China’s Existing Framework for Platform Liability
Like most countries, Chinese law provides a “Notice and Take-Down” process for intellectual property right holders to request the removal of infringing content from websites and online platforms. The mechanism was first introduced in State Council’s Regulations on the Protection of Information Network Dissemination Rights (the “2006 Regulations”). Under the 2006 Regulations, network service providers must promptly remove or disconnect links to content suspected of infringement upon receiving notices from IP owners, and must reinstate the removed content upon receiving counter-notices from content uploaders. Only prima facie evidence is needed to support notices and counter-notices. Once a counter-notice has been provided, IP owners are not permitted to again request the network service providers to take down the content. Given that the evidence threshold in either case is incredibly low, with platforms not required to conduct any substantive or critical examination of the evidence, the process can and is readily abused by both complainants and respondents, rendering the process’ utility questionable at best.
In 2009, platform liability for IP infringements was first codified into a national law via the Tort Liability Law (“TLL”). Under the TLL, if a network service provider fails to take necessary measures upon receiving notices or being aware of the infringement, it bears joint and several liability for the expanded portion of any damages caused by the online seller’s continuous infringement activity due to the platform’s inaction.
Since then, however, many of the amendments or refinements to law and regulations in this area have tended to encourage platforms to permit reposting of suspected infringing content under certain circumstances. For example, the E-Commerce Law (the “ECL”) requires platforms to reinstate alleged-infringing content unless the IP owner files an administrative complaint or a civil action within 15 working days of receipt of the counter-notice. Similarly, the Civil Code stipulates that if an IP owner submits an erroneous notice and causes damage to either the online seller or the platform, it is liable for such harm. As well, and although the ECL sets out penalties – monetary and otherwise – that may be imposed by local Market Supervision Bureaux (“MSBs”) where a platform fails to take necessary measures against IP infringements, there is no evidence that such penalties have been widely imposed in practice. As a result, and where platforms refuse to remove or reinstate infringing listings, IP owners are forced to resort to civil actions to obtain takedowns, injunctions and compensation.
This has left the refinement of principles for platform liability for IP infringements essentially entirely to higher-level Chinese courts. For example, the Zhejiang Province Higher People’s Court No. 3 Tribunal (the highest court in Zhejiang province, where many larger e-commerce platforms are based), published its own “Guidance on the Determination of IP Trials Involving Online Trade Platforms” in December 2019 (the “Zhejiang Guidance”). Among other things, the Zhejiang Guidance sets out the standards of care for platforms in accepting, forwarding, and reviewing notices and counter-notices. The Zhejiang Guidance also presents an array of factors for courts to consider in determining a platform’s potential liability.
Subsequently, in response to lower courts’ requests for instructions, the Supreme People’s Court (the “SPC”) released two pertinent judicial opinions in September 2020: the “Guiding Opinions of the Supreme People’s Court Regarding the Trial of Civil Cases Involving IP Rights on E-Commerce Platforms” (the “Guiding Opinions”), and the “Supreme People’s Court’s Reply on Several Issues Concerning the Application of Law in Disputes Involving Internet Intellectual Property Infringement”. Most of the provisions related to platform liability in IP infringement cases in these two opinions align with the existing laws. In the Guiding Opinions, the SPC also provides a list of factors for lower courts to consider when assessing whether the platform’s actions meet the standard of sufficiency of “necessary measures” in light of the facts: preliminary evidence of infringement provided by a complainant; the likelihood that infringement will be established; the scope of the infringement; the specific circumstances of the infringement, including the presence of “bad faith” from the vendor’s listing(s) (including a history of repeat infringement); the effectiveness of the platform’s actions to limit or minimise harm; the potential impact on the vendor’s interests; the type of service and technical limitations of the e-commerce platform, etc.
Recent Legal Developments on Platform Liability for IP Infringement
Recently, draft amendments related to platform obligations for IP infringements were proposed for China’s Anti-Unfair Competition Law (the “AUCL”). Amongst other proposed changes, the draft provisions would require platforms to expressly clarify their own unfair competition rules and to take “timely and necessary measures” against acts of unfair competition occurring on their platforms. The draft amendments do not outline any civil remedies or administrative sanctions if platforms were to breach these obligations, however, leaving the potential utility of these new “requirements” unclear.
Public consultation on the draft amendments closed in January 2025, so it will be some time before it is known if the proposed changes will be enacted, or if the absence of enforcement mechanisms will be remedied in the amended law or any accompanying regulations.
Potentially in concert with the draft amendments to the AUCL discussed above, the State Administration for Market Regulation (“SAMR”) also recently issued “Interim Provisions on Anti-Unfair Competition on the Internet” (the “Interim Provisions”). Notably, the Interim Provisions impose heavier responsibilities on the platform operators to effectively regulate unfair competition behaviour.
Finally, SAMR has also crafted the “Self-disciplinary Convention for E-Commerce Platform Operators to Improve the Level of Intellectual Property Protection” (the “Convention”), which seeks platforms’ voluntary commitment to bolstering their ability to prevent IP infringements and more effectively handle IP related disputes. 81Chinese platforms have already signed up to the Convention, and according to official media reports, SAMR has made clear it expects e-commerce platforms to adhere to their commitments. This includes by further refining platform rules, more clearly delineating work processes, and taking more practical and effective measures to protect IP.
Representative Judicial Decisions Holding Platforms Jointly Liable for IP Infringement
Platforms can generally avoid any significant civil liability by simply immediately deleting infringing listings upon issuance of a civil suit against them and the vendor by the IP rights owner. This necessarily limits both the scale of damages awarded against them by trial courts, as well as the number of appeals/retrials of decisions against platforms held jointly liable for significant damages. The handful of cases discussed below, however, provide insight into courts’ views on what amounts to a platform’s failure to timely take “necessary measures” to halt infringements upon notice from IP owners.
Jiangsu Huateng Personal Care Products Co., Ltd. v Yiwu Deliang House Appliance Products Co., Ltd. and Zhejiang Tmall Network Co., Ltd. ((2021) Yue 1971 Min Chu No. 10140)
Summary: In 2021, the Dongguan First People’s Court found Zhejiang Tmall Network Co., Ltd (“Tmall”) jointly liable for increased damages due to its failure to implement necessary measures after the IP owner submitted three complaints. Tmall had rejected the IP owner’s complaints on three separate occasions, raising spurious requests for additional evidence despite the IP owner having submitted all the information the platform continued requesting in its initial complaint.
In the civil suit, Tmall argued its rejections were valid and that the IP owner had also failed to submit images of the genuine product.
The Court ruled that Tmall’s rejections of the complaints were baseless, where the information noted in each of the rejections had already been provided in the IP owner’s initial complaint. As well, Tmall had never requested an image of the genuine product in any of its rejections.
Importantly, the Court noted that a platform’s duty of care does not necessarily require it to immediately delete content and block links to a listing upon receipt of a complaint, and it can be justified to ask a complainant to provide additional information where the initial complaint does not constitute prima facie evidence of infringement. That said, a platform may not impose unreasonable conditions or hurdles on IP owners when addressing complaints.
The Court found Tmall jointly liable for all continuing infringements arising after the plaintiff’s three complaints, ordering it liable for one-third of the total damages to be paid by the infringer.
Beijing Beihe Sunshine Technology Co., Ltd. v Shanghai Pudong New District Huinan Town Chen X Food Store, Zhou X, and Company B ((2021) Hu 0115 Min Chu No. 76438)
Summary: In 2021, the Pudong New District People’s Court found a platform (in this instance, Taobao) jointly liable for increased damages caused by the infringers’ continuous infringement. The platform had rejected the plaintiff’s complaint, deciding unilaterally that there had been no infringement, declining not only to takedown the listing but even to forward the complaint to the vendor. A key aspect of the platform’s decision was its conclusion that the plaintiff’s trademark functioned not as a trademark, but instead, as a generic product name.
In rejecting this argument, the Court held the platform’s conclusion was clearly inconsistent with the factual evidence submitted by the plaintiff. As well, the platform had no evidence to support its unilateral conclusion that the trademark had become genericised. Considering the complex nature of such an analysis, the platform should not have hastily arrived at this conclusion.
The Court also clarified that, while a platform was not required to immediately delete, block, or disconnect the links in such a case, the platform should at the very least fulfil its basic legal obligation to forward the complaints to the vendor, only deciding what to do thereafter. In any event, the platform is not a court, and should not unilaterally decide complex IP complaints. Such conduct contravenes established mechanisms for resolving IP disputes, exceeds a platform’s capabilities and responsibilities, compromises its neutrality as a platform, and breaches its basic legal obligations.
The Court found the platform jointly liable for one-third of the total amount of the plaintiff’s economic losses.
Beijing IP Court: Bejjing Xiaochang Technology Co., Ltd. v Xingyin Information Technology (Shanghai) Co., Ltd. ((2023) Jing 73 Min Zhong 742); and
Beijing Internet Court: Beijing Weibo Shijie Technology Co., Ltd. (later name changed to Beijing Douyin Technology Co., Ltd.) v Xingyin Information Technology (Shanghai) Co., Ltd. ((2021) Jing 0491 Min Chu 26711)
Summary: In both cases, involving copyright infringement and with the platform RedNote as sole defendant, the Beijing IP Court and the Beijing Internet Court held RedNote liable for unjustifiable delays in implementing necessary measures to halt the infringement. In the Beijing Internet Court case, the platform waited two full months to delete the infringing content after initial notice to it. In the Beijing IP Court case, the platform had not only failed to act after the plaintiff’s multiple complaints; it did not even act after the court had formally docketed the case and serve it with the plaintiff’s pleadings and evidence. In the end, the listing was only deleted a mere day before the Court’s second hearing.
Best Practices
As can be seen above, platforms in China can quite readily avoid any significant liability for IP infringements on their websites. That is even the case when they act unreasonably or drag their feet in removing links until well after they are actually sued for joint liability for IP infringement. That said, recent developments in relevant regulations and policies on these issues, as well as lessons learned from the cases discussed herein provide pointers to increase the likelihood Chinese platforms will act favourably and swiftly in response to IP owners’ complaints of infringement.
Support Proactive Anti-Counterfeiting Activities of Platforms
Over the past few years, several Chinese platforms have visibly increased support for IP owners in enforcing their rights and addressing online infringements. For example, Amazon China has devoted greater resources to proactive investigation and enforcement of potential counterfeits being sold on their sites, up to and including referrals of suspected criminal cases to police departments. This is directly contrary to the reputation of many Chinese platforms deliberately turning blind eyes to IP infringements to provide cover for their vendors.
To take maximum advantage of platforms’ proactive anti-counterfeiting work, IP owners should strongly consider reaching out to the platforms to offer support for that work, and responding favourably to any requests for such support. This should necessarily include responding quickly and affirmatively to sightings of fakes, but could also include, for example, offers to provide detailed surveys of potential infringing listings on the platform.
Sue Non-Cooperating Platforms as Co-defendants
IP owners regularly express reservations about naming uncooperative platforms as co-defendants in lawsuits, particularly where they are also listing their own products on those platforms, fearing commercial retaliation. In our experience, however, such fears are largely overblown or even non-existent. This is primarily because suing platforms normally results in little to no actual liability to them, and to the contrary, actually provides them cover in respect of the infringing vendors, where they can clearly argue to the vendors that they have no choice but to comply with the plaintiff’s request now that a civil suit has been filed.
File Multiple Notices and Respond in Detail to Counter-notices
As shown in the cases above, the number of notices submitted to a platform can often play a pivotal role in lawsuits against platforms, especially where establishing infringement is not a clear-cut issue. It is recommended that IP owners be persistent, continuing to file takedown requests in cases where platforms act slowly or unreasonably in response to such requests. They should also respond quickly and in detail to any enquiries and further document requests raised by platforms, keeping good records of all communications in a form that can readily be notarised to meet relevant evidentiary standards.
It is particularly important to respond in detail to counter-notices filed by infringers to challenge takedown requests, where evidence provided by them may be difficult for a platform to identify as fake or irrelevant in the absence of the IP owner’s expertise.
Where the IP owner cannot definitively prove the goods are fake (particularly after sample purchases do not definitively prove they are counterfeit), it is wisest to proactively withdraw the complaints. This not only mitigates risks of the IP owner’s potential liability to vendors and platforms for loss of profits due to the take-down measures initiated by IP owners; it could also help to foster the IP owner’s relationship with the platforms’ enforcement teams.
Cooperation with Other Victim Brands
Lastly, and as is true in respect of any counterfeiting cases in China, seeking opportunities for cooperation with other victim brands that are similarly impacted on a given platform can help to more quickly identify repeat offenders and persuade uncooperative platforms to respond more readily and proactively to infringements on their platform. Armed with such data and complaints from multiple brands, trade platforms are more likely to terminate the trading accounts of infringing vendors. In our experience, victim brands can generate significant return-on-investment by sharing costs of monitoring/investigating larger online infringers. As well, filing joint complaints can also maximise odds of success in “Notice and Take-Down” requests and other enforcement actions tied to online platforms.
