The PRC Supreme People’s Court recently announced the top 10 IP cases in 2011. Of these 10 cases, four cases which involve trade mark infringement, copyright infringement and unfair competition seem to demonstrate a more “open” attitude in protecting IPR owners or balancing the rights of the parties. Nonetheless, these cases have their own specific circumstances which may explain the court’s decisions or approach. This article would briefly discuss these four cases.
The first case involves trade mark infringement. In E-land International Fashion (Shanghai) Co (“E-Land”) v. Zhejiang Taobao Network Co., Ltd. (“Taobao”) and Du Guofa, E-Land owned the exclusive rights to use the registered trade marks and in respect of clothing products. Du Guofa, an individual, sold clothing through Taobao, which is a website similar to eBay and is one of the biggest Chinese online B2B and B2C platform providers. The clothing sold by Du Guofa featured the registered marks over which E-Land had exclusive rights. From 29 September 2009 to 11 November 2009, E-Land filed seven complaints with Taobao regarding Du Guofa’s infringement of E-Land’s trade mark rights. On each occasion, Taobao deleted the infringing links. However, Taobao did not, as requested by E-Land, take any measures to prevent the infringement. The main issue before the court was whether Taobao was liable for the infringement of Du Guofa.
The Court first acknowledged that internet service providers are not liable for infringements by users of their service because, generally, they cannot foresee and prevent the infringement. However, the Court held that the internet service provider will be jointly liable for the infringement if, despite the fact that it knows or should know that its users make use of its service to commit infringement, it continues to provide internet services to the user or does not take the appropriate measures to prevent the infringement. Taobao was found to be jointly liable for the infringement. The court took into consideration a number of factors such as:
- Since 2006, E-Land had filed with Taobao a large number of takedown complaints: E-Land filed 131,261 complaints and 117,861 infringing links were deleted during September to November 2009. It filed 153,277 complaints and 124,742 links were deleted from 23 February 2010 to 12 April 2010. The number of complaints and the number of deletions showed that Taobao was aware of the high incidence of infringement and also knew that merely deleting the infringing materials was not an effective way of dealing with the long term infringement of E-Land’s trade mark rights. Taobao must have examined the content of the infringing links before deleting them and Taobao must know what E-Land had been complaining about throughout the years;
- Du Guofa stated on his Taobao online store that some of his goods were high quality counterfeits;
- Taobao deleted the information of Du Guofa’s products several times and informed Du Guofa about the reason of the deletion and Du Guofa did not object to the deletion.
Where counterfeits are sold at online shopping websites, one of the most common tactics to deal with the infringement is to ask the relevant internet service providers to take down the infringing materials. However, even if the internet service providers remove the infringing materials, it does not mean that the infringement will stop, not even infringement by the same infringer. As a result of this case IPR owners who are the victims of this kind of incessant infringement, may also try to have redress against the internet service providers, even if the internet service providers have been “helpful” in removing the infringing contents.
The second case involves trade mark infringement and unfair competition. In Société Civile de Chateau Lafite Rothschild (“Lafite”) v. Shenzhen Jinhongde Trade Co. Ltd (“Jinghongde”) and Health Industry Development Co. Ltd. under Hunan Biological & Pharmaceutical Group (“HID”), Lafite was the owner of the two trade marks in class 33, namely “LAFITE” under registration no.1122916 in respect of “alcoholic beverages, except beer” and under registration no. G764270 in respect of “wines of guaranteed label of origin”. Jinhongde used on its wine products and on its website and brochures the marks “Lafite Family”, “拉菲世族” (LA FEI SHI ZU)(the first two Chinese characters “拉菲” (LA FEI) are transliteration of “Lafite” and the last two Chinese characters “世族” means “family”) and . Jinhongde adopted the history of Lafite when introducing its own history. HID sold the alleged infringing products produced by Jinhongde. The court of second instance upheld the ruling that there was infringement of the registered trade marks of Lafite and that Jinhongde’s use of the Chinese characters “拉菲世族” (LA FEI SHI ZU) on its wine products amounted to unfair competition because “拉菲” (LA FEI) should be recognised as the unique name of the famous wine products of Lafite. Therefore, Jinhongde and HID were also held liable for unfair competition for their fraudulent marketing activities.
In the PRC, a name (despite not being registered as a trade mark) can be protected under the Anti-Unfair Competition Law if it is the unique name of a well-known product/service in the PRC. In the above case, the Chinese name “拉菲” (LA FEI) is not registered as a trade mark in the PRC. The court held that the wine produced by Lafite had a high level of reputation in the wine market of the PRC and the Chinese name “拉菲” (LA FEI) is the unique name of the well-known wine product of Lafite and hence, the Chinese name “拉菲” (LA FEI) should be protected under the Anti-Unfair Competition Law.
In order to be able to rely on the Anti-Unfair Competition Law to protect an unregistered trade mark, it is essential to prove that the product/service is well-known in the PRC and it usually requires evidence of the production, sales or other business activities in the PRC. In this case, the court has taken into consideration of the international reputation of the wine of Lafite in determining its reputation in the PRC. But, it should be noted that the wine of Lafite has been sold in the PRC and the Chinese name “拉菲” (LA FEI) has been used to identify the wine in the PRC. So, for products that are not offered, sold or promoted in the PRC at all, it is unlikely that such products would be recognized as well-known in the PRC.
The third case involves unfair competition. In Beijing Kaixinren Information Technology Co. Ltd. (“KXR”) v. Beijing Qianxiang Hulian Technology Development Co. Ltd (“QXHL”) and Beijing Qianxiang Wangjing Technology Development Co., Ltd (“QXWJ”), KXR owned the trade mark “开心” (Kai Xin)(meaning “happy”) which is registered in Class 42 for services such as rental of computer, chaperoning and marriage agencies etc. In March 2008, KXR started to operate a website called “开心网” (KAI XIN NET) (meaning “happy net”) at www.kaixin001.com for the provision of social networking services. The website gained popularity in a short period of time. In October 2008, QXHL and QXWJ launched a website also called “开心网” at www.kaixin.com for the provision social internet services. The domain name was acquired through assignment. The court held that the services of QXHL and QXWJ provided through their website were not similar to the services covered by KXR’s registered mark and thus QXHL and QXWJ were not liable for trade mark infringement. However, since “开心网” had become a unique name of KXR’s well-known services, QXHL’s and QXWJ’s use of the same name in connection with similar services amounted to unfair competition.
In the PRC, a name (despite not being registered as a trade mark) can be protected under the Anti-Unfair Competition Law if it is the unique name of a well-known product/service in the PRC. In this case, the social networking service provided via the website of KXR was recognised as a well-known service and the name of the website was the most important way for internet users to identify the website. Hence, the name of the website was a unique name for a well-known service and was protected under the Anti-Unfair Competition Law.
This case is being regarded as “the first social network sites competition case”. It is recognized that a social network site which has a significant level of reputation can be recognized as a well-known service and the name of the site can be protected as the unique name of a well-known service under the Anti-Unfair Competition Law. It should also be noted that the website of KXR was recognized as well-known although it had only been operated for more than 6 months before QXHL and QXWJ operated their website. While the parties involved in this case are all PRC entities, it would be less certain if the court is willing to recognize a website operated for such a short period time by a foreign entity as a well-known site.
The fourth case is a copyright infringement case. Universal, Warner and Sony filed a court action against Baidu, a Chinese search engine similar to Google or Yahoo, for infringing their copyright in the sound recordings of 128 songs by allowing users to listen and download the songs via the search box and billboard etc. available under Baidu’s MP3 service. The court of first instance held that even if Baidu had exercised the level of attention that it was capable of, it would be difficult for it to know if the information involved in its service was infringing any third party’s rights. The court therefore ruled that Baidu was not liable for copyright infringement. Universal, Warner and Sony appealed. Hearings were held and the facts of the case were ascertained. With the assistance of the mediation centre of the Internet Society of China, the court helped the parties enter into settlement arrangement and an agreement was made under which Baidu pays royalties for making available to internet users the songs of Universal, Warner and Sony.
The case is not conclusive as to whether Baidu’s acts amounted to copyright infringement, but the results have in a way protected the interests of the copyright owners. This case also demonstrates the PRC courts’ effort in implementing the principles of mediation first and of combining mediation and adjudication.