By Luo Yanjie

In recent, 360buy.com, also called Jingdong Market, which is a famous online retailer in China, lost its lawsuit in an unfair competition dispute. In the case, another company called Jingdong Rubber registered the domain name of jingdong.cn, who recently found 360buy.com (Jingdong Market) will be on top of the search result of www.jingdong.cn, and right to the results is the link of “brand propaganda”. Then Jingdong Rubber filed a lawsuit against 360buy.com and Baidu (NASDAQ: BAIDU), accusing the defendants of unfair competition. After the hearing of the 1^st instance, 360buy.com was deemed liable for unfair competition, yet meanwhile, Baidu was decided free of liability.

The search result is mainly due to 360buy.com’s purchase of the “key words search” from the search engine Baidu, and that purchase is a kind of search promotion service of the company (previously known as paid listing). With that service, any business units may get a high rank in the search list after the payment of the propaganda fee and the ultimate goal is to promote the company. The legal problems arising from the search promotion has long been the hot topic among the public, today we would share our opinions on the topic:

I. To conduct the search promotion with other’s righted key words may lead to an infringement

In the above case, Jingdong Rubber is the owner of the domain name of www.jingdong.cn, and as investigated by us, this online address was first registered in 2003 and is earlier than the founding of 360buy.com in 2004. For this reason, though the later established 360buy.com is now more reputable than Jingdong Rubber, no malicious intension could be found in Jingdong Rubber’s registration of the address, and thereby it may legally use www.jingdong.cn.

As to 360buy.com’s use of another’s registered domain name as its key works of promotion, though no specific laws say it’s illegal, it does decrease Jingdong Rubbers chances of being searched by others and thereby suffer a devaluation of its domain name. By the good faith principle, regulated in Article 2 of Anti-unfair Competition Law, 360buy.com, as the purchaser of the service shall take the liability of unfair competition. Therefore, we hold a positive attitude towards the decision made by the court of the first instance that 360buy.com shall take the infringement liability.

Furthermore, in addition to the domain name, using another’s trademark or company name as ones key works in search promotion, the service purchase will take the infringement liability alike.

II. The standard of the liability decision of infringement aid by search engine

In the above case, the court held that the co-defendant Baidu had fulfilled its due care obligation and shall thereafter be exempt from its infringement liability. And the more specific reason is Baidu has warned to avoid adding any infringing key words in the promotion service contract and in key words adding, also, search company provides the relief way to the right owner, all these could show its fulfilling of the due care obligation. What’s more likely, in a similar case of Baidu (note: the link is in Chinese) heard in Shenzhen court, the judge decided that Baidu shall also not take the infringement liability for it only provides the technology platform and reacts  promptly to the deletion claim from the right owner. From these two cases, we would like to conclude:

1. The fulfilling of due care obligation is the only standard in deciding infringement liability of a search engine.

In the first case introduced herein, the court took the “due care obligation” as the standard to judge the liability by Baidu, to it we have no different opinions. Despite no definition in law of search promotion, we could still find its feature from relevant laws:

(1) The search promotion is a kind of propaganda to some extent, and the search engine in this instance is more like the ads publisher. Under the Advertisement Law, the ads publisher shall “examine the related proof documents and verify the contents of the ads by the laws and regulations” and “advertisement publisher, who have knowledge of or are deemed to have such knowledge of the falsity of the content of the advertisement, but continue to design, produce and publish it, shall be jointly liable according to law with the advertiser.”

(2) With regards to the net feature of the search engine, it greatly resembles the internet service provider (ISP), and by the Regulation on Protection of Right of Information Communication by Networks (the “Regulation”):

“however, if it knew or should have known that the linked work, performance, or audio-visual recording has infringed upon an other’s right, it shall bear liability for joint infringement.”

Based on the above discussion, either by the Advertisements Law or the Regulation, the due care obligation, namely whether it’s known or shall be known, is the standard when considering the aiding infringement liability of the ISP (the search engine).

2. A heavier due care obligation for search engines

In the aforesaid cases, the courts have exempted the liability of Baidu, for the warning in the search promotion agreement as well as the deletion in time after the right owner’s notice. Yet, in our opinions, such actions are inadequate for Baidu’s full free-of-duty:

If the warning clause could be proof of Baidu’s due care obligation fulfillment

(1) If the warning clause could be  proof of Baidu’s due care obligation fulfillment, then there could be no ISP aiding the infringement as provided in the copyright system, since such clauses could be found in almost all the agreements from ISPs.

(2) The “notice-deletion” principle is no doubt quoted from the copyright law system, by which the due care fulfilling could exempt ones infringement liability, while no one shall exempt from due care with its observance to the “notice-delete” rule.

For these reasons, we prefer to take it that Baidu could not be exempted from such liabilities, for it shall conduct the fundamental review on service purchaser’s qualification or right belonging, rather than only setting a warning clause or afterwards making up (for Baidu’s review before the account opening, we could not test the whole propaganda promotion, yet after checking on the internet, we find the purchase of promotion service is not necessarily with right certificate, and that could also be proved by 360buy.com’s purchase of other’s domain name as its key word in online search), such as the search provider may demand the service purchaser provide the trademark certificate copy or conduct a domain name registration check. Therefore, once Baidu failed to go through these necessary procedures, it shall be judged to be liability for infringement. Moreover, for those key works complained of by others and have been proved illegal, when Baidu does not prevent the reoccurrence of the infringement, the search engine shall also be deemed as failing in fulfilling its due care obligation.

Other recommended posts on our website:
1. The Actual Term of Trademark Registration in China
2. How to Apply for the Trademark Record in China Custom
3. How to improve the success rate of trademark registration in China?
4. Matters for Attention in Trademark Refusal Review in China
5. Introduction of China’s Legal System of Trademark Renewal
6. Introduction on the Regulations concerning the Capital Contribution in IPR or Domain Name in China
7. The Copyright Registration in China Could Be FREE?
8. China Copyright Protection Term Longer than EU’s?
9. Matters for Attention in the Patent Preliminary Injunction Application in China(I)

Lawyer Contacts

You Yunting

86-21-52134918

youyunting@debund.com, yytbest@gmail.com

For further information, please contact the lawyer as listed above or through the methods in our CONTACTS.

Bridge IP Law Commentary’s posts, including the comments and opinions contained herein, shall not be construed as the legal advice on any issues related. The contents are for general information purposes only. Anyone willing to quote or refer the posts to any other publications or for any other purposes, no matter there’s benefits gained or not, shall first get the written consent from Bridge IP Law Commentary and used under the discretion of us. As to the application of the reprint permission for any of our posts, please email us to the above addresses. The publication of this post or transmission of it through mail, internet or other methods does not constitute an attorney-client relationship. The views set forth here are of due diligence, neutrality and impartiality, representing our own opinions only and are our original works.

Short Link: