—Interpretations on Solutions to Several Issues in Hearing E-Commerce IPR Infringement Cases
In today’s post we will continue to discuss the standards to be considered in determining the liability of e-merchant platforms.
III. Standards in Determining the Indirect Infringement Liability of E-Merchant Platforms
As discussed above, an e-merchant platform may only assume indirect infringement liability under the law, and therefore it would not be necessarily always be liable for infringement occurring on its platform. The pressing question then, is what standards shall be utilized when determining their liability? In response to this question, we would like to share our analysis based on a comparison of similar statutes:
- 1. As compared with a counter renter, an e-merchant platform need not undertake the obligation to make active examinations in most circumstances
In the lawsuit filed by PUMA against Taobao.com, PUMA claimed that the relationship between Taobao.com and the actual seller more resembles that between a shopping mall and merchant counters. In other words, PUMA argued that Taobao.com should carry out its active obligation to examine shops on its e-commerce platform. As stipulated in Article 8 of the Management Measures of Counter Renting and Operation:
“In the business of counter renting, the renter shall fulfill the following obligation:
…..
(2) To supervise and urge the lessee to follow the rules implemented in the sites for business operation, and report any violation against the rules or damages caused to the consumer to the relevant authority.”
However, as confirmed by the Guangzhou Intermediate People’s Court: the relationship between an Internet service provider and online shops is quite different from that between a shopping mall and merchant counters;” in addition, “the Internet service provider is merely providing a platform upon which shops can carry out their business”. Based on these grounds, the court further affirmed that Taobao.com did not violate its examination obligation.
It can be concluded from the above court’s opinions, that in IPR infringement cases involving e-merchant platforms, there is a great disparity between them and traditional merchant counter rentals, where the scope is much smaller and the quantity can be controlled. Therefore, an e-platform operator should be subject to a lower duty of care in its obligation to inspect and examine merchants, in contrast to the traditional counter renter.
2. Similar to an ISP in the Copyright Field—Comprehensively determining an E-Merchant’s Assumption of Liability
Despite not being required to undertake active examination obligations, as described above, once an e-merchant platform operator is aware of infringement but does not take necessary measures to stop the infringement, it will accordingly assume liability for such. In further consideration of the rules, it should be noted that in the “Solution” the term “awareness” is defined as “knowing” or “should have known.”
In this sense, it is not difficult for us to say the main characteristics concerning the assumption of liability for e-merchant platform operators are as follows: “assumption of indirect liability,” “known or should have known,” and “no obligation to undertake active examination”. All of these look strikingly similar to the “safe harbor” principles well known in the realm of copyright law. In fact, in the author’s opinion, the “Solution” offered by the Beijing High Court can be considered as essentially being a “safe harbor” for e-merchant platform operators, shielding them from direct IPR infringement liability.
The Solution also has prescribed some elements to be considered in determining whether an e-merchant platform operator “knows” or “should have known” of any infringing activity. In essence, these elements are remarkably similar to the “safe harbor” principles often referred to in cases involving copyright infringement; which means that since an e-merchant platform operator’s liability is not based on active examination of merchants, it can determine whether the platform operator has contributed to the infringement on more comprehensive grounds. For example, whether any advertisements promoting the infringing products may be found on the platform’s main page, whether it has gained or stands to gain any benefits arising from the infringement, or whether it has received notice of the infringing activity from the copyright holder, etc. In addition, the “Solution” also provides that the “notice-delete” rule often invoked in cases where an ISP is involved, and the counter notice principle as invoked in typical shopping mall-merchant counter cases can be considered a part of the “safe harbor” principle. It can be reasonably stated that the Beijing High People’s Court has fully adopted the “safe harbor” principle in writing the “Solution,” and the relevant articles can be found in Article 6-9.
All the above comprise my understanding and analysis of the “Solution.” With the incredible development of e-commerce, we have seen the evolution of numerous emerging models of commerce. The “Solution” undoubtedly cannot cover all possible IPR disputes, like Tmall, who has charged its shop operators a rather expensive management fee in order to undertake a higher degree of care in conducting investigations of merchants, quite unlike measures adopted by what may be considered “normal” platforms. However, there should be no doubt that the principles set forth in the “Solution” have supplied those of us in practice a great hand and a source of ideas with which we can solve similar cases.
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