Risk of unfair competition in platform data capture

By Chen Jing and Meng Xiaodi, Commerce & Finance Law Offices
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With the development of the digital economy, data have emerged as a new type of production factor, garnering increasing interest among companies. However, the heightened focus on data intellectual property rights or property rights protection has made many enterprises suspicious of the business approach of capturing data as a data source. Based on consultations with clients in recent years, the author offers the following five frequently asked questions and answers for readers.

Q: Do platforms have the right to file a lawsuit if the data captured include user-generated content (UGC)?

A: In Qihoo 360 v Baidu, the first data capture case in China, the plaintiff claimed that the platform data illegally captured by the defendant included UGC from platforms like Baidu Zhidao and Baidu Tieba. The judgment indicates that the presence of a single work within a platform’s data collection, with its rights held by a different party than the data collection’s rights holder, does not necessarily impede the litigation rights of the data collection’s rights holder.

In the dispute between Beijing Weibo Shijie Technology v Beijing Chuangrui Media over unfair competition in short video platform data collection, the platform data claimed by the plaintiff also included UGC such as user comments, and the court once again held that Weibo Shijie had formed a competing interest based on the data collection, and that the interest was legitimate and protected by the Anti-Unfair Competition Law of the People’s Republic of China (AUCL).

Q: If there is no competition between two parties, will one party still be deemed to have committed unfair competition?

Chen Jing, Commerce & Finance Law Offices
Chen Jing
Equity Partner
Commerce & Finance Law Offices
Tel: +86 135 8154 5292
E-mail: chenjing@tongshang.com

A: In unfair competition disputes involving the internet economy, the domestic courts are increasingly inclined to consider that a competitive relationship is not a prerequisite for determining that the act in question constitutes unfair competition. Although the AUCL has not yet abolished the requirement of having a competitive relationship, judgements have already expanded from the traditional narrow definition of a competitive relationship to a broad one, and from an actual competitive relationship to a potential one, such as competing for trading opportunities or even harming competitive advantage.

Therefore, the absence of a narrow or real competitive relationship between the plaintiff and the defendant does not prevent domestic courts from determining that the defendant’s actions constitute unfair competition.

Q: If the data captured is publicly available on the platform, will the capture still constitute unfair competition?

A: Whether the captured data is publicly available or not does not necessarily affect the legal assessment of the appropriateness of the behaviour. On the one hand, there is a need to promote data circulation and open sharing; on the other hand, attention must also be paid to protect the property rights of data value-adding entities.

According to the Opinions of the CPC Central Committee and the State Council on Establishing a Data Base System to Maximise a Better Role of Data Elements, data processors have the right to independently control the data they lawfully possess, as well as the right to process, use and obtain benefits from the data by laws and regulations. Therefore, even if the data captured is public, it may still constitute unfair competition if it damages the rights and interests of the corresponding data value-adding entities.

Q: Is it still illegitimate if no technical means are used to interfere or sabotage the data platform?

Meng Xiaodi, Commerce & Finance Law Offices
Meng Xiaodi
Commerce & Finance Law Offices
Tel: +86 183 0138 2787
E-mail: mengxiaodi@tongshang.com

A: Article 12 of the AUCL clearly provides that the use of technical means to interfere with or sabotage the normal operation of other network operators’ online products or services constitutes unfair competition. However, these are not the only cases that are subject to the AUCL.

In domestic judicial practice, only about 25% of the unfair competition disputes on data rights and interests are adjudicated on the basis of article 12, and more courts still invoke the general provisions of article 2 of the AUCL as the basis for adjudication.

In the dispute Qihoo 360 v Baidu over unfair competition, considering that both plaintiffs and defendants had signed the Self-Regulation Convention on Internet Search Engine Services, the court recognised the principles outlined in the convention, including the requirement for the Robots Exclusion Protocol to adhere to fairness, openness and promotion of the free flow of information, as well as the requirement for search engines to have reasonable and justifiable reasons for crawling. They are all seen as commercial ethics within the search engine industry.

On this basis, the court then decided whether the respondents had violated the commercial ethics and whether it constituted unfair competition.

Q: How can the risk of unfair competition in platform data capture be reduced?

A: Capturing data from platforms is one of the ways companies acquire data. To mitigate the risk of unfair competition in platform data capture, companies should prioritise compliance efforts.

When companies use automated tools like web crawlers to collect platform data, they should first comply with laws and regulations, including assessing in advance whether technical means, regulated by article 12, are used to impede or disrupt the normal operation of the products or services of the data platforms and, if so, exclude the application of the corresponding means.

Second, if a company has already agreed to industry self-regulation conventions or the platform has announced that non-authorised capture is not allowed, the company must comply with the convention or obtain authorisation from the platform, unless the convention or the content of the platform’s announcement itself is unlawful or in violation of the industry’s business ethics.

Finally, respect the rules set by the platform. If a company believes such rules are unreasonable, it is recommended to communicate and negotiate with the platform in advance and avoid the direct use of technical means.

Chen Jing is an equity partner at Commerce & Finance Law Offices. She can be contacted by +86 135 8154 5292 or by e-mail at chenjing@tongshang.com
Meng Xiaodi is an associate at Commerce & Finance Law Offices. She can be contacted by +86 183 0138 2787 or by e-mail at mengxiaodi@tongshang.com

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