Articles

(Part2) Litigation Manual for intellectual property cases involving an E-commerce platform (Part 2)
05.10.2020

  1. Liability of the E-commerce platform
  2. E-commerce platform operator is liable for infringement of intellectual property committed by any person who conducts business on his platform. The subjective elements include knowledge or constructive knowledge.
  3. If the E-commerce platform operator knows or ought to know of the infringement behaviours on the platform and does not make timely necessary measures, despite the failure of the right owner to issue notice, the platform operator and the direct infringer shall be joint and severally liable for the damage caused.

If the E-commerce platform operator knows or ought to know of the infringement behaviours on the platform and makes timely necessary measures, he shall be joint and severally liable only for the damage caused before the necessary measures are enforced.

If the E-commerce platform operator knows or ought to know of the infringement behaviours on the platform and does not make necessary measures before and after the receipt of notice issued by the intellectual property right owner, he shall be joint and severally liable for all damage of the right owner.

If the E-commerce platform operator does not know or ought not to know of the infringement behaviours on the platform and does not make necessary measures after the receipt of notice issued by the intellectual property right owner, he shall be joint and severally liable for the aggravation of the damage of the right owner.

  1. The People’s Court shall consider both the category of intellectual property right and the circumstances of the case when determining whether the E-commerce platform operator has breached his duty. The fact that the operator has to conduct prior surveillance on the legality of transactional information in accordance to the relevant management regulations, or he is merely aware of the possibility of intellectual property infringement on the platform is not determinative of the issue whether he knows or ought to know of the existence of the specific infringement behaviours.
  2. “Know” refers to the subjective state of mind of the platform operator being actually aware of the existence of the infringement behavior.

The E-commerce platform operator’s receipt of a valid notice issued by the right owner shall be taken as the knowledge of the existence of the infringement behavior. However, the People’s Court shall not rule that the operator subjectively does not know of the infringement behaviours merely on the basis that the right owner has not issued a notice or that the notice is invalid. The receipt of notice from an administrative department, a complaint from a consumer etc. can be used to prove his knowledge of the existence of the infringement behaviour.

  1. “Ought to know” refers to the subjective state of mind of the E-commerce platform operator being unaware of the infringement behaviours but ought to or able to be aware of the same.

When determining whether the operator ought to know, the People’s Court shall give greater weight on his duty of reasonable care on the protection on others’ intellectual property right. If the operator does not or neglects to perform his duty of reasonable care within his foreseeable ability and scope, it shall be taken as being ought to know.

  1. The duty of reasonable care on protection of intellectual property on the part of the E-commerce platform operator shall not include general duty of prior surveillance. However, the People’s Court may rule that an operator does not fulfil his duty of reasonable care in the following situations:

(1) Has not performed the legal duty to establish an intellectual property protection regulation, to verify the information of the registered operator and other duties viz-a-viz intellectual property protection.

(2) The brand’s franchisee in “flagship store” and “franchise store” has not submitted the trademark registration certificate or other relevant authorisation;

(3) Had not enforced ordinary surveillance strategy on infringement before the act of infringement occurred, for example, failure to filter links that are marked as “counterfeit” or “highly-imitated” and failure to block links that are considered as infringement.

  1. E-commerce platform operator shall bear a greater duty of reasonable care if the platform uses the means of establishing best sellers list, recommendation of celebrity’s products etc for artificial promotion of products or services.

The operator’s display of the ranking of sale and personalised recommendation by way of reasonable automatic technology generally does not lead to a stricter duty of reasonable care. However, the operator shall bear the burden of proof for the fact and the legality of his use of automatic technology.

Benny Kong & Tsai © 2020
 

Benny Kong & Tsai, Solicitors

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