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. For the URL available on its web pages, the company should be obligated to take an even higher care with regards to its content. Even after the company fails to demonstrate that the IP address is used by a third party, and it has 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 had been 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 notarized the link on Hainan Netcom’s homepage which streams Qi Jian, and filed a lawsuit against Hainan Netcom because it believed that Hainan Netcom had infringed upon its copyright.

The First Instance Court did not rule 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. Moreover, considering that Hainan Netcom immediately disconnected the webpage after the case was filed, it could be exempt from the liability because it was simply an ISP. 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 acknowledged the facts investigated in the original hearings, but it 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 link was owned by a third party. Furthermore, the relevant IP address also didd not  demonstrate whether or not it belongs to a third party. For this reason, from the public point of view, the involving IP address is owned by Hainan Netcom;

3. As the manager of the IP telecommunication involved in the case, objectively speaking, 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.

Based on the above reasons, the Supreme Court finds that Hainan Netcom has 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 fails to demonstrate that it had taken a higher care with regards to the IP address it provided. Furthermore, since the beginning of the hearing, Hainan Netcom failed to explain who was using the IP address. 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

Generally speaking, the ISP does not directly use or integrate the content developed by the Internet Content Provider (“ICP”). This is due to the reason that once the ISP uses any form of the content, the company would be obligated to a higher care with regards to the content it provides.

Judging from the webpage layout of Hainan Netcom, the accused Film channel (where the link to Qi Jian was located) did not distinguish itself as being designed or run by a third party. At the same, the said channel was 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 infringe upon 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 its obligated high care for the contents on its webpage.

2. The ISP fails to demonstrate that 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 that the content in question is not managed by the company. However, since the company was the operator of the IP address involved in the case, Hainan Netcom could only claim Safe Harbor as the link provider under the “Regulation on the Protection of the Right to Network Dissemination of Information” by clearly demonstrating that the webpage is run by a third party. 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 involved in the case 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

Even when ISP like Hainan Netcom could demonstrate that the accused content is provided by a third party, it still cannot be certain that it is completely exempt from any infringement liability or in aiding infringement liability. 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 company should 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.

Lawyer Contacts

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

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