New SPC Guiding Opinion on E-Commerce and IP

On September 12, 2020, the Supreme People’s Court issued its new “Guiding Opinion on the Trial of Civil Cases of Intellectual Property Rights Involving E-Commerce Platforms”  关于审理涉电子商务平台知识产权民事案件的指导意见 (the “Guiding Opinion”).

This Guiding Opinion explicitly references China’s E-Commerce law.  A translation is available here. I previously discussed the drafting of that law here.  As best I can tell this document was not anticipated in the SPC’s JI drafting agenda of earlier this year.    That is likely because strictly speaking a “Guiding Opinion” is not a judicial interpretation.  As one observer has noted: “These notices and opinions encourage judges to make decisions, or local courts to explore new mechanisms based on their attitudes. The SPC will sometimes formulate official judicial interpretation based on the judicial practice after these documents are published.”

The Guiding Opinion should further help implement obligations set forth in Section 1 (E) of the Phase 1 Trade Agreement regarding “Piracy and Counterfeiting on E-Commerce Platforms”, although It is not a specifically enumerated “deliverable” in that Agreement.  The Phase 1 Agreement does include a number of specific reforms that the US and China agreed to, including “extend to 20 working days the deadline for right holders to file a judicial or administrative complaint after receipt of a counter-notification”; “ensure validity of takedown notices and counter-notifications, by requiring relevant information for notices and counter-notifications and penalizing notices and counter-notifications submitted in bad faith” and  that “China shall provide that e-commerce platforms may have their operating licenses revoked for repeated failures to curb the sale of counterfeit or pirated goods.”  These reforms may be reflected in other legislative or judicial acts.

In the absence of a complete translation, I offer here one provision regarding implied knowledge of infringement by an e-commerce platform in the Guiding Opinion ,which is likely intended to help implement Arts. 38, 41, 42 and 45 of the E-Commerce law:

“电子商务平台经营者存在下列情形之一的,人民法院可以认定其“应当知道”侵权行为的存在:

  (一)未履行制定知识产权保护规则、审核平台内经营者经营资质等法定义务;

  (二)未审核平台内店铺类型标注为“旗舰店”“品牌店”等字样的经营者的权利证明;

  (三)未采取有效技术手段,过滤和拦截包含“高仿”“假货”等字样的侵权商品链接、被投诉成立后再次上架的侵权商品链接;

  (四)其他未履行合理审查和注意义务的情形”

“The People’s Court may determine that an e-commerce platform operator ‘should be aware of’ the existence of infringement under the following circumstances:

1) Failure to perform legal obligations such as formulating intellectual property protection rules and reviewing the operating qualifications of operators on the platform;

(2) Where there is no review of the proof of rights of operators whose store types on the platform are marked as “flagship store”, “brand store”, etc.;

 (3) Failing to adopt effective technical means to filter and block infringing product links containing the words “high imitation” and “fake goods”, and links to infringing products that are re-listed after the complaint is established; and

(4) Other circumstances where reasonable review and care obligations are not performed.”

What constitutes “effective technical mean to filter and block” or  “reasonable review and care” are key issues in the Guiding Opinion and for the future.  This Guiding Opinion offers some concrete examples. As technology evolves in such areas as machine learning and recognizing of fake products and fake product purveyors, the concepts of “effective” and “reasonable” may necessarily evolve.  These changes in technology could impose greater technical and financial obligations on e-commerce platform operators. As I recall, the evolving nature of these technologies was discussed about a decade ago by the late Prof. Guo Shoukang and hosted by AmCham on e-commerce liability, and it remains true today. 

Terms such as “effective” and “reasonable” in the Guiding Opinion offer an opportunity for the courts to flexibly address newly emerging challenges as they arise.  These general concepts are also in synch with a trend towards greater flexibility by the Chinese courts in addressing emerging legal and technical challenges in China.  As with the definitions of “bad faith” which are also described in the Guiding Opinion Arts. 6, 8 and 10 for platform business operators  and rights holders providing notifications and counter-notifications of infringement, the concept of “implied knowledge” is part of a broader effort to incorporate “good faith” -type obligations into Chinese IP and civil law generally. 

Please send in any corrections or comments.

E-Commerce Law Up for Public Comment

The National People’s Congress announced this week that it has released a draft of the E-Commerce Law for public comment.  The public comment period began December 27, 2016 with comments due by January 26, 2016.  Although focused on the overall development and regulation of e-commerce, the draft also contains provisions regarding IP protection by platforms and their responsibilities, in order to preserve market order and fair competition 市场秩序与公平竞争.  The draft in Chinese is attached here, with relevant provisions and machine translations below.  I hope to provide more detailed comments later – I am particularly interested in how this draft relates to provisions in the tort law, IP laws and civil laws regarding online liability, as well as how enforcement authority over infringements for online operators will be amended and divided up amongst the various IP agencies if this draft is implemented into law.

Article 53 provides:

第五十三条   电子商务经营主体应当依法保护知识产权,建立知识产权保护规则。电子商务第三方平台明知平台内电子商务经营者侵犯知识产权的,应当依法采取删除、屏蔽、断开链接、终止交易和服务等必要措施。         

Article 53 The electronic commerce business principal operator shall protect intellectual property rights in accordance with the law and establish rules for the protection of intellectual property rights. If the e-commerce operator infringes the intellectual property rights within the platform, it shall take the necessary measures such as deleting, shielding, breaking the link, terminating the transaction and service according to law.

Article 54 provides:

第五十四条   电子商务第三方平台接到知识产权权利人发出的平台内经营者实施知识产权侵权行为通知的,应当及时将该通知转送平台内经营者,并依法采取必要措施。知识产权权利人因通知错误给平台内经营者造成损失的,依法承担民事责任。   

平台内经营者接到转送的通知后,向电子商务第三方平台提交声明保证不存在侵权行为的,电子商务第三方平台应当及时终止所采取的措施,将该经营者的声明转送发出通知的知识产权权利人,并告知该权利人可以向有关行政部门投诉或者向人民法院起诉。   

电子商务第三方平台应当及时公示收到的通知、声明及处理结果.

Article 54 Where a third-party platform for e-commerce receives a notice from a platform operator of intellectual property rights issued by the owner of the platform for intellectual property infringement, it shall promptly transmit the notice to the operators within the platform and take the necessary measures according to law. If the intellectual property right owner causes any loss to the operator of the platform due to the wrong notification, he shall bear civil liability according to law.
If the platform operator submits a declaration to the e-commerce third-party platform to ensure that there is no infringement, the third-party platform shall promptly terminate the measures taken and forward the statement of the operator to the notification Property rights, and inform the right person to the relevant administrative departments of complaints or to the people ‘s court.
E-commerce third-party platform shall promptly publicize the received notice, statement and processing results.

Article 88 provides:

第八十八条   电子商务第三方平台违反本法第五十三条的规定,明知平台内经营者实施侵犯知识产权行为未采取必要措施的,由各级人民政府有关部门责令限期改正;逾期不改正的,责令停业整顿,并处以三万元以上十万元以下的罚款;情节严重的,吊销营业执照,并处以十万元以上五十万元以下的罚款。         

Article 88 If a third-party platform for e-commerce violates the provisions of Article 53 of this Law and knows that the operator of the platform does not take the necessary measures for infringement of intellectual property rights, the relevant departments of the people’s governments at various levels shall order it to make corrections within a prescribed time limit; If the circumstances are serious, the business license shall be revoked and a fine of not less than 100,000 yuan but not more than 500,000 yuan shall be imposed.