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Liability for an Online Marketplace Provider’s Trademark Infringement – Practice and Latest Development of Chinese Law

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Abstract

It is increasingly common to find online shopping marketplaces selling forged or counterfeit products in China. One of the biggest, Taobao, has been involved in a series of cases in which the IPR owners required the company to accept joint liability with the sellers for counterfeiting. This paper reviews those cases and explores the latest developments in China’s judicial rulings concerning the liability of online marketplaces. In light of the recent court decision against Taobao, it is expected that online marketplaces will bear more responsibility for combating online counterfeits. The latest Chinese stance, which lies between the US approach and the EU approach, constitutes a significant development in fighting counterfeiting and will, in the long run, benefit the development of e-commerce in China.

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Notes

  1. Forecast – global B2C e-commerce sales 2010–2013. http://www.statista.com/statistics/222128/global-e-commerce-sales-volume-forecast/ (Accessed 28 Oct 2012).

  2. China Internet Network Information Center, Report on online shopping in China in 2011, the Chinese version is available at http://www.cnnic.cn/hlwfzyj/hlwxzbg/dzswbg/201208/P020120827473850053431.pdf (Accessed 28 Oct 2012).

  3. Taobao Marketplace (Tao Bao Wang) is a Chinese-language website for online shopping, similar to eBay and Amazon, operated in the People’s Republic of China by Alibaba Group. Mangalindan (2005).

  4. Indvik (2012).

  5. Alibaba Group was founded in 1999 by Jack Ma to make it easy for anyone to buy or sell online anywhere in the world. It is a family of Internet-based businesses that include online marketplaces that facilitate business-to-business international and domestic Chinese trade, retail and payment platforms, shopping search engines and distributed cloud computing services. In July 2012, Alibaba Group adjusted its core business into seven business groups, namely Alibaba International Business Operations, Alibaba Small Business Operations, Taobao Marketplace, Tmall.com, Juhuasuan, eTao and Alibaba Cloud Computing, to foster the development of an open, collaborative and prosperous e-commerce ecosystem. Currently, the privately held Alibaba Group reaches Internet users in more than 240 countries and regions. Alibaba Group, including its affiliated entities, employs more than 24,000 people in some 70 cities in Greater China, India, Japan, Korea, the United Kingdom and the United States. For more details please refer to the official website of Alibaba Group at http://news.alibaba.com/specials/aboutalibaba/aligroup/index.html (Accessed 31 Oct 2012).

  6. Stanford Graduate School of Business, “Taobao vs. Ebay China”. https://gsbapps.stanford.edu/cases/documents/ib88.pdf (Accessed 1 Nov 2012).

  7. According to Alexa and DoubleClick Ad Planner by Google site rankings. http://news.alibaba.com/specials/aboutalibaba/aligroup/index.html (Accessed 31 Oct 2012).

  8. For more details of the history and business model of Taobao please refer to http://en.wikipedia.org/wiki/Taobao (Accessed 1 Nov 2012).

  9. http://en.wikipedia.org/wiki/Taobao (Accessed 1 Nov 2012).

  10. “Counterfeit Fashion Generates 15 Bln Euro Turnover in Italy”, ANSA – English Media Service, 17 November 2003.

  11. Tingting (2012 ).

  12. Section 4(c), User Agreement of Taobao. http://service.taobao.com/support/knowledge-1163515.htm (Accessed 1 Nov 2012).

  13. Bergman (2012).

  14. Intellectual Property Policy Infringement Claims Reporting System FAQ (updated on 16 Aug 2010). http://news.alibaba.com/article/detail/help/100453292-1-ipr-infringement-claims-reporting-system.html (Accessed 1 Nov 2012) and How to Submit an IPR Infringement Complaint. http://bbs.taobao.com/catalog/thread/154504-255142103.htm?spm=161.41329.208915.4 (Accessed 1 Nov 2012).

  15. USTR Announces Results of Special 301 Review of Notorious Markets. http://www.ustr.gov/about-us/press-office/press-releases/2011/December/ustr-announces-results-special-301-review-notorio (Accessed 1 Nov 2012).

  16. The Regulation on Internet Information Services of the People’s Republic of China, adopted at the 31st regular meeting of the State Council on 20 September 2000.

  17. Regulation, Sec. 15.

  18. Regulation, Sec. 16.

  19. Act on General Principles of the Civil Law of the People’s Republic of China, adopted at the Fourth Session of the Sixth National People’s Congress on 12 April 1986 and promulgated by Order No. 37 of the President of the People’s Republic of China on 12 April 1986, Sec. 118.

  20. Act on General Principles of the Civil Law, Sec. 130.

  21. Trade Mark Act of the People’s Republic of China, adopted on 23 August 1982 by the National People’s Congress, amended for the first time according to the Decision on Amending the Trade Mark Act of the People’s Republic of China of the 30th Session of the Standing Committee of the Seventh National People’s Congress on 22 February 1993, and amended for the second time according to the Decision on Amending the Trade Mark Act of the People’s Republic of China of the 24th Session of the Standing Committee of the Ninth National People’s Congress on 27 October 2001.

  22. Implementing Regulations of the Trade Mark Act of the People’s Republic of China, promulgated by the State Council on 3 August 2002, Sec. 50.

  23. The Regulation on Protection of the Right to Network Dissemination of Information, adopted by the State Council on 10 May 2006, which entered into force on 1 July 2006, Sec. 15.

  24. “Taobao sued for selling fakes”. Global Times, 22 July 2011. http://www.china.org.cn/business/2011-07/22/content_23046304.htm (Accessed 5 Nov 2012).

  25. Puma Aktiengesellschaft Rudolf Dassler Sport v. Zhejiang Taobao Network Co., Ltd. & a store owner Chen Yangrong, 2006 Shui Zhong Fa Ming San Chu Zi No.179, ruled by the Guangzhou Higher People’s Court on 8 October 2006.

  26. Fangna Garment Co., Ltd v. Zhejiang Taobao Network Co., Ltd. http://hubeigy.chinacourt.org/public/detail.php?id=21325 (Accessed 11 Nov 2012).

  27. According to the internal document, “Rules of Taobao.com Governing the Management of User Behaviors (non-mall)” adopted by Taobao on 15 September 2009, if a Taobao user committed any act of infringement, Taobao could prevent the accused vendor from releasing the goods, withdraw the disputed goods, make public announcements about the penalty, deduct points from the accused vendor, freeze the accused account on Taobao.com, cancel the account concerned, etc.

  28. Section 50(2) of the Trademark Implementing Rules.

  29. E-land International Fashion (Shanghai) Co (“E-Land”) v. Zhejiang Taobao Network Co., Ltd. and Du Guofa, Civil Judgement, 2011 Hu Yi Zhong Min Wu (Zhi) Zhong Zi No. 40.

  30. Communication Decency Act, 47 U.S.C. 230 (2006); Zeran v. Am. Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997).

  31. “The IP Guide to France”, Ip Rev. Online, 24 October 2006. http://www.cpaglobal.com/ip-review-online/l175/the-ip-guide-tofrance (Accessed 11 Nov 2012).

  32. For a detailed introduction to ISP liability in the EU (at the Community level), Germany, France, Italy, the United States, Japan, Korea, Australia, and New Zealand, please refer to Heath and Sanders (2012).

  33. This article is focused on joint liability of online marketplace providers. The cases referred to are therefore limited to those directly related to the liability of online shopping platform providers, such as Taobao and eBay. Cases such as the Google Books decision by the ECJ and more recent French case law discussing contributory and secondary liability for trademark infringement by service providers other than online marketplace providers are not taken into account.

  34. Louis Vuitton Malletier v. eBay Inc and eBay International AG, RG No. 2006077799, Paris District Court for Commercial Matters, 30 June 2008, 2010 European Trade Mark Report 10.

  35. Louis Vuitton Malletier v. eBay Inc and eBay International AG, RG No. 2006077799, Paris District Court for Commercial Matters, 30 June 2008, 2010 European Trade Mark Report 10.

  36. Hermes International v. Cindy Feitz, eBay France and eBay International AG, 4 June 2008, Troyes District Court, 4 June 2008, RG No. 06/02604.

  37. Christian Dior Couture SA v. eBay Inc., eBay International AG, 30 June 2008, Paris District Court for Commercial Matters, 30 June 2008, RG No. 2006077807, p. 17.

  38. Montres Rolex S.A. v. Ricardo.de AG, Case I ZR 304/01, 11 March 2004, 37 IIC 573 (2005). See discussion in Rosler, supra note 16, p. 784.

  39. Rolex v. Ricardo.de, German Federal Supreme Court, 30 April 2008, Case I ZR 73/05.

  40. Tiffany, 576 F. Supp.2d 508.

  41. Tiffany, 576 F. Supp.2d 508.

  42. L’Oreal SA v. eBay International AG, [2009] EWHC 1094 (Ch). For further comments see Lievens (2012).

  43. Judgment of 12 July 2011, Case C-324/09, L’Oréal SA and Others v. eBay International AG and Others (10 September 2011) OJ EC C 269, p. 3.

  44. L’Oréal SA and Others v. eBay International AG and Others, Case C-324/09. http://curia.europa.eu/juris/document/document.jsf?text=&docid=107261&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=168374 (Accessed 11 Nov 2012).

  45. Ziegler (2010); Ahmed (2009). Saunders and Berger-Walliser (2012) proposed a standard broadly based on that suggested in Tiffany as a means to harmonize the law of contributory trademark infringement across borders and within the realities of the business model of online intermediary markets.

  46. Leu (2011); Weckstrom (2012).

  47. Cheung and Pun (2009).

  48. Section 14 of the Ordinance on the Protection of the Right to Network Dissemination of Information stipulates that a notice should include: (1) Name, contact information and address of the owner; (2) The names of the infringed works, performances and audio-visual products that are required to be deleted or the names of the web addresses whose link is required to be cut off; and (3) The preliminary certification materials on infringement. The Ordinance was issued by the State Administration for Industry and Commerce on 31 May 2010.

  49. Interim Measures for the Administration of Online Commodities Trading and Relevant Services, issued in June 2010 by the State Administration of China.

  50. Notice on the Implementation Plan for the Special Campaign to Crack Down on the Infringement of Intellectual Property Rights and the Manufacture and Sales of Counterfeit and Shoddy Goods in the Online Shopping Area, jointly issued in July 2011 by the State Administration for Industry and Commerce, the Ministry of Public Security, the Ministry of Commerce and another six ministries and administrations.

  51. Hof (2004).

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Authors and Affiliations

  1. RM A 318, Faculty of Law, Macau University of Science and Technology, Avenida Wai Long, Taipa, Macau

    Fei Lanfang (Ph.D., University of Hong Kong; Lecturer, Faculty of Law of Macau University of Science and Technology)

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Correspondence to Fei Lanfang.

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Lanfang, F. Liability for an Online Marketplace Provider’s Trademark Infringement – Practice and Latest Development of Chinese Law. IIC 44, 569–584 (2013). https://doi.org/10.1007/s40319-013-0062-1

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