On 10 September 2020, the Supreme People’s Court issued the Guiding Opinions on the Trial of Civil Cases Involving Intellectual Property Rights on E-commerce Platforms (the “Opinions”). The Opinions marked the first time that the Supreme People’s Court issued guiding opinions specifically on the protection of intellectual property rights in e-commerce, covering the basic principles, general provisions, the rules and governance measures for the protection of intellectual property rights of e-commerce platforms, the legal responsibilities of e-commerce platforms operators, etc. The key points are highlighted below:
The Opinions state that e-commerce platform operators or business operators on those platforms shall be determined in accordance with the Electronic Commerce Law of the People’s Republic of China (the “E-Commerce Law”). Pursuant to the E-commerce Law, e-commerce operators refer to natural, legal or unincorporated persons engaging in the business of selling goods or providing services through the Internet and other information networks, including e-commerce platform operators, operators of other platforms and other operators engaged in selling goods or providing services electronically through their own websites or other network services. The People’s Court may determine whether the conduct of an e-commerce platform operator may be regarded as developing its own trade by generally considering the “self operation” information on the pages on which products are sold, information about the seller on the physical product information or receipts such as invoices, and other factors.
The Opinions stipulate that if the an e-commerce platform operator knows or is supposed to know that an operator on the platform has infringed intellectual property rights, the platform operator is required to take the necessary measures under the principle of reasonableness and prudence, including but not limited to take the goods off the shelves such as the deletion, blockage, disconnection of links and other measures. If an operator on the platform repeatedly and intentionally infringes intellectual property rights, the e-commerce platform operator has the right to terminate transactions and services. The Opinions also clearly stipulate that in emergencies, intellectual property rights holders may apply to the people’s court for preservation measures in accordance with the Civil Procedure Law of the People’s Republic of China if the e-commerce platform operator fails to remove the goods from market circulation in a timely manner to the extent that irreparable damage to the interest of the intellectual property rights holders will result.
The Opinions specify the specific consideration factors in determining bad faith as set forth in Article 42, Paragraph 3 of the E-Commerce Law, including the submission of forged or altered rights certifications, false comparative infringement opinions or expert opinions; issuance of notices despite uncertainty in the rights involved; failure to withdraw or correct notices that are known to be erroneous; and repeated submission of erroneous notices.
In addition, the Opinions clarify the four circumstances in which the People’s Court may find that the e-commerce platform operator “should have been aware” of the infringement, specifically: (1) failure to perform legal obligations to formulate rules for the protection of intellectual property rights and to review the business qualifications of the operators on the platform; (2) failure to review the rights certifications of operators running “flagship stores” and “brand name stores” on the platform; (3) failure to adopt effective technical means to filter and intercept links to infringing goods containing wording such as “high-quality counterfeits” or “fake goods”, or links that reappeared even after a complaint has been successfully lodged against the underlying infringing goods; and (4) other circumstances of failing to perform the duty of reasonable review and care.