) Zhe Zhi Zhong Zi No.186 Judgment, clarifying that, “based on its ability to judge invention patent infringement, the probability of winning infringement complaints and the balance of interests, the e-commerce platform is not necessarily required to take immediate measures to delete and shield the goods complained about, after accepting the complaints. It is also one of the necessary measures that the e-commerce platform should take to convey the effective complaint notification materials to the respondent and inform the respondent to defend itself.”

The respondent lacks effective remedies. Article 36 of the Tort Liability Law does not provide for the remedies of the respondent. In the case of a false or even malicious notice, the respondent lacks rights, and it is difficult to avoid the loss of interest caused by the deletion or shielding of goods that are subject to complaint.

It can be seen that applying the previously established Notice-delete rule to solve the rapidly growing number of IP disputes involving e-commerce platforms in recent years results in the above-mentioned problems mainly due to the imbalance of rights and interests, and an imbalance of value, which is reflected in the imbalance of rights and obligations between the parties, as well as the imbalance of fairness and efficiency pursued by legal norms.

In view of the above-mentioned problems, articles 42 and 43 of the E-commerce Law implemented in 2019 improve the Notice-delete rule. To be specific: The effective notice should include the preliminary evidence of infringement; the platform shall fulfill the obligation of forwarding the notice to the respondent; legal liability for false and malicious notice is added; and on the basis of the original Notice-delete rule, the “Respondent Declare-Recover” rule is added, that is, after the respondent provides a non-infringement statement, the e-commerce platform forwards the statement to the right-holder, and if the right-holder fails to file for administrative or judicial protection within 15 days after receiving the statement, the e-commerce platform shall terminate the necessary measures.

Keeping the Notice-delete rule, these amendments can quickly solve IP disputes involving e-commerce platforms. At the same time, they significantly weaken the legal liability of e-commerce platforms for infringement judgment, and provide corresponding relief channels for the respondent so as to balance the interests of all parties as much as possible.

It is worth noting that in June 2020, the Supreme People’s Court issued the Guiding Opinions on the Trial of Cases regarding Disputes on Intellectual Property Involving E-commerce Platforms (Draft for Soliciting Opinions), further refining and clarifying the E-commerce Law, including the Notice-delete rule. This document is expected to be the direct basis for the trial of such cases after its formal promulgation.

Mi Tai is an associate at Wan Rui Law Firm

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