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Notice and Take Down: How the Shift from Copyright Law to Chinese E-Commerce Law Poses an Unnecessary Disturbance to E-Commerce

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Abstract

The notice-and-take-down (NTD) procedure, as an enforcement tool of copyright, is equitable and balanced. However, its applicability to other types of intellectual property depends on necessary adaptation. Currently, the Chinese Tort Liability Law has created an incomplete NTD procedure applicable to all kinds of civil rights, and Chinese e-commerce platforms have managed an internal NTD procedure in which they decide on IP infringements and measures to take. The Chinese E-Commerce Law has created a new NTD procedure exclusively for e-commerce, which requires the automatic removal of allegedly infringing items for at least 15 days and an automatic restoration of removed items in the absence of complaints submitted to relevant authorities by the holders of IP rights. The new procedure will seriously affect e-commerce due to its automatic removal measures, even more so in light of the current problem in China of IP trolls. The e-commerce platforms will probably resist the injunction-like NTD procedure in order to maintain their controlling role, so as to protect the interests of online stores as well as their own interests.

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Notes

  1. Department of E-commerce and Information of the Ministry of Commerce (2018), at 1-5.C.

  2. E-Commerce Law of the PRC, Art. 1. The Finance and Economics Commission of the People’s Congress of China has led the legislative project by organising a working group including representatives of 12 departments of the State Council as of December 2013. The law entered into force on 1 January 2019.

  3. The NTD procedure concerns three articles of the E-commerce Law. Article 42 reads: “[I]f IP rights holders believe that their IP rights have been infringed, they have the right to notify the e-commerce platform involved and request necessary measures be taken, such as deleting, blocking, disconnecting links, terminating transactions or services, etc. The notice should include prima facie evidence of infringement. Upon receipt of such a notice the e-commerce platform must promptly take necessary measures and forward the notices to the online stores on the platform; in the absence of prompt necessary measures, it will be jointly liable with the online stores on the platform for the subsequent prejudice. If prejudice is caused to online store on platforms by wrongful notices, the IP rights holders will bear civil liability. In case of prejudice caused to operators on platforms by bad faith notices, the damages will be doubled.”

    Article 43 reads: “[U]pon receipt of the notice forwarded by an e-commerce platform, an online store on the platform may submit a declaration of non-infringement. The declaration should include prima facie evidence of non-infringement. Upon receipt of such a declaration the e-commerce platform will forward it to the IP right holder which has filed the notice and inform it of its rights to resort to competent authorities or to sue before the court. The e-commerce platform will terminate any necessary measures that have been taken if it has not been informed of a complaint being filed with competent authorities or lawsuit being filed with the court by the IP right holder within 15 days of the delivery of such declaration to the IP right holder.”

    Article 44 reads: “E-commerce platforms must timely publish the notices and declarations that they have received pursuant to Art. 42 or 43 and the results of settlement.”

  4. Article 36, para. 2 of the Tort Liability Law reads: “[I]f an internet service user commits a tort via internet services, the victim has the right to notify the internet service provider and request the latter to take necessary measures, such as deleting, blocking or disconnecting links to (the information at issue). If the internet service provider has not taken timely necessary measures upon receipt of notice, it is jointly liable with the internet user for the subsequent prejudice.”

    Article 45 of the E-commerce Law reads: “[I]f e-commerce platforms know, or should have known, of IP infringement by online stores on their platform, they must take necessary measures such as deleting, blocking, disconnecting links, terminating transactions or services, etc. If it fails to promptly take such necessary measures, a platform will be jointly liable with the online stores on the platform.”

    See also Drafting Commission of the PRC E-Commerce Law, supra note 2 p. 200; Feng (2017), pp. 191–210.

  5. Article 41 of E-Commerce Law reads: “E-commerce platforms must establish rules on the protection of IP rights, strengthen co-operation with IP rights holders and protect IP rights pursuant to applicable laws.”

  6. Article 84 of the Chinese E-Commerce Law reads: [W]ith regard to e-commerce platforms which have failed to take necessary measures regarding IP infringement by online stores in violation of Arts. 42 or 45 of the law, competent IP administrations can order such platforms to rectify their practices by a certain deadline. IP administrations can impose fines of CNY 50,000 to CNY 500,000 if platforms do not comply with such orders or a fine of CNY 500,000 to CNY 2,000,000 in case of serious breaches of applicable law.”

  7. " U.S.C. § 512, Ch. 5, title 17.

  8. See Liu (2006), p. 27.

  9. Tort Liability Law of the PRC, Art. 36, para. 2: “In case an internet user commits a tort via internet services, the victim has the right to notify the internet service provider and request the latter to take necessary measures such as deleting, blocking or disconnecting links with (the information at issue). If the internet service provider fails to promptly take necessary measures upon receipt of notice, it will be liable together with the internet user for the subsequent prejudice.”

  10. See Temporary Rules on the Administration of Online Trade of Goods (2010); Answers to Some Questions Concerning IP Infringement in E-Commerce of Beijing High People’s Court (2013); Shi and Yuan (2018), p. 7.

  11. Chinese E-commerce Law, Art. 2.

  12. See Judicial Interpretation of the SPC on Several Issues Concerning the Application of Law in Cases of Internet Related Copyright Disputes (2006); Judicial Interpretation of the SPC on Several Issues Concerning the Application of Law in Civil Cases on Infringement of Online Distribution Rights (2012); and the Regulation on the Protection of Online Distribution Rights (2013). See also Kong (2012), pp. 193–213.

  13. Regulation on the Protection of Online Distribution Rights, Arts. 14–17.

  14. Judicial Interpretation of the SPC on Several Issues Concerning the Application of Law in Cases of Internet Related Copyright Disputes, Art. 8.

  15. See U.S.C. § 512, Ch. 5, title 17, (c) 3 and (g) 2 and 3.

  16. Cui (2014), p. 772.

  17. Cui, supra note 16, pp. 771–775.

  18. Liu (2009), pp. 13–22; Wang (2011), p. 252.

  19. Bearda et al. (2018).

  20. According to statistics on NTD online copyright practice, one third of the notices in the U.S. are not founded. See Urban, Karaganis and Schofield (2016).

  21. EUIPO (2018), pp. 52–56.

  22. See Several Opinions of the Centre Committee of the Chinese Communist Party and the State Council on the Further Reform of the Systems and Procedures in order to Accelerate the Implementation of Innovation Driven Innovation Strategy (2013) (providing an example); see also Feng and Ma (2019).

  23. Article 36 of the Chinese Tort Liability Law (Order of the President of the People’s Republic of China No. 21): If an internet user commits a tort through internet services, the infringed party shall be entitled to ask the internet service provider to take necessary measures, including, inter alia, deletion, blocking and disconnection. If the internet service provider fails to take necessary measures in a timely manner upon notification, it shall be jointly and severally liable with the said internet user for the extended damage.

  24. Li (2018), pp. 106–108.

  25. Fan and Si (2015); He and Lv (2015), pp. 10–19.

  26. Feng (2015), pp. 10–19; Cui, supra note 16, pp. 775–776.

  27. Otherwise, it is also possible to apply for the application of preliminary injunction to ISPs. See Judicial interpretation of the SPC on Several Issues Concerning the Application of Law in Cases of Internet Related Copyright Disputes, Art. 7, para. 2.

  28. Feng, supra note 26, pp. 10–19.

  29. Answers to Some Questions Concerning IP Infringement in E-Commerce of Beijing High People’s Court, supra, note 10, Arts. 10–16.

  30. Answers to Some Questions Concerning IP Infringement in E-Commerce of Beijing High People’s Court, supra note 10, Art. 13.

  31. Answers to Some Questions Concerning IP Infringement in E-Commerce of Beijing High People’s Court, supra note 10, Art. 16.

  32. Zhe Zhi Zhong Zi No. 186 (2015).

  33. Article 36, para. 3 of the Chinese Tort Liability Law provides that an ISP is liable if it has knowledge. Notices submitted by IP rights holders may be used as evidence proving the knowledge of an ISP about an internet user’s illegal activities. NTD is not a legal obligation in EU law and it was a regime created under the same logic relating to Art. 14 of the EU E-Commerce Directive. See Wallberg (2017), pp. 922–936; Petersen and Riis (2016), p. 242.

  34. EUIPO, supra note 21.

  35. See Report from the Commission to the European Parliament and the Council on the Functioning of the Memorandum of Understanding on the Sale of Counterfeit Goods via the Internet (COM/2013/0209 final). The purpose of the Memorandum of Understanding (hereinafter, the “MoU”) is to establish a code of practice in the fight against the sale of counterfeit goods over the internet and to enhance collaboration between the signatories, including and in addition to notice-and-take-down procedures. The MoU will also set an example for other stakeholders that are not signatories to this MoU. Alibaba is a signatory of the 2016 MoU.

  36. Alibaba, Regulations on the Processing of Intellectual Property Infringement, https://rule.1688.com/rule/detail/939.htm?spm=a26go.7662369.0.0.dHGgs3 (last accessed on 11 September 2018). The other Chinese E-Commerce platforms, such as Taobao, Tmall, and JD, have the same or very similar procedures.

  37. See Verified Rights Owner Program on eBay’s website. https://pages.ebay.com/seller-center/listing-and-marketing/verified-rights-owner-program.html#m17-1-tb1.

  38. For Tencent’s practices, seehttp://wiki.open.qq.com/wiki/%E8%85%BE%E8%AE%AF%E5%BC%80%E6%94%BE%E5%B9%B3%E5%8F%B0%E4%BE%B5%E6%9D%83%E6%8A%95%E8%AF%89%E6%8C%87%E5%BC%95; for JD practice, seehttps://jrhelp.jd.com/show/getProblemInfo-3061.

  39. E-Commerce Law of the PRC, Art. 43.

  40. E-Commerce Law of the PRC, Art. 44.

  41. Fan and Si, supra note 25; see also Provisions on Law Application Issues Concerning the Examination of Injunction Applications in Cases Involving Disputes Over Intellectual Property of the Supreme People’s Court (2019).

  42. See TRIPS Agreement, Art. 50.3; Provisions on Law Application Issues Concerning the Examination of Injunction Applications in Cases Involving Disputes Over Intellectual Property of the Supreme People’s Court, Art. 16.

  43. See Urban et al., supra note 20.

  44. See Wallberg, supra note 33; Petersen and Riis, supra note 33.

  45. Though the main objective of the TRIPS Agreement is to promote effective and adequate protection of IP, the Agreement emphasizes the importance of respecting the rights and interests of opposite parties. Article 1.1 of the Agreement provides that WTO Members “may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement”; the Agreement has, at its very beginning, indicated that “measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade”; Art. 41.1 of the Agreement requires for Members that “the procedures (for the enforcement of IP) shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse”.

  46. Yan (2017), p. 3.

  47. The Alibaba Group has signed collaboration conventions with more than 200 brands for this purpose. Good faith IP rights holders mean those who do not abuse their right in using NTD procedures, i.e. those whose rate of success of complaints is high enough. See Drafting Commission of the PRC E-Commerce Law, supra note 4, p. 205.

  48. Cui (2017); Bearda, supra note 19.

  49. Tort Liability Law of the PRC, Art. 36, para. 2; E-Commerce Law of the PRC, Art. 42, paras. 2–3.

  50. Usually, IP administrative bodies play an important role in the settlement of disputes concerning infringement of trademarks and industrial designs, but much less so for infringement of patents covering inventions.

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Acknowledgements

The authors are grateful to Yanwei Fan of JD, Wei Zhan of Alibaba, Xiaoming Ma of Sohu Institute, Wei Pan of the Intellectual Property Chamber of Beijing People’s High Court and Xiang Pu of IP House database for the valuable information and discussion. The authors are thankful to Kristina Da Costa (an LL.M. student of Tsinghua Law School) for her editing assistance. The authors are responsible for any errors in this article.

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  1. Ph.D. (Panthéon Sorbonne), LL.M. (Renmin University); Associate Professor, Tsinghua University, Beijing, China

    Shujie Feng

  2. Ph.D. and LL.M. (Renmin University); Professor at Renmin University of China, Beijing, China

    Yong Wan

  3. LL.M. (Nankai University); Ph.D. candidate, the Law School of Tsinghua University, Beijing, China

    Fang Fang

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  1. Shujie Feng
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Shujie Feng is an Associate Professor at Tsinghua University, Beijing; Director of the Innovation & Competition Law Center at Tsinghua University School of Law; Vice-President of the Trademark & Unfair Competition Committee of the IP Case Law Center (Beijing) of the Chinese Supreme People’s Court; Vice President of the Beijing IP Judicial Protection Association; and Visiting Professor or research fellow at the University of Milan, the Toulouse 1 University, the University of Paris 1 Pantheon-Sorbonne, the University of Paris-Sud and the Max Plank Institute for Procedural Law. Yong Wan is a Professor at Renmin University of China in Beijing. Fang Fang is a Ph.D. candidate at the Law School of Tsinghua University.

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Feng, S., Wan, Y. & Fang, F. Notice and Take Down: How the Shift from Copyright Law to Chinese E-Commerce Law Poses an Unnecessary Disturbance to E-Commerce. IIC 50, 1082–1100 (2019). https://doi.org/10.1007/s40319-019-00857-2

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