Why Hainan Netcom Is Judged Infringement Liability for IP Addresses It Manages?

(By Albert Chen) Hainan Netcom is an Internet Service Provider (“ISP”), but it also provides the content on the Internet. Even after the company failed todemonstrate that the IP address is used by a third party, and it fulfilled its obligation to check the content of the webpage, the company should still be liable for any corresponding infringement.

Case Summary:

Beijing Ciwen Filming Co., Ltd. (“Company C”) is the copyright holder of film Qi Jian (also known as “Seven Sword”) in mainland China. However, Company C discovered that Hainan Netcom hadbeen providing a link on its homepage (www.hai169.com) for its visitors to stream Qi Jian, without the authorization of Company C.As a result,in September of 2005, Company C filed a lawsuit against Hainan Netcom because it believed that Hainan Netcom had infringed upon its copyright.

The First Instance Court did notrule in favor of Company C’s infringement accusation against Hainan Netcom.The main reason provided by the court was that Hainan Netcom is simply an ISP, and there were no direct evidence that demonstrated that Hainan Netcom was involved in the creation and operation of the website.Dissatisfied of the decision, Company C appealed to the higher court.However, the original decision was sustained in the Second Instance Court as well.

Unsatisfied with the rulings, Company C appealed its case to the Supreme People’s Court of China (“Supreme Court”). After hearing the case, the Supreme Court ruled that Hainan Netcom should be liable for the infringement of Company C’s right and gave the following reasons for its ruling:

1. Hainan Netcom posted the link in question next to “News Channel”, “Literature Channel”, and other channels displayed on its homepage.

2. The URL provided by Hainan Netcom did not indicate that the linkwas owned by a third party. . From the public point of view, the involving IP address is owned by Hainan Netcom;

3. As the manager of the IP telecommunication, Hainan Netcom is the only party who has access to the usage information of the address. However, Hainan Netcom fails to present such evidence in the case, rendering its argument that the company only provided the link service to be unfounded.

The Supreme Court found that Hainan Netcom had an obligation to enforce a higher care on the IP address involved in the case, as well as the use of such address.However, Hainan Netcom failsto demonstrate that it had taken a higher care with regards to the IP address it provided. Therefore, the Supreme Court finds Hainan Netcom to be jointly liable to the infringement over the content of on its homepage.

Lawyer Comment

From the opinions of the Supreme Court, the question whether or not ISP should be held jointly liable for any infringement of rights of IP address which the ISP manages, should be answered affirmatively when the following conditions are met:

1. The ISP provided the accused infringing content

Judging from the webpage layout of Hainan Netcom, the accused Film channelwas placed paralleled to channels that were developed by the ISP itself. To the understanding of the general public, the relevant content of such channel is directly provided by Hainan Netcom. At this point,the only ways for Hainan Netcom to exempt itself from being held jointly liable for the contents it displays on its webpage, is by the following two methods:

  1. prove that the content on its webpage does not infringeupon others’ right; or
  2. clearly demonstrate that the content on the relevant page is provided by a third party, and at the same time, as the ISP of the webpage, the company has fulfilled itsobligated high care for the contents on its webpage.

2. The ISP fails to demonstratethat it is legally using the content it displays or that the IP address in question is used or operated by a third party

In the case, Hainan Netcom advocated from the beginning thatthe content in question is not managed by the company.Unfortunately, until the end of the hearing, Hainan Netcom failed to provide such evidence while continues to argue that it does not know who controlled the content of the IP address in question. The lack of evidence presented by Hainan Netcom failed to convince the court to relinquish its responsibility to the content on its webpage. Perhaps the view held by Hainan Netcom was that: it is only the ISP in the case, and not the content provider. But according to the right holder’s written notarization,it explicitly demonstrated that for the case in question, Hainan Netcom is the content provider herein.

3. When proving that the page is run by a third party, the ISP should also demonstrate that it has fulfilled its obligation of high care with regards to the content provider’s qualification

Unlike companies that only provides the URL, the website in question was established by Hainan Netcom. Therefore, it has a corresponding high care obligation to the content provided by the third party that is displayed on its website. In this case, Hainan Netcom should have at least examined the qualification of the actual owner or operator of the content provider. As to what should be examined, Hainan Netcom should find out whether the content provider has acquired the License of Information Communication Audio and Visual from the State Administration of Radio, Film, and Television. If the content provider has such certificate, then Hainan Netcom could be exempted for its liability in this case.

Considering these, when the ISP uses or integrates the relevant content, instead of claiming itself to be non-liable for the action of its content provider, the companyshould demonstrate that it has examined the qualification of the actual operator. Unfortunately in this case, Hainan Netcom did not demonstrate that it has fulfilled such obligation. For this reason, in the end the Supreme Court found the company guilty of infringement.

We posted this article several months ago which might be too long to read it on. Our intern Mr. Le Duc helped us to abstract it again. You may click here for the detailed post, if you prefer to know more on the case.

Lawyer Contacts

You Yunting86-21-52134918 youyunting@debund.com/yytbest@gmail.com

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