By Luo Yanjie

Recently, Shanghai No.2 Intermediate People’s Court issued “Investigation Report about Infringement of Right of Information Network Dissemination in the Area” which introduces the application of “red flag” principle in China. Today we would like to share the topic with readers as follows:

I. The basic concept of “red flag” principle

“Red flag” principle is an exception of “safe harbor” principle. It means if the fact of infringement obviously like a “red flag” flying, network service providers cannot pretend not to see, or to shirk responsibility as not knowing. In this premise, even if the right people have issued a notice, the court should also identify the Internet service provider is aware of third party’s infringement and shall bear tort liability.

“Red flag” principle is embodied in “regulation protection network dissemination information“, which provides kinds of Internet service providers shall bear joint liability for tort when they “know or should know” that there is infringement work.  Notwithstanding the above, but at present, China does not publish relevant legal laws and regulations to make clear what circumstances should be applied for “red flag” principle.

II. The legal application of “Red flag” principle

In judicial practice, the court will generally refer to the following factors to judge the network service provider is consistent with the principle of “red flag” or not:

1, whether works are recommended, arranged or classified.

This is the most direct factor to judge the network services provider whether “knows or should know”, because it represent that service provider has “contacted” works, and actually “participated” in the spread. For this kind of work, service providers should pay more attention to the Examination Obligation to judge whether the work is infringement or not. As in the case between Shanghai Gong He Co. and Shanghai HanChuang Company (note: the link is in Chinese) handled by our website’s lawyer, the court found the defendant need to bear tort liability because the defendant is involved in classification and arrangement.

2, the Reputation of Work

In practice, the court usually requires service provider higher duty of care for famous works, because well-known works are unlikely to be placed on the network for free. Of course, network services providers’ link or storage “famous works”, it doesn’t mean that they must need to bear tort liability. But the work whether famous is one of the important factors for courts to consider.

3, whether service providers know work’s authorization

“Regulation Protection Network Dissemination Information” provides the program of “Notification-Remove”. The reason of the law requires the right person performing the “notification” obligation is to help service providers to know their service object content having infringing works. But it does not mean that the service provider can be free if they already known there are infringing works through other channels but without “notice” from the right person. If there is evidence can prove that service providers knew related information, even if the right person doesn’t notice, the service provider shall bear tort liability. For example, in the case of Han Han vs. Baidu Library (note: the link is in Chinese), although Han Han did not send a “notice” according the law, but the court held that, in view of Han Han’s popularity and wide influence of the dispute before case, Baidu Company had obligation to pay more attention about whether there are infringing works in Baidu Library.

4, whether there are “instigating or helping” behavior

In practice, the service provider is unlikely to “instigate or help” the spread of piracy obviously. It need to proceed from the objective facts to determine whether there are subjective malicious by service provider. For example, in the case between Beijing Chinese online culture development limited company and Wapu network technology Ltd. (note: the link is in Chinese), the court thinks that “Wapu Company should know the books uploaded have a big possibility that they are infringing. While they do not only to encourage uploading entire books, but also give corresponding award to up loaders. They build the search and navigation of the author’s name for users to find books easily. It belongs to “instigating or helping” behavior and should bear tort liability. ”

The above are main reference factors for the courts to consider in trial in recent years. But they are not absolute standard, the author just simple induction here. In the actual trial, the court also will consider other fact in each specific case.

II. Trend-the expanding interpretation of “red flag” principle

Even if none of the above factors exists, but with China is paying more and more attention on protection intellectual property rights, from the latest judicial cases, the court require higher standard of “duty of care” for “Internet service provider”. For example, in the case of “YPPL Co. v. TCL group and Thunder Company” (note: the link is in Chinese), although there is no behavior of arrangement or classification, and right people did not send a notice, and the film is not famous, the court still found that “the defendant set Movie Database with a subjective malicious. The defendant did not implement the technical means of shielding the infringing work uploading.” It is undoubtedly an expand interpretation of existing “knows or should know” rule. If the network service provider to take a business model that infringing works will exist with a big opportunity, service provider should take the initiative to exam; otherwise it will need to bear tort liability.

Other recommended posts on our website:
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