Preface

 

Internet is gradually changing people’s way of work and life, and it is bringing significant effect to intellectual property as well. On one hand, the development of Internet technology enables fast and effective spreading of the IPR information, and thus promotes the IPR development. New types of IPR such as domain names came into being. On the other hand, the Internet environment also provides convenience for IPR infringement. As a result, the application of Internet technology makes the protection of new types of IPR such as domain names more and more important.

 

This article will introduce the basic types of IPR infringements in Internet environment, basic countermeasures, and some detailed measures against several types of most common infringement. We hope this would be of some help for a better protection in Internet environment for enterprises.

 

Chapter I Current Status and Brief Introduction of IPR Protection in the Internet Environment in China

 

I. Current Status of IPR Protection in the Internet Environment

 

China Internet Network Information Center (CNNIC) published the 34th Statistical Report on Internet Development in China (hereinafter referred to as Report) on July 21, 2014. According to the Report, by the end of June 2014, China has 632 million Internet users, with an increase of 14.42 million in the past half year. The Internet penetration was 46.9%, increased by 1.1% compared with the end of 2013.

 

Also by the end of June 2014, there are a total of 2.73 million websites in China. The number of online shoppers in China reached 332 million, and the online shopping trade already reached 1.85 trillion yuan.

 

With the spread of Internet and the rapid development of online trade, Internet has also become a hot spot for IPR infringement. Taking online copyright infringement as an example, according to the incomplete statistics by China National Copyright Administration, there were 4,241 online infringements from 2005 to 2014, and the involved amount was 7.83 million yuan in total. Administrative organs for law enforcement shut down 1,926 copyright infringing websites according to law, and confiscated 1,178 servers and related apparatus, and transferred 322 cases to judicial organs for criminal liability. Therefore, together with the development of Internet, IPR protection in the Internet environment is getting more and more important.

 

IPR infringement in the Internet environment has its own features compared to the traditional IPR infringement.

First of all, IPR in the Internet environment is an expanded intangible property right, which makes IPR infringement easier. In the Internet environment, IPR’s intangibility becomes more obvious, since the object of IPR is shown as digitalized electronic signals, and what can be sensed is only the data image shown on the screen of the Internet terminal. In other words, while traditional IPR objects are res corporales, the ones in the Internet environment are digitalized texts, sounds and images, which are easier to be copied and spread.

 

Second, IPR in the Internet environment has no territory boundaries, which may bring conflicts to IPR protection due to different protection systems. Traditional IPR’s territoriality is significantly challenged, because IPR objects can be spread rapidly and effectively worldwide via Internet. Boundaries of different regions are more and more diluted in the Internet environment. Intellectual achievements of human beings could be immediately transferred to other IPR jurisdictions, and this may result in conflicts among different protection systems.

 

Third, online IPR infringement has a chaining tendency. From real cases, one infringement act may be involved with several different IPR infringement acts. For example, infringement on integrated information form such as multimedia may be involved with infringements on several IPR rights that the multimedia contains, such as copyrights and trademark rights.  

Fourth, evidence retrieval and liability pursuit meet restrictions in the Internet environment. Due to the intangible and information nature of IPR, infringement acts for IPR are easier to be hidden compared to those for other rights. Therefore, the recognition of infringement is difficult, which makes it harder to affix liability to such act. When the infringing act happens in the Internet environment where the evidence of infringement is mostly data, it becomes even more difficult since these data can be readily hidden and transformed.

 

II. Main Types of Online Infringing Acts

 

Common online IPR infringement disputes include the following types.

 

1. Register and use domain names which are other’s trademarks or trade names

 

Domain name is a certain characterized identification to indicate the address in computer network communications in order to differentiate computers in the network. It is also a unique code for a computer in the network. Domain name is protected as a new type of IPR. In practice, the most common infringement is to preemptively register other’s trademark or trade name as a domain name. Such preemptively registered domain names are mostly trademarks, trade names or geographical indications of high business value. Since domain names in the Internet environment could identify and differentiate from others like a trademark or a trade name, domain names in the Internet environment should be protected by law just like trademarks and trade names.

 

With the penetration of the Internet, there are more and more disputes on trademarks, trade names and domain names. According to the report by WIPO, WIPO Arbitration and Mediation Center accepted 2,585 domain names disputes in 2013, and there were 6,191 preemptively registered domain names involved, which increased by 22% compared to the year before and was the most increase ever.

 

2. Sell infringing products on e-commerce platforms provided by a third party

 

Statistics indicates that online shoppers in China reached 302 million in 2013 and the percentage thereof is 48.9%, at an increase of 6.0% compared to 2012. Group purchase users reached 141 million and the percentage thereof is 22.8%, at an increase of 8.0% compared to 2012. Users increased by 68.9% each year. With the wide spread of online trade, the e-commerce trade platform also became a hot spot to sell IPR infringing products. It is reported that from January to June 2012, Taobao dealt with over 47 million pieces of information of IPR infringing products. The reason that Internet third party platform became a hot spot for selling IPR infringing products is that the sellers are pursuing profits. And on the other hand, it also shows the lack of online IPR supervision and the helplessness of related laws. As a result, the rights of IPR owners cannot be effectively protected in the current legal environment in China.

 

3. Use or spread other’s works online without authorization

 

As the statistics by China National Copyright Administration indicates, with the development of the Internet, online copyright infringement is also increasing. Meanwhile, online copyright infringement disputes are taking more and more percentage in all copyright dispute cases, and have become the main type of copyright dispute.

 

4. Illegal use of other’s trademark or trade name online 

 

Trademarks and trade names are important for companies because they have distinguishing function. Infringers take advantage of such distinguishing function to use other’s trademarks or trade names in advertisement online, in order to mislead the public.

 

5. Unfair competition acts such as damaging other’s goodwill, false advertisement

 

According to the report published by State Administration for Industry and Commerce, supervision and random inspection were conducted on the advertisements released on about 20 main websites in China from March to December 2013, and it was found that 33% of the advertisements were illegal to a serious extent. Since the Internet is open, uncertain and easy to hide, it is even more difficult to supervise such “unfair competition” on the Internet. Such online illegal acts mainly include counterfeiting, false advertisement, infringing trade secrets, damaging goodwill, etc.

 

6. Register other’s trademark or trade name as the user name of microblog, WeChat or mobile application name and use

The Report shows that by the end of June 2014, the WeChat users in China also increased rapidly. The total number of users is 275 million, taking 43.6% of all users. With the increasing use of WeChat, the related business value also become more and more obvious, and more and more users use WeChat as an important advertising means. Some of the WeChat users even imitated the preemptive registration of domain names and registered others’ trademarks as WeChat user names with bad faith for illegal benefits.

 

Furthermore, according to the 2014 investigation statistics on mobile Internet in China conducted by Data Center of China Internet (DCCI), Chinese mobile Internet users already exceeded the computer Internet users in 2012. Chinese mobile Internet users reached 685 million in 2013, with an increasing speed of 18.4%. Meanwhile, according to the expectation of DCCI, Chinese mobile Internet users will reach 860 million in 2015. And the use of various mobile applications is increasing rapidly as well. According to statistics data, by the end of 2011, mobile applications increased by 202.5%, and the total number is already more than 1.35 million. China is rapidly entering mobile Internet era from traditional Internet era. In the mobile Internet era, mobile applications have already become a main way for the users to access mobile Internet, so they are of significant strategic value. Under such background, it is not rare that some well-known trademarks or trade names are registered as mobile application names. Mobile application names will definitely become the next target to be preemptively registered after domain names and user names of microblog and WeChat.

 

III. Basic Strategy against IPR Infringement in the Internet Environment

 

1. Make clear the subject of infringing act

 

First of all, it should be made clear who the subject of infringing act is. This is the precondition to take the next step. Internet has the features that it is easy to hide and vary. Therefore, identifying the infringing subject becomes more difficult than other types of IPR infringement. IPR owners can investigate the infringers from the following aspects, and after getting the company name of the infringer, we can log in the China Company Credit Information Publication System (http://gsxt.saic.gov.cn) to check the basic information thereof.

Investigation Content	Information of Domain Name Registrant	Information of Online Operator	Information of Online Shop Operator
Website	Domain name servers’ website such as http://whois.www.net.cn/	ICP/IP Address/Domain Name Recordal System by Ministry of Industry and Information Technology (MIIT) http://www.miibeian.gov.cn	Publicized information of each online shop
Introduction	Whois is a transport protocol to check the IP of domain name and its owner. We can also take it as a tool to check whether a domain name is registered or not, and a database of registered domain names. IPR owners can use Whois to check the information of domain names.	Since 2009, MIIT required all the websites in China to conduct a recordation, so most of the websites operator already recorded their information therein. The data can be searched on the above website.	Mature e-commerce websites already set up a complete ID verification system. IPR owners can check the online shop owners’ information on the websites of related business platform.

 

2. Confirm whether there is an infringement

 

After confirming the information of the accused infringer, an evaluation should be conducted on IPR owners’ rights and the infringing acts of the infringer. IPR owners should set up a detailed strategy based on their owned rights, characteristics of the infringing act, actual situation and status of the evidence. Also, investigation should be conducted on whether the infringer owns any relevant rights, and verification should be made on the validity of the rights. If the rights of the infringer are valid, we should analyze the condition of our rights and defects thereof. Normally we suggest analyzing the following aspects.

Territoriality of the rights	Whether IPR is owned in the location of the infringing act
Validity of the rights	Whether related IPR is still valid, whether the IPR needs renewal or whether the related fees are paid.
Stability of the rights	We should thoroughly analyze the stability of our IPR if the infringer files invalidation.
Infringing acts	Determine which IPR was infringed by the infringer’s act, for example, trademark right has been infringed, copyright has been infringed, or several rights have been infringed.

 

3. Infringement evidence preservation

The following notarizations are often conducted in an online infringement case.

Notarization for webpages	Preserve the webpages containing the infringing information including advertisement, pictures of the infringing product, etc. Such notarization is conducted with notary public, and the evidence are printed and preserved for the future use as evidence of infringement.
Notarization for the purchase online	Place the order online and receive the mailed package of the infringing product under the witness of notary public.
Notice	(1) If we only require deleting the infringing webpages, then we only need to submit to the website of the third party: the related right certificates, documents that prove the products are counterfeits, and explanations of the reasons for deletion. The requirements of evidence are not strict. If we seek solution via judicial means, the requirements are quite strict, and notarization of purchase is necessary. If the infringing product is purchased without notarization, the effect of evidence may not be recognized by court. (2) During the notarization of purchase, in order to ensure the effect of notarization, we should do our best to complete the whole process of purchase under the witness of notary public, especially the receipt of the infringing product. If we receive the product and then bring it to the notary public, then whether the product was replaced could be a dispute.

 

4. Possible legal means

 

Warning and negotiation via telephone

 

C&D letter is often used as a means of self-remedy. It is mainly used against the infringement with minor infringing act and for the cases with a limited budget. C&D letter itself does not have a compulsory power. After the C&D letter is sent, whether the infringer stops the infringing act mainly depends on the infringer’s legal awareness and attitude. After sending the C&D letter, if there is no response from the infringer after a period of time, a direct telephone negotiation could be conducted, in order to exert pressure as a lawyer on the infringer and make them stop the infringing act as soon as possible.

 

Asking domain name dispute resolution center for a resolution

 

When a domain name dispute happens, the involved party could negotiate to solve the dispute. However, it should be noticed that since most of the negotiations are made orally by telephone or through meetings, it is very common that too much time is spent on negotiation and the arbitration deadline is missed. Therefore, we highly recommend the related right owners to file a request for arbitration with the domain name dispute resolution center as soon as possible. The winning rate is high when the right owner requests arbitration based on prior IPRs such as trademark right. With such countermeasure, domain name disputes could be solved in a fast and simple way with low cost.

 

File a complaint to the Ministry of Industry and Information Technology (MIIT)

 

According to the rules of MIIT, the operator of a website must record the information of the website via “MIIT ICP/IP Address Information Recordal Management system”. If we find the infringer’s infringing website is not recorded in MIIT, we can file a complaint to the local communication administration office with the reason that the website is not recorded. There is no clear provision in the laws about this complaining procedure, but normally contact is made via telephone or email to inform the related government office of the infringing website’s address.

 

File a complaint to the e-commerce platform provided by a third party

 

According to Article 36 of Tort Liability Law, Internet users conduct infringing act via Internet services, the infringed party has the right to notify the network service provider to take necessary actions such as deleting, shielding or cutting off the link.

 

Currently, the main e-commerce platforms in China, such as Taobao, Alibaba.com, JD.com, etc, all have already established a rather complete IPR protection and reaction system. So if we find infringing products are being sold on an e-commerce platform provided by a third party, we can file a complaint with the e-commerce platform about the infringing links. In most cases, if the complaint is reasonable and the infringing act does exist, the infringing link will be deleted.

 

Request an administrative investigation with administrative organs such as AIC

 

Besides self-remedy, an administrative investigation could be used against the infringers with physical stores. Administrative means has a crackdown power and is fast. It also has an effect of preserving the evidence. However, it should be noted that compensation for damages cannot be requested with the administrative organs.

 

Judicial means

 

Litigations are suitable for cases where the infringing act is serious, where it is difficult to achieve any expected effect through self-remedy or administrative means, and where the right owner wishes to exert pressure on the infringing party to completely stop the infringing act and pay for damages. Judicial means could exert big pressure on the infringer and push them to stop the infringing act. It also allows compensation for damages from the infringer. Furthermore, it is more open to the public compared to the administrative means and thus is more likely to achieve a fair solution for the dispute.

 

 

Chapter II Domain name disputes and solutions

 

I. A summary of domain name disputes

Domain names are the address of users on the Internet which are the identifiers used to distinguish one user from another and have the function of identification. In accordance with Article 3(1) of Administration of China Internet Domain Names Procedures, “Domain name: hierarchical character identifier recognizing and locating a computer on the Internet that corresponds to a computer's Internet protocol （IP）”

 

Domain names have the characteristic of uniqueness. That is, once a domain name is registered, the identical domain name cannot be registered any more by others in the scope of the whole world. Thus, in the perspective of business, as the unique identifier including certain characters, a domain name can represent the unique commercial value of an enterprise or an individual the same as other intellectual property rights including trademarks, trade names and copyrights do. So domain names can be seen as the “trademarks” or “trade names” of enterprises or individuals on the Internet. 

 

Along with the enormous strides of the Internet economic, domain name disputes brought about by the registration and use of domain names are happening in an endless stream in recent years, which takes the form of right conflicts between domain names and trademarks, trade names, personal names and so on. Speaking of China, until the end of 1996, trademarks or trade names of over 600 famous enterprises had been preemptively registered, including CHANGHONG, JIANLIBAO, HONGTASHAN, WULIANGYE, TSINGDAO BEER, WAHAHA, QUANJUDE and so on.  The number has been continuously increasing in recent years. Lots of famous brands still encounter the preemptive registration of the domain names identical with or similar to their trademarks, such as in the case of JACK JONES, etc. And some cases of unfair competition between domain names and service of social network websites or names of celebrities, such as the unfair competitions on well-known service of “Kaixin Website” and the name of the well-known artist Zhou Libo, have raised the alarm on the healthy development of Internet. 

 

II. Typical cases on domain name disputes

 

1. Disputes between domain name and trademark right

 

In the case regarding civil disputes over trademark infringement on “JACK&JONES” between Bestseller Company v. Huansuo Cui and so on , the plaintiff Bestseller Company enjoys the right to use the trademark right for “JACK&JONES” and the right to initiate infringement litigation in the territory of China by authorization and the exclusive right of the trademark for “杰克·琼斯”(the Chinese name of JACK&JONES) by registration. The defendants Huansuo Cui and Xinghua Du, without the permission, registered the domain name jackjones.net and set up the Jack Jones Chinese website using this domain name. The title of the website shown in the search results is “JACKJONES Chinese website-杰克琼斯Chinese website-JACK&JONES Chinese official website”. In the description of the website, the expressions including “杰克琼斯Chinese” and “杰克琼斯official website” are used. In the home page and relevant web pages, the expressions including “杰克琼斯Chinese website” and “jackjones Chinese website” and the logo “Jack Jones & Device” are used in a large amount together with the “Introduction of Jack·Jones”. In the source documents of relevant web pages, words related to Jack Jones, JACKJONES, jackjones are used in a large amount. The corresponding photos of physical products and the logo “Jack Jones & Device” are shown on the left of each style of clothes in “Clothing catalog”. Through the trial, Beijing Haidian People’s Court held that, the activities of the defendants constitute the use of trademarks identical with or similar to the “JACK&JONES” and “杰克·琼斯” in the publicity, introduction and dealing of the same commodities, and also the sale of commodities infringing the above mentioned trademark rights. The activities may easily cause the misunderstanding of relevant public that the owner of the above domain name and website and the supplier of the clothes is Bestseller Company, which constitutes the infringement on legal rights of Bestseller Company. The court thus made the judgment on April 26, 2011, ordering the two defendants to cease selling the infringing clothes, to close down the involved website used to sell infringing clothes, to cease using the involved domain name jackjonescn.net which shall be registered and used by the plaintiff, to publish a statement on the Legal Daily and Sina Website (www.sina.com.cn) to eliminate the influence, and to pay the compensation of 2 million yuan to the plaintiff for economic losses and reasonable expense for litigation. 

 

2. Disputes between a domain name and the distinctive name of well-known service

 

In the appeal case regarding disputes over unfair competition between Beijing Kaixinren Information Technology Co., Ltd. v. Beijing Qianxiang Interconnection Technology Development Co., Ltd. and Beijing Qianxiang Beijing Qianxiang Netscape Technology Development Co., Ltd. [Beijing Higher People’s Court (2011) Higher Civil Final No. 846 Civil Judgment], Beijing Kaixinren Information Technology Co., Ltd. (hereinafter referred to as Kaixinren Company) operated a website “Kaixin Website” (kaixin001.com) which provides social network service since March, 2008. On October 16, 2008, Beijing Qianxiang Interconnection Technology Development Co., Ltd. (hereinafter referred to as Qianxiang Interconnection Company) obtained the domain name “kaixin.com” by assignment. Qianxiang Interconnection and Beijing Qianxiang Netscape Technology Development Co., Ltd. (hereinafter referred to as Qianxiang Netscape Company) also set up a website “Kaixin Website” (kaixin.com) which provides social network service. The plaintiff Kaixinren Company claimed that its own “Kaixin Website” is a well-known website, and that the use of “Kaixin” as the name of a website and the use of the domain name “kaixin.com” by the defendants constitute the imitation of the distinctive name “Kaixin Website” of their well-known service as well as unfair competition. Beijing No. 2 People’s Court decided in the first instance that Qianxiang Interconnection Company and Qianxiang Netscape Company shall not use the name identical with or similar to the distinctive name “Kaixin Website” of Kaixinren Company while providing social network service and shall pay the compensation 400, 000 yuan to Kaixinren Company. Kaixinren Company was not satisfied and filed the appeal. Beijing Higher People’s Court held in the second instance that, the social network service provided by Kaixinren Company through the “Kaixin Website” (kaixin001.com) had constituted well-known service in a relatively short term after March, 2008. As the most significant method by which the network users identify the service, the name of the website constitute distinctive name of well-known service and is under the protection by the Anti-unfair Competition Law. While being fully aware that the social network service provided by Kaixinren Company through the “Kaixin Website” (kaixin001.com) was a well-known service, Qianxiang Interconnection Company used the distinctive name of the well-known service “Kaixin Website” as the name of their own website to provide social network service to the public., This caused the confusion of network users on the services provided by the two companies and constituted unfair competition. Thus, the court of the second instance affirmed the decision of the first instance. 

 

3. Disputes between a domain name and the right of personal name

 

In the appeal case regarding unfair competition on individual’s name, the defendant Zhou Libo enjoys the lawful civil right for “zhoulibo” which is the main part of the involved domain name, because “zhoulibo” is almost identical with the Pinyin name of Zhou Libo. The registrant of the domain name, shown as “Hong YiShen”, registered and sold the involved domain name at a high price while having no lawful right of the name. The registration and use of the domain name have express malice. Based on the above grounds, the defendant Zhou Libo filed a domain name complaint with the Asian Domain Name Dispute Resolution Center (hereinafter referred to as ADNDRC) on September 29, 2011. Afterwards, the ADNDRC made a decision supporting the complaints of Zhou Libo and transferring the involved domain name to Zhou Libo. Then Tongyu Yue, the actual user of the involved domain name initiated a litigation with the court. In accordance with Article 4 of Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Dispute Cases Involving Computer Network Domain Names (hereinafter referred to as Domain Name Interpretation), the main focus of the disputes of the two parties is whether Zhou Libo enjoys the civil interests of “zhoulibo” and whether the name of Zhou Libo constitutes the name as used in the Anti-unfair Competition Law of China. The court held in the trial that, the name, pseudonym or stage name of an individual used in the business of commodities which has certain reputation in the market and is known to the relevant public is under the protection of the Anti-unfair Competition Law of our country, based on Article 5(3) of the Anti-unfair Competition Law of the P.R.C. and Article 6(2) of Interpretation of the Supreme People's Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition. The individual has the right to prohibit others from using the name without permission or using the name for operational activities such as market trades in unfair ways. 

 

III. Main solutions for domain name disputes

 

1. Negotiation 

 

Similar to other intellectual property rights, domain names owners are free to choose solutions for solving disputes. Negotiation is a good private solution. The merit of negotiation is that, unlike litigation or arbitration, negotiation does not require sufficient evidence. As long as the right owner has an advantageous position in the evidence held or the information collected, he/she can ask the infringer or unfair competitor to transfer the disputed domain to him/her. In terms of time, if the opposite party pays enough attention to the possible outcome of their illegal activities, the domain name disputes can be resolved in a short time. In terms of costs, the expense of negotiation is surely the least. However, negotiation also has some demerits. If the infringer or unfair competitor has not realized the severity of their activities, it normally would procrastinate or even ignore the request of the right owner. It may also ask for a fee for the domain name transfer. These would bring the negotiation into a deadlock and delay the time for dispute resolution. Also, orally claiming the right related to the disputed domain name via phone etc. keeps no evidence, and there is the risk of missing the deadline for action. 

 

To sum up, negotiation can be applied to different types of domain name disputes, be it simple ownership disputes or complicated disputes involving domain name infringement or unfair competition. The owner of prior rights can decide whether to use negotiation or not based on actual situations.

 

2. Litigation

As a kind of civil litigation, domain name dispute litigation also applies Civil Procedure Law of the P.R.C. and relevant judicial interpretations. Those in common with other civil litigations will not be elaborated here. The following will introduce some legal texts related to the determination of infringement or unfair competition and relevant liabilities in domain name dispute litigations. 

 

(1) Jurisdiction

In accordance with Article 2 of the Domain Name Interpretation, “Intermediate People's Courts of the place of the infringement or the place of the defendant's domicile shall have jurisdiction over infringement disputes involving domain names. Where the place of the infringement and the place of the defendant's domicile are difficult to determine, the location of the equipment including a computer terminal through which the plaintiff discovered the domain name(s) may be regarded as the place of the infringement.

 

Foreign-related domain name dispute cases include cases in which one or both of the parties are foreigners, stateless persons, foreign enterprises or organizations or international organizations, or in which the domain name(s) in question is (are) registered abroad. For foreign-related domain name dispute cases occurring within the territory of the People's Republic of China, jurisdiction shall be determined in accordance with the provisions of Section Four of the Civil Procedure Law.”

 

(2) Determination of infringement or unfair competition

In accordance with Article 4 of the Domain Name Interpretation, in domain name disputes, the defendant's registration and/or use, etc. of a domain name constitutes infringement or unfair competition if all of the following conditions are satisfied:

 

“1. the civil rights or interests for which the plaintiff seeks protection are legitimate and effective;

2. the defendant's domain name or its main part constitutes the reproduction, imitation, translation or transliteration of a well-known trademark of the plaintiff; or it is identical with or similar to a registered trademark, domain name, etc. of the plaintiff to a degree sufficient to cause mistaken identification among the relevant public;

3. the defendant does not enjoy rights or interests to the domain name or its main part, and has no justification to register and/or use the domain name; and

4. the defendant's registration and/or use of the domain name is in bad faith.”

 

And in accordance with Article 5 of the Domain Name Interpretation, the defendant can be determined to be in bad faith if his activities constitute any one of the following:

 

1. for commercial purposes, registering other's well-known trademark as a domain name;

2. for commercial purposes, registering and/or using a domain name that is identical with or similar to the plaintiff's registered trademark, domain name, etc., and deliberately causing confusion with the products and/or services provided by the plaintiff or with the plaintiff's website in order to mislead network users into accessing one's own website or another online site;

3. having offered to sell, lease or otherwise transfer the domain name at a high price and obtained unfair benefits;

4. the defendant neither uses nor intends to use the domain name after registration, but intentionally prevents the registration of the domain name by the person holding rights therein;

5. other situations involving bad faith.

 

If the defendant produces evidence that the domain name(s) he owns has (have) gained a certain degree of reputation before the dispute occurred, and is (are) distinct from the plaintiff's registered trademark(s), domain name(s), etc., or if there are other circumstances sufficient to show that he has not acted in bad faith, the People's Court is not required to determine that the defendant acted in bad faith.”

 

(3) Liabilities of domain name infringement or unfair competition

 

In accordance with Article 8 of the Domain Name Interpretation, “Once the People's Court determines that the activities including the registration and/or use of a domain name constitute infringement or unfair competition, it may order the defendant to cease the infringement and/or deregister the domain name, or, at the request of the plaintiff, order that the domain name be registered and used by the plaintiff. If the said activities have caused actual damage to the holder of the rights, the People's Court may order the defendant to compensate the damages.”

 

(4) The merits and demerits of litigation

 

From the above introduction, it is not hard to tell the following merits of resolving domain name disputes through litigation. Firstly, the range of the application is wider, besides the disputes over ownership of domain names, it also includes the disputes between domain names and trademarks and the disputes over unfair competition. Secondly, the outcome of litigation which is the court’s decision has the most enforcement power. The parties involved must abide by the effective judgment. Thirdly, the losing party bears more liabilities. Besides changing the registrant of the domain name as per the request of the party winning the suit, the losing party has to cease the infringement and apologize, etc. 

 

However, litigation also has some demerits. Firstly, litigation is stricter in the requirement of evidence. Especially for the evidence formed outside the territory of the mainland of the P.R.C, notarization and legalization of the evidence is required in the country where the evidence is formed, and the evidence written in a foreign language is required to be translated into Chinese. Secondly, litigation takes a long time. The first instance of common civil litigation usually takes 6 months to 1.5 years. If a party appeals, it would extend to 2~3 years. Thirdly, litigation costs much. Besides the expenses for evidence collection and litigation fees, the attorney fees for litigation are not a small expense. To sum up, the resolution of domain name disputes through litigation is more suitable for disputes involving complicated legal relations, such as domain names infringing trademarks or violating the Anti-unfair Competition Law. As for people who only seek the transfer of a domain name, the best way may be negotiation or domain name dispute resolution proceeding which will be introduced next. 

 

3. Domain name dispute resolution proceeding

 

(1) Domain name dispute resolution institute

 

The domain name dispute resolution institute, which is also called the domain name dispute resolution service provider, deals with the complaints regarding disputes over domain names and makes decisions in accordance with corresponding dispute resolution policies and rules. They function similarly to arbitration institutes. People can choose the most suitable provider to file a complaint, based on the type of the domain name and the language that they use. 

 

The main domain name dispute resolution service providers are as follows:

 

① For the general Top Level Domains, including .com, .net, etc., the applicants can file the complaints in accordance with Uniform Domain Name Dispute Resolution Policy (UDRP), Rules for Uniform Domain Name Dispute Resolution Policy, and the relevant Supplemental Rules of the Provider, with any of the following dispute-resolution service providers approved by Internet Corporation For Assigned Names and Numbers (ICANN) for resolution. 

 

a. Asian Domain Name Dispute Resolution Center (ADNDRC)

b. National Arbitration Forum

c. WIPO

d. The Czech Arbitration Court - Arbitration Center for Internet Disputes

 

② For the Chinese domain names, including .cn, .com.cn, etc., the applicants can file the complaints in accordance with China Internet Network Information Center (CNNIC) Domain Name Dispute Resolution Policy, Rules for (CNNIC) Domain Name Dispute Resolution Policy and the Supplemental Rules of the Provider, with the following dispute resolution service providers approved by China Internet Network Information Center for resolution: 

 

a. Hong Kong International Arbitration Center

b. China International Economic and Trade Arbitration Commission

 

Among the above domain name dispute resolution service providers, the ones we worked with the most are Asian Domain Name Dispute Resolution Center (ADNDRC) and China International Economic and Trade Arbitration Commission (CIETAC). 

 

ADNDRC was jointly established by the CIETAC and the Hong Kong International Arbitration Center in 2002, and has four offices including Beijing Office, Hong Kong Office, Seoul Office and Kuala Lumpur Office, respectively accepting the domain name disputes under the UDRP. Among the four offices, Beijing Office is located in Beijing, which is the main institute we file the relevant domain name dispute complaints with. Beijing Office has accepted over 700 pieces of domain name dispute cases under the UDRP and they are the main channel to resolve the domain name disputes in the mainland of China and even the Asia region. 

 

Domain name dispute resolution center of CIETAC was established at the end of 2000, which is the dispute resolution institute approved by CNNIC to provide the domain name dispute resolution service for the domain name .cn and the domain names in Chinese. Afterwards, the Domain name dispute resolution center of CIETAC accepted entrustment and authorization of relevant institutes in succession to provide the dispute resolution service for the Internet keyword, MOBNIC, .wap.cn, etc. In 2007, the domain name dispute resolution center started to work externally in the name of Internet Dispute Resolution Center of the China International Economic and Trade Arbitration Commission. 

 

(2) Preparation prior to the complaint

 

① Investigation and C&D Letter

 

Before collecting the evidence to file the complaint, it is necessary to conduct an investigation on the registrant or user of the disputed domain name. According to the relevant policies and rules for domain name dispute resolution, the items to be investigated are as follows: 

 

a. Whether the registrant or user has any legal rights and interests for the disputed domain name or not;

b. Whether the registrant or user has used the domain name or corresponding names in good faith in offering goods or services, before receiving any notice of the dispute; 

c. Whether the registrant or user has been using the disputed domain name for some time and has accumulated some brand awareness – the registrant or user could be an individual, an enterprise, or other entities; 

d. Whether the registrant or user is making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to mislead consumers or to tarnish the trademark or service mark at issue.

 

If none of the above items is found through investigation, the legal rights and interests for the disputed domain name of the registrant or user can be ruled out, and bad faith can be preliminarily established. Then a complaint regarding the disputed domain name can be filed in accordance with relevant domain name dispute resolution policies. 

 

② Evidence collection

 

a. Filing the complaint in accordance with UDRP on the domain name of .com, .net, etc. 

 

Lists of materials	Facts to be proved	Points for attention
1． Whois information of the disputed domain name	The disputed domain name has been registered	Inquiry on the website of the registrar of the disputed domain name or on
2．Trademark Registration Certificates of the prior trademarks of the complainant all over the world	The complainant enjoys the rights for prior trademarks which is suspected of being infringing by the disputed domain name	Not limited to the trademarks registered in China
3.  The information of the web pages corresponding to the domain name, or the C&D Letter in which the registrant or user is requested to stop the use of the disputed domain name	The respondent uses the disputed domain name in bad faith	It is acceptable if any of the following circumstances is met： (i) has registered or has acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the documented out-of-pocket costs directly related to the domain name; or   (ii) has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the registrant or the user has engaged in a pattern of such conduct; or   (iii) has registered the domain name primarily for the purpose of disrupting the business of a competitor; or   (iv) by using the domain name, the registrant or the user intentionally attempted to attract, for commercial gain, Internet users to its web site or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of the web site or location or of a product or service on the web site or location.
4.  Registration agreement of the disputed domain name	Basis for the resolution of the domain name dispute
5.  POA		Under the circumstance that the complaint entrusts an agent to file the complaint

 

② Filing complaints against the domain name .cn, com.cn, .中国, .公司in accordance with the CNNIC Domain Name Dispute Resolution Policy (revised in 2012)

Lists of materials	Facts to be proved	Points for attention
1． Whois information of the disputed domain name	The disputed domain name has been registered	The time limit for filing the complaint shall be within 2 years after the registration of the domain name; the Whois information can be searched out on the CNNIC’s website www.cnnic.net.cn
2．Certificates of the civil rights or interests on the names or marks of the complainant	The complaint enjoys the prior trademarks, rights for trade names, distinctive names for well-known products, etc. which are suspected of being infringed by the disputed domain name	Different from the certificates for .com, .net.etc.
3.  The information of the web pages corresponding to the domain name, or the C&D Letter in which the registrant or user is requested to stop the use of the disputed domain name	The respondent uses the disputed domain name in bad faith	It is acceptable if any of the following circumstances is met： (i) has registered or has acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the documented out-of-pocket costs directly related to the domain name; or   (ii) has registered the domain name in order to prevent the owner of the trademark, service mark or other names from reflecting the mark or name in a corresponding domain name, provided that the registrant or the user has engaged in a pattern of such conduct; or   (iii) has registered the domain name in order to damage the reputation of the complainant, to disrupt the normal business of the complainant, or to confuse the distinction with the complainant and mislead the public;   (iv) other circumstances of having bad faith
4.  Registration agreement of the disputed domain name	Basis for the resolution of the domain name dispute
5.  POA		Under the circumstance that the complainant entrusts an agent to file the complaint

 

(3) Complaint

 

① Drafting and submitting the evidence materials and the complaint

 

a. Language

As for the complaints on the domain name .cn, .com.cn, etc., in accordance with the Rules for CNNIC Domain Name Dispute Resolution Policy (revised in 2012), unless otherwise agreed by the Parties, or specified otherwise by the panel, the language of the domain name dispute resolution proceeding shall be Chinese. The panel may order the Parties to submit the Chinese translation of all or part of any documents made in the languages other than Chinese. As for the complaints on the domain name .com, .net, etc., in accordance with Rules for Uniform Domain Name Dispute Resolution Policy, unless otherwise agreed by the Parties, or specified otherwise in the Registration Agreement, the language of the domain name dispute resolution proceeding shall be the language of the Registration Agreement, subject to the authority of the panel to determine otherwise, having regard to the circumstances of the domain name dispute resolution proceeding. The panel may order that any documents submitted in languages other than the language of the domain name dispute resolution proceeding should be accompanied by a translation in whole or in part into the language of the domain name dispute resolution proceeding. 

 

b. Form

All the documents shall be submitted electronically. 

 

c. Content

The claims of the complaint, the contact information of the complainant, choosing of the panel (a single-member or a three-member panel is available), the contact information of the respondent, the information of the disputed domain name (including the registration information, the registrar information, etc.), the legal rights or interests of the complainant as well as relevant evidence, grounds of the complaint. At the end of the complaint, the applicant or the representative shall sign or affix the seal. 

 

d. More than one domain name 

The applicant can submit the complaint related to more than one domain name registered by the same domain-name holder.

 

② Fees

 

ADNDRC

Number of disputed domain names	Total fees
	Numbers of the panel
	Single panelist	Three panelists
1~2 domain names	US$1,300	US$2,800
3~5 domain names	US$1,600	US$3,300
6~9 domain names	US$1,900	US$3,800
10 domain names or more	to be determined by the relevant office of the ADNDRC

 

CIETAC

 

 

 

 

   

All fees in connection with the proceeding shall be paid by the complainant. Under the situation that the complainant has elected to have the dispute decided by a single-member panel and the respondent elects a three-member panel, the applicant and the respondent shall be required to respectively pay one half of the arbitration fees for a three-member panel. Please notice that in accordance with Article 48 of the Rules for (CNNIC) Domain Name Dispute Resolution Policy, in particular cases, if a hearing is held, the domain name dispute resolution service provider can order the parties to pay the fees additionally, which will be fixed by the domain name dispute resolution service provider, the parties and the panel after negotiation. 

 

(4) Flow chart of the dispute resolution

① ADNDRC (domain name dispute resolution flow  for the domain name .com, .net, etc.)

 

 

② CIETAC (domain name dispute resolution flow for the domain name .cn, .com.cn, etc.)

 

(5) Circumstances during the dispute resolution

 

① Transfers 

The domain name holder may neither transfer the disputed domain name to another holder, cancel the registration of the disputed domain name, nor change the domain name registrar during the domain name dispute resolution until the end of the execution of the decision, unless otherwise the party to whom the domain name registration is being transferred agrees, in writing, to be bound by the decision of the dispute resolution. 

 

② The suspension or termination of the dispute resolution proceeding

a. Suspension

In the event of any litigation initiated prior to or during domain name dispute resolution proceeding, the panel shall have the discretion to decide whether to suspend or terminate the corresponding domain name dispute resolution proceeding, or to proceed to a decision. In the event that a party initiates any litigation during the domain name dispute resolution proceeding, it shall promptly notify the panel and the domain name dispute resolution service provider. 

 

b. Termination

If, before the panel’s decision, the parties agree on a settlement, the panel shall terminate the domain name dispute resolution proceeding. If, before the panel’s decision is made, it becomes unnecessary or impossible to continue the proceeding for any reason, the panel shall terminate the proceeding, unless a party raises justifiable grounds for objection within a period of time to be determined by the panel.

 

③ Result of the dispute resolution

a. Type of the decision

Canceling the registered domain names, or

Ordering to transferring the registered domain name to the applicant, or
 

If, the panel makes the decision that the complaint is not tenable, the panel shall decide to overrule the complaint

 

b. Execution of the decision

If the panel decides that the disputed domain name registration should be canceled or transferred, the domain name registrar implements the decision within 10 work days since being informed by the domain name dispute resolution service provider. However, if the respondent can provide the effective evidence to prove a judicial authority or an arbitration institute which has the jurisdiction to the complaint has accepted the relevant dispute within the 10 work days since the panel’s decision has been issued, the execution of the panel’s decision shall be suspended until the registrar receives evidence proving a resolution between the parties, or that the application for a lawsuit or arbitration has been dismissed or withdrawn. If a judgment or arbitration is made, the registrar shall implement the same. 

 

③ Remedies for domain name dispute complaint

The applicant for complaint or the respondent can initiate a lawsuit with the court which has the jurisdiction or apply for arbitration with arbitration institute as to the same dispute before submitting the complaint, during the domain name dispute resolution proceeding or after the panel’s decision. 

 

(7) Merits and demerits of the domain name dispute resolution proceeding

According to the above domain name dispute resolution proceeding and our experience, the time spent on the domain name dispute resolution proceeding is shorter than litigation. The requirement for evidence is relatively low. And if the party is not satisfied with the panel’s decision, they can initiate a lawsuit or apply for arbitration with another institute. The panel’s decision has a great binding force on the registrar. Normally, after verifying the qualifications of the applicant for complaint, the registrar will transfer the disputed domain name to the applicant for complaint who wins the proceeding per the request thereof within 10 work days, if having not received any notice that the judicial authority or arbitration institute has accepted the case. 

 

However, the domain name dispute resolution proceeding can only resolve the dispute over ownership of domain names. And the proceeding may be suspended by the judicial or arbitration proceeding, which is very detrimental to the party who wins the domain name dispute resolution proceeding. Though, in practice, this situation is not common. 

 

Chapter III Countermeasures against Online Selling of Infringing Goods

 

I. Current status of online selling of infringing goods

 

1. Current status of online shopping

With the popularity of the Internet, online shopping has gradually become an important way of shopping. The network users search goods information through the Internet, place shopping requests through electronic orders, and pay directly online or pay on delivery. Basically, all the trade of goods or services is conducted through network communication. With network, you can do shopping without leaving home, which is very convenient and efficient and popular among a large number of consumers in recent years. Moreover, the extensive use of smart phones promoted the development of online shopping with might doubled. 

 

At present, the online shopping users have exceeded 300 million in China. The rapid increase of online shopping users has established a well-founded user base for the development of online shopping market, and the development of online shopping market is enormous in potential and amazing in speed. The graph below shows that the transaction amount of online shopping reached nearly 1,850 billion yuan in 2013, with a growth of 40.9% compared with the previous year. What is particularly worthy of noticing is that the total transaction amount of online retail market has taken up 7.9% of total retail sales of consumer goods in 2013. As online shopping is an obvious substitution of shopping in real shops, it can be expected that the transformation of the enterprises from retail to e-commerce is an irresistible trend. It also can be seen from the below graph that online shopping has entered into a stage of rapid development since 2006, and the online trade amount in 2010 is twenty times the online trade amount in 2006. From 2011, since the calculation base has become bigger, the growth rate has slowed down to a certain extent, but it still remained a rapid growth.      

    

 

Graph 3-1 Transaction amount of online shopping from 2006 to 2013 and the growth rate 

 

Compared with the traditional trading mode, the online shopping is more efficient and convenient, which enables the user to save a great deal of time, resource and manpower. Meanwhile, the online shopping has no limitation in time and space, and it can be completed as long as there is access to the Internet, so it has swept away various obstacles existed in the traditional market. In addition, the network expanded market trade opportunities. Some small and medium-sized enterprises may, as big enterprises, know the situation of market supply and demand through the network timely, and participate in competition, which objectively promotes the improvement of the quality of online shopping service.

 

At the system level, the newly amended Law on Protection of the Rights and Interests of Consumers strengthened the protection for consumers during the process of online shopping, which greatly raised the position and experience of the users during online shopping, improved the legislation for online shopping, and directed the development of online shopping towards a fair and orderly direction. 

 

2. Main types of e-commerce 

 

A rapid and vigorous development of online shopping would not happen if without the support from Internet platform. The business activities that operated on the Internet platform are what we always call “e-commerce”. The e-commerce in China has been developed to a complete system with coordinated development in multiple realms, from the original network retail to various forms as B2B, C2C, and B2C, etc. in later time. Usually, there are the following types of e-commerce: 

 

(1) B2B

B2B is the abbreviation of Business-to-Business. It usually means the e-commerce between businesses (usually enterprises) to businesses, which refers to the trade or exchange of product, service and information through Internet among the enterprises. The supplying and requisitioning parties are both enterprises, and they use Internet technology or various e-commerce platforms to complete the process of business transaction, for example, posting supply or demand information, placing and confirming orders, process payment, issuing, sending and receiving commercial bills, confirming the delivery scheme and monitoring the delivery, etc. 

 

The typical B2B model is Alibaba which was recently listed in New York Stock Market.  

 

(2) B2C

B2C is the abbreviation of Business-to-Customer. It usually means selling of goods to the customers directly from the suppliers. We usually call it retailing business. The main business involved therein is online retailing of which the selling is operated through Internet. The enterprises provide consumers with a new shopping environment -- online shop. The consumers purchase and pay online through Internet. 

 

B2C model is the earliest e-commerce model in China. Now there are many B2C e-commerce websites, among them, some big ones are Tmall, JD, and 1 The Store. 

 

(3) C2C

C2C is the abbreviation of Consumer-to-Consumer which means e-commerce among individuals. Through providing an online trade platform for both the sellers and the buyers, the sellers may provide goods for online auction actively, while the buyers may choose goods and bid price voluntarily. 

 

The typical C2C model includes Taobao, Paipai, etc.  

 

In addition, with the continuous development of the times, more e-commerce models have been developed and operated, for example O2O, B2G, B2T, C2B, etc. But for general consumers, the above mentioned three models B2B, B2C, and C2C are the commonest and most familiar ones, and they are the leading online shopping channels. 

 

3. Main infringement types

The course of online shopping development has never been perfect, and there have been some shortcomings. Due to the large number of network users, the online shopping demand is also large, which have brought opportunities to the market. The opportunities may have been taken advantage of by the illegal businessmen at the same time. In recent years, behind the rapid development of online shopping, the online sales of suspected infringing goods gradually become a serious issue of intellectual property infringement, mainly includes the following types:

 

(1) Direct sale by the manufacturers

The Internet shortens the distance between the manufacturers and consumers. Among the manufacturers which are involved in the selling of suspected infringing goods, a few are capable of doing online trade and directly selling the suspected infringing goods manufactured by themselves. Most of such infringement are related to patent or trademark rights. Meanwhile, goods that infringe on copyright also exist, for example, pirated books or audio-visual products, pirated computer software, etc.  

 

(2) Sale by proxy 

Generally, most manufacturers are not capable of doing online transaction independently. Thus, the selling of their products usually is relied on other network platforms. 

 

1) Sale by trade platform

Some of the online trade platforms themselves undertake partial responsibilities of sellers, such as JD, Amazon, Suning, etc. However, since they are limited by their capacity to determine whether intellectual property infringement exists, they are likely to sell the suspected infringing goods to the consumers through regular channels. In addition, it could not be completely excluded that the trade platforms may be aware of the infringing acts. 

   

2) Sale by third party seller or sale by retail store of the manufacturer

The main difference between sale by third party or sale by retail store of the manufacturer from sale by trade platform lies in that the third party seller or retail store of the manufacturer do their trade through online trade platforms, such as Taobao, Tmall, Alibaba, etc. They are similar to business people who run the stalls under contract, while the trade platforms conduct unified management to them. There are different opinions in practice with respect to whether the third party seller is aware of the suspected infringement involved in the products sold. 

 

II. Countermeasures to online selling of infringing goods

 

As for the online selling of the suspected infringing goods as above mentioned, if the right owner sits idle, on the one hand, its own market share would be squeezed, which may lead to a decrease of sales amount and profit; on the other hand, no matter what the suspected infringing goods are, counterfeit and shoddy products or imitated products, the quality thereof usually are worse than the genuine goods produced by the right owner. Thus, it would make the general evaluation of the products decline, or mislead some consumers into thinking that the infringing goods were produced by the right owner. In addition, since online sales almost have no limitation in territory, once such circumstance happens, it would likely influence the whole market. In light of this, it is advisable for the right owner to actively take action when finding the relevant information of suspected infringing goods. 

 

From a practical point of view, there are mainly the following effective measures. 

 

1. Submitting complaint to the third party trade platform

 

The third party trade platform is a major online shopping channel and also a place involving serious sales of infringing goods. In 2013, according to the statistics from only Taobao (Tmall), it had deleted about 112 million links of suspected infringing goods. The earlier date indicated that Taobao (Tmall) had dealt with 82 million pieces of information of infringing goods from January 2012 to November 2012. The vigorous development of an online shopping also revealed some problems of the e-commerce platforms, for example loose review, etc. 

 

The online trade platform, as one of the network service providers, the Tort Liability Law expressly sets forth its obligations. When the right owner finds out the infringing act and informs the network service provider, the network service provider shall take necessary measures such as deleting, shielding, breaking link, etc. to stop infringement. Otherwise, it shall bear joint liability to the portion of extended losses attributable to its liability. Thus, most of the online trade platforms have set up complaint channel for right owners. Among them, Taobao (Tmall) and Alibaba had set up relatively effective intellectual property protection systems. But the intellectual property protection systems of other e-commerce platforms are slightly behind. 

 

Meanwhile, Taobao (Tmall) and Alibaba take a dominant position in B2B and C2C online market in respect of the proportion of their online shopping sales in the total sales, and they also play an important role in B2C market. Thus, the online shops of most of the goods can be found from Taobao (Tmall) and Alibaba. In other words, if there are infringing goods sold online, the relevant online shop information is very likely to be found from Taobao (Tmall) and Alibaba. Considering Taobao (Tmall) and Alibaba have relatively effective intellectual property protection systems, and their standard of determination of infringement is relatively objective and fair, filing a complaint to the third party trade platform and requesting them to delete the infringing links, or even close down the shop, is the best way to solve the infringement from a perspective of stopping infringement immediately, in respect of the shops and relevant information of the infringing goods existed in the websites of Taobao (Tmall) and Alibaba. This way is much better than the other ways for protecting right either in terms of time or cost to solve the dispute. 

 

However, there are also some limitations for submitting complaint to the third party trade platform. Taobao (Tmall) and Alibaba are limited by their capacity to determine intellectual property infringement. Moreover, since the original web page could not be opened after the link is deleted, and the suspected infringing seller would learn the right owner’s relevant rights thoroughly during the process of responding, it is necessary to prepare well in advance if it needs to preserve evidence so as to avoid the evidence being destroyed completely. 

 

Herewith, we would like to introduce briefly the process of submitting a complaint by using the intellectual property complaint system provided by Taobao (Tmall) and Alibaba. There are the following major steps for the right owner. 

 

(1) Registration of complainant 

 

The complainant here can be either the right owner or the agent. The registration information should be in consistency with the business information of the enterprise in order to confirm by the third party platform. It is also required to sign a Commitment Letter ensuring the authenticity and legality of the materials submitted in future. 

 

(2) Right Certificate of the right owner

 

It is required to submit legal and effective right certificate, usually including the copy of the ownership document such as copyright registration certificate, patent certificate, trademark registration certificate, etc. 

 

(3) Reveal infringing link and shop

 

It is required to reveal the link and the shop involving the infringing goods to the third party platform, and explain the reasons of infringement briefly. 

 

(4) Respond to the response of the seller

 

The suspected infringing link would be temporarily disabled after verification. At this time, the seller may submit a response. As for the seller’s response, the complainant may choose to leave it to the determination of the third party platform on whether the infringement is established. 

 

In the above step, if the seller makes no response, it would be deemed that the infringement is tenable and the relevant link would be directly deleted. Or if his grounds of response are untenable, the link would be also deleted. If his grounds of response are tenable, the right owner may need to further submit more detailed explanation of the infringement grounds or relevant professional appraisal report, etc. for further determination by the third party platform. 

 

Since the process of the IP system of Taobao (Tmall) and Alibaba is relatively complete and objective, they are quite efficient in dealing with infringement. Not quite the same, the IP systems of the other third party trade platforms also require submitting right certificate and infringement grounds. However, it always takes a long time for verification, and the result may not be satisfactory. The owner may need to consider whether to take this measure according to specific situation in respect of the other third party trade platforms. 

 

Particularly, when the third party platform itself is a seller, it is necessary to preserve evidence before submitting complaint since network evidence could be very easily destroyed. When the third party platform learns the infringement, it is very likely to destroy the relevant evidence or amend the background data directly in order to distance itself from the manufacturer of the suspected infringing goods, or under the circumstance it has some relation with the manufacturer. Meanwhile, when to preserve evidence, it is advisable to take the possibility of lawsuit in future into consideration and try the best to choose Beijing, Shanghai, etc. as the place where the infringing act or the infringement result occurs, so as to have the lawsuit under the jurisdiction of the courts in Beijing or Shanghai that are supposedly having higher capacity of trying IP cases. 

 

In summary, compared with the other reliefs, since the infringing goods are sold online, the shops may be in any place, almost without limitation. This would bring serious difficulty to the administrative investigation and the lawsuit. But it is cost effective and to a certain extent may obtain a better result by submitting a complaint to the third party platform and requesting to delete the links of selling the infringing goods and close the online shop selling the suspected infringing goods. 

 

2. Warning and negotiation

 

Warning, as one of the self-remedies, is commonly used before taking the administrative or the judicial relief. Due to the plea of good faith in the IP infringement dispute, some of the manufacturers and sellers always take this as a ground to reduce their duty of care so as not to bear the infringement liability. Thus, warning is a way to inform the other party of his infringing act and request him to correct within a certain period. If he does not correct in the period, it can be deemed that the other party has willfully performed the infringing act. From this respect, warning can be used to confront the good faith plea. Meanwhile, when the other party stops the infringing act as requested, no matter whether he makes a Declaration of stopping infringement and ensuring not to infringe again, it would to a great extent influence the determination by the law enforcement organization as long as infringement happens again in the future. 

 

As for the infringing goods sold online, usually it is preferred to submit a complaint to the third party platform in respect of the seller of the suspected infringing goods. When facing obstacle or it takes a long time for submitting a complaint to the third party platform, the right owner may send a warning to the seller at the same time, which basically may stop the infringing act effectively.

 

In practice, basically when the manufacturer of the infringing goods is involved, it is necessary to send a C&D letter under the circumstance that the third party complaint is not available or there is little effect. The manufacturer usually submits a large number of evidence to the third party platform to prove no infringement, and such evidence is even enough to confront with the owner’s right. Since the third party platform is limited in identification, they may not give a conclusion under such circumstance. Thus, the right owner may need to send a C&D letter and interact with the manufacturer of the suspected infringing goods directly to further put pressure. However, as a manufacturer, it always has intention to perform the infringing act. Thus, even if the C&D letter is sent, it is very likely to be ignored directly. Moreover, it is possible that the manufacturer may directly file a lawsuit on affirmation of non-infringement to the local court, which may bring the right owner to a dilemma. 

 

In addition, in practice, if the third party platform is reluctant to respond to the complaint or does not make a decision, the right owner may send a warning to the platform according to Article 36(2) of the Tort Liability Law in order to urge the platform to deal with the matter quickly. 

 

What should be noted is that the C&D letter is not a prepositive procedure. Its most important meaning is to solve the dispute quickly. However, if the suspected infringer is experienced in producing counterfeits, or the situation of infringement is serious, C&D letter may not help as much as it alerts the infringer to prepare well in advance. If there is a possibility that the suspected manufacturer of the infringing goods is or should be aware of the infringement, it is advisable to prepare for the administrative investigation or the lawsuit as soon as possible.

 

3. Administrative investigation  

 

The third party platform may solve the infringement during circulation channel in respect of the infringing goods sold online. But comparatively they are not capable to cut off the source. It would feel like being trapped in a Whac-a-Mole game if only submitting complaint to the third party platform. Thus, if the infringement is serious and the infringing goods are flooded in the network, it is advisable to take both measures online and offline, namely, to submit a complaint to the third party platform to stop the circulation of the infringing goods in sales channels, and meanwhile try to investigate the physical store, the agency shop, the warehouse, and the manufacturer, etc. which have inventory from the clue of online selling. If the physical operators of the infringing goods during each link from manufacturing to online selling can be investigated, the right owner may choose to stop the infringing act in manufacturing and solve the selling of the infringing goods at root through the administrative investigation or the lawsuit. 

 

In addition, if the online shop is not opened in the third party platform, but is on a website set up independently, the infringement could not be solved through submitting a complaint to the third party platform. The owner may need to solve the infringement by submitting a complaint to the Ministry of Industry and Information Technology or filing a lawsuit according to whether the website has been recorded. 

Advantage

l  Time and cost effective compared with civil lawsuit l  The requirement on evidence is not so strict compared with civil lawsuit. l  The administrative organization may investigate the situation of infringement by itself.

Disadvantage

l  The chance of success of the administrative investigation is relied on whether the infringement is established determined by the administrative organization. If the administrative organization determines infringement is hardly to be established, then the administrative investigation would not be started. l  If the suspected infringer is influential in the local place, local protectionism may be involved. l  The right owner could not be compensated for the damages.

 

When to take the administrative investigation, it is advisable to pay attention to the following points:

 

Firstly, the right owner needs to submit their requests to the corresponding administrative departments according to the type of their intellectual property. Specifically, as for the selling of the suspected patent infringing goods, the right owner may apply for investigation with the Intellectual Property Office at the place where the manufacturer or the seller is located; as for the selling of the suspected trademark infringing goods or the goods involving unfair competition, the right owner may apply for investigation with the Administration of Industry and Commerce at the place where the manufacturer or the seller is located; as for the selling of the suspected copyright infringing goods, the right owner may apply for investigation with the Copyright Office at the place where the manufacturer or the seller is located. If the suspected infringing goods are imported from a foreign country, the right owner may apply for investigation with the Customs at the place where the goods entered. 

 

The Administration of Industry and Commerce is relatively strong in investigation. As for trademark and unfair competition cases, to apply administrative investigation with the Administration of Industry and Commerce is an effective way, if the physical store or the factory is found from the on-site investigation. 

 

Secondly, the on-site investigation before the administrative investigation is very important. Though the owner may also apply for investigation with the authority at the place where the server of the online shop is located, it is not easy to identify place of the server. As a significant number of the infringing websites are located outside China, it is difficult to verify the domicile only from the information such as address from its website. So it is also difficult to determine the specific monitoring authority. Moreover, the final result of such investigation against the online shop may be only closure of the shop. The infringer may set up another website and the cost for infringement is very low. Thus, before conducting the administrative investigation, it is better to find out the physical operators of the manufacturing and the selling of the infringing goods through on-site investigation. It helps to achieve a better result, crack-down the infringer and avoid the infringement from happening again. 

 

4. Criminal report

 

Compared with the other reliefs, usually the requirement is quite strict to start a criminal procedure. But it is still a possible way in practice. In 2013, according to the data from Taobao platform alone, it helped the Public Security Bureaus at various levels handle 77 IP cases, and captured 51 gangs who sold counterfeits with more than 360 million yuan involved. 

Article 213 to Article 220 of the Criminal Law in China stipulated the typical intellectual property criminal acts. For example, Article 213 stipulated “crime of counterfeiting registered trademark”, Article 214 stipulated “crime of selling the goods which counterfeit registered trademark”, Article 216 stipulated “crime of counterfeiting patents”, Article 217 stipulated “crime of infringing copyright”, and Article 218 stipulated “crime of selling pirated goods”, etc. If the right owner has the clue of the suspected crime of the infringer and it is difficult to identify who the infringer is, he may report it to the Public Security Bureau and request an investigation on the case. The right owner, as the plaintiff in a criminal lawsuit with supplementary civil litigation, may require the defendant to bear the civil compensation liability. Since the criminal punishment is very severe, the determination of infringement fact is also very strict. Only when the infringement situation is serious, can the criminal procedure be started.   

Advantage	l  Very severe punishment against the suspected infringer. l  It may be conducted simultaneously with the civil lawsuit. l  The Public Security Bureau may provide relatively great support.
Disadvantage	l  The requirement is very strict for starting the criminal procedure.

 

5. Civil lawsuit

 

Among the various measures against the online selling of the infringing goods, civil lawsuit may put great pressure on the suspected infringer, and solve the dispute as soon as possible through settlement, etc. to prevent the owner from being trapped in the endless procedures of lawsuit. Particularly, if the above mentioned measures do not work so well, the civil lawsuit would become more important. 

 

Compared with the administrative investigation, the civil lawsuit has the following advantages and disadvantages.

 

Advantage	l  Put pressure on the suspected infringer. l  The owner may be compensated for damages. l  The court is more capable of determining intellectual property infringement than the administrative organs, particularly for difficult cases. l  The judicial procedures are open and transparent, which is better to ensure fairness.
Disadvantage	l  It takes a long time to try the case and the cost is high. l  The requirement on the evidence is very strict.

When to choose civil lawsuit, it is advisable to pay attention to the following points:

 

Firstly, as for civil lawsuit, the investigation and evidence collection is very important. Similar to the administrative investigation, it is very difficult to confirm the source of the manufacturing of the infringing goods sold online. It is also possible that the address of the online shop is not a real one. Before filing a lawsuit, it needs to confirm the real identity and domicile of the defendant. Moreover, compared with the administrative investigation, the court is stricter in the requirement on evidence than the administrative organ, and usually would not directly investigate and collect evidence on-site. Thus, in order to win the case, the plaintiff needs to collect sufficient and effective evidence. For example, when buying the infringing goods, the purchase process should be notarized. 

 

Secondly, the right owner may have a number of options in jurisdictions. In current practice, usually Beijing or Shanghai would be the first choice for evidence preservation. Particularly, after the Intellectual Property Court being established, Beijing, Shanghai, etc. would be much better than the other regions in China in terms of attention to the intellectual property protection and level of the judicial protection. Meanwhile, it would reduce the influence to judicature from local protectionism to a certain extent.       

 

Chapter IV Other main infringements 

 

I. Main infringements

 

Under the Internet environment, in addition to the above mentioned domain name infringement and online sales of the infringing goods, there are the other main infringements. 

 

1. Improper use of other’s trademark or trade name

 

In a world of network, since the representations of the object, the character, the sign, etc. are all electronized, and it is easy to imitate and reproduce, due to which, the cost of infringement is reduced and the opportunities and means to cause confusion in the market is increased. It is a common occurrence to engage in unfair competition of commercial confusion taking advantage of other’s registered trademark and trade name, particularly well-known trademark and trade name. 

 

Commercial confusion refers to an unfair competition act in which the operator makes his own goods or services confusing compared to others’ goods or services through unfair means, which misleads the consumers into wrong identification or purchase of the goods or services. The trademark and the trade name are both used to distinguish the source of goods. Once there is confusion for the consumers, it would not only damage the interests of the consumers, but also harm the reputation of the trademark owner and the holder of the trade name. 

 

Besides selling infringing goods as said above, there are also the following forms of infringement related to improper use of other’s trademark or trade name.  

 

(1) Pretend to be a flagship or franchised store 

 

The consumers usually prefer to buy the goods from the “official flagship store” or “franchised store” when they choose the goods from the Internet which are mixed with the genuine and the false, because according to the consumers’ understanding, “official flagship store” means that it is authorized by the brand owner and the goods are from proper channels. 

 

However, a number of online shops which announced as the flagship stores or franchised shores of some enterprises in fact are not all authorized by the right owner. Some shops even fabricate the Authorization Letter. No matter what those shops sell, genuine or infringing goods, the announcement of “flagship store” without authorization still constitutes infringement. And the fabrication of the Authorization Letter is suspected of unfair competition due to false propaganda.

 

(2) Noticeably using other’s trademark 

 

Some of the online shops sell a number of goods, and they make the well-known brand conspicuous. Or they actually only sell products compatible to a certain famous brand, but they do not show or do not clearly show the real brand on purpose. Instead, they indicate other’s brand noticeably, for example “for EPSON” indicated on the compatible products. 

 

Such act is likely to cause confusion and misunderstanding among the consumers, which also constitutes infringement. 

 

(3) Use other’s trademark as product name, etc. 

 

In some situations, the trademark owner’s brand is of very high reputation on the products in the same category. It even becomes a synonym of such products. Some of the online sellers use the famous trademark as the product name to indicate the performance and quality of the products. 

 

According to Article 76 of the current Implementation Regulations of the Trademark Law, where the sign that is identical with or similar to the registered trademark of another person, with respect to the same or similar goods, as the designation or decoration of the goods, which is sufficient to mislead the public, it shall belong to the infringing acts against the exclusive right to use a registered trademark as prescribed in Article 57(2) of the Trademark Law. 

 

Thus, the above act also constitutes trademark infringing act. And for trademark owner, even it is possible that such act is not out of bad faith, it is advisable not to indulge such act of trademark use, because such act is likely to lead to dilution of the distinctiveness of the trademark. If the registered trademark is diluted to a generic name of the product, the trademark owner would lose the exclusive right to use the trademark. 

 

2. Use or spread other’s work on network without authorization 

 

Copyright is generated upon the creation of the work. Neither does it need to be approved by any authority, nor is publication or registration required. The work obtains protection from Copyright Law upon completion. 

 

Article 2(2) of the Interpretation on Several Issues of Law Application in Computer-Network Related Copyright Disputes passed by the Supreme People’s Court on November 22, 2000, “The provision of various rights in respect of copyright prescribed in Article 10 of the Copyright Law can be applied to digitalized works. The spread of the work among the public through network belongs to the act of using the work prescribed in the Copyright Law. The copyright owner has the right to use the work in this way or authorize other people to use the work and obtain reimbursement.” This Interpretation affirmed network spreading is a way of using the work prescribed in the Copyright law and clearly provided protection to the right of spreading the work in the network enjoyed by the copyright owner. 

 

Thus, under the network environment, without authorization from the copyright owner, performer and the maker of the recording, the work of the recording shall not be uploaded and spread in the network. When the author uploads his work according to law, visitors may read or download free of charge. But the forging, falsification, elimination or reprinting of the other’s work, without authorization, may constitute infringement.

 

At present, the improper transmission, copy, and use of the information and data on network cause most legal problems. According to the different infringement subject and act, there are mainly the following types of disputes. 

 

Firstly, the use of other’s work directly by the network platform constitutes infringement. 

 

For example, in the second half year of 2013, the State Copyright Office received a series of complaints submitted by the right owners Ucool, Tecent, LeTV, Sohu, etc. against Shenzhen Qvod Technology Co., Ltd. (hereafter referred to as Qvod) and Beijing Baidu Network Information Technology Co., Ltd. (hereafter referred to as Baidu) which were suspected of transmitting the infringing videos through their media player software. On November 19, the State Copyright Administration had the case on the record. Through investigation, it was found that Qvod and Baidu provided beam search and connection point service which directly linked to a number of websites with pirated contents through their media player software. They have certain subjective fault and their act constituted infringement against network dissemination of information right, and damaged the interests of the public. On December 27, the State Copyright Administration imposed a fine of 250,000 yuan on Qvod and Baidu respectively as an administrative punishment.  

 

Secondly, though the network platform itself is not the direct infringer, its act of providing storage space or links to disseminate other’s work may constitute infringement. 

 

For example, in the case of the plaintiff Beijing Chengtian Jiahe Film Making Co., Ltd. (hereafter referred to as Chengtian) against the defendant Guangzhou Qianjun Network Technology Co., Ltd. (hereafter referred to as Qianjun)2 , the plaintiff claimed that it found on April 10, 2012 through investigation that, the defendant disseminated illegally the film I love Hong Kong 2012 which the plaintiff had copyright and network dissemination right exclusively in Mainland China, and obtained illegal income from the above mentioned act. Since the film would be released on June 15, 2012 in Mainland China, the defendant’s infringing act severely damaged the plaintiff’s economic interest. Based on this, Chengtian requested the court to order Qianjun to stop infringement immediately and compensate for its economic losses 100,000 yuan. 

 

The defendant Qianjun argued that the film was uploaded by a registered member of the website, not the company itself, and that it met the liability exemption condition. Moreover, it complained that the compensation requested by the plaintiff was too high even if infringement did exist. After that, Qianjun deleted the film video. 

 

In the trial, the court held that since the involved work was uploaded by a registered member “mablle117”, the defendant only bears the legal liability of providing storage space as a network service provider. On the other hand, the involved video was stored under the category of “film”. The defendant had full capability to check the origin in order to avoid the dissemination of the infringing videos, but it did not do due diligence in exercising the obligation which resulted in the happening of the infringing act. Thus, in respect of the uploading and dissemination of the infringing video to its website, the defendant had subjective fault and objectively provided assistance to other’s infringing act. Finally, the court ordered Qianjun to compensate Chengtian for the economic losses and the reasonable expense of 15,400 yuan and rejected the other claims of Chengtian. The plaintiff was not satisfied and appealed the case, but the court of the second instance maintained the judgment of the first instance3 . 

 

Thirdly, if the individual or enterprise is for the purpose of business or profit, the use of other’s work on network constitutes infringement. 

 

For example, in January 2011, in the lawsuit brought by LeTV Network Information Technology (Beijing) Co., Ltd. (hereafter referred to as LeTV Network in the Yangpu District Court against Shanghai Xinghong Internet Service Co., Ltd. (hereafter referred to as Xinghong) and Shanghai Kuanyu Digital Technology Co., Ltd. (hereafter referred to as Kuanyu) for their infringement on property right in a work, LeTV claimed it enjoyed network dissemination of information right over the film Overheard in Mainland China, while the network bar operated by Xinghong provided online playing service of this film in its business place without authorization and did not pay any reimbursement to LeTV. And the film was offered to Xinghong by Kuanyu at a cost. Thus, LeTV brought a lawsuit against the two defendants in the court and requested to order the two defendants to stop infringement immediately and compensate for its economic losses and reasonable expense of 10,000 yuan. 
 

After trial, the court held that the two defendants infringed the network dissemination right of LeTV and shall bear the corresponding civil infringement liability, since Kuanyu provided the involved film to Xinghong without authorization from LeTV and Xinghong provided playing service of the involved film to the public in its network bar at a cost. Though Xinghong provided playing service of the involved film in its network bar, it paid Kuanyu for the film. And it was found that Xinghong checked the relevant certificates of Kuanyu and requested Kuanyu to ensure taking liability for copyright issue to the film played on its platform. Xinghong had already executed the reasonable duty of care and it had no subjective fault. Thus, Xinghong only needed to stop the infringement act immediately, but did not need to take the civil liability of compensating for damages. Finally, the court made a judgment according to law that Kuanyu compensated LeTV for economic losses and reasonable expense of 3,500 yuan, while rejected the other claims of LeTV. The plaintiff was not satisfied and appealed the case. The court of the second instance maintained this judgment2. 

 

The above circumstances of infringement are mainly relevant to media enterprises. Usually, the general enterprises are not likely to be involved in such circumstances. However, one of the suspected infringing acts may happen to every enterprise, that is, the illegal use of the pictures from the official website or product catalogs of an enterprise. When introducing a certain product, even if it is not from the right owner, the online seller might use pictures from the official website or product catalogs of the right owner to make its own website or catalogs for publicity. Such act is suspected of infringing the reproduction right of the work. 

 

3. Unfair competition acts as damaging commercial reputation and false advertising 

 

In recent years, the online advertising has developed rapidly. It has become a new field which is comparable to the traditional advertising. With the increase of net users in China, online advertising has become a major source of profit for e-commerce and network communication business. 

 

Since network is open, unstable and concealable, the release of improper and false advertising has become more and more common through such new media. One of the most common false advertising is on product performance, function, manufacturer, etc. in order to boast itself and entice consumers to buy the goods or services. 

 

As for this, the Anti-Unfair Competition Law in China provided explicit stipulation on the unfair competition acts as misleading and false advertising in the market. Article 9 of this law stipulated, a business operator shall not, by advertisement or any other means, make false or misleading publicity of their commodities as to their quality, ingredients, functions, usage, producers, duration of validity or origin. Meanwhile, the paragraph 2 of this Article provided a clear stipulation on the legal liability of the advertising operators involving false advertising, that is, an advertisement agent shall not act as agent for, or design, produce or release a false advertisement while he clearly knows or ought to know its falsehood.

 

For example, in one of the typical cases of false advertising involved in Shanghai Yixiang Advertising Co., Ltd. (hereafter referred to as Yixiang) and Hangzhou Tubashu Marketing Plan Co., Ltd. (hereafter referred to as Tubashu) in their design, production and representation of release, in order to earn profit from the selling of juice by the company Daxidi Nuoli, Tubashu entrusted Yixiang to make and release the advertisement of juice which announced that the juice could cure asthma, cancer, rheumatism, arthralgia, diabetes, etc. and was helpful in preventing and curing cancer from eight aspects, exaggerated product effect, used medical terms or terms which were likely to be misunderstood as medicines, and misled consumers, which violated the relevant regulations and laws of Advertisement Law. The Administration of Industry and Commerce ordered the two defendants to stop releasing the illegal advertisement, confiscated the advertising fee of 283,000 yuan of Yixiang and imposed this company a fine of 1,532,000 yuan, and imposed Tubashu a fine of 1,915,000 yuan. 
 

In addition, the online advertisement which has already been released not only made false publicity of the product performance, use, and manufacturer, but also dispraised others and boasted itself. Specially, their false publicity included fabricating and disseminating false fact, using unconfirmed opinions to mislead the consumers, using partial fact to cover the whole situation, using past fact to cover the present fact, using vague and ambiguous words to mislead consumers, etc. Due to its falsehood and misleading nature, it also brought much trouble to the other operators. 
 

As for this, Article 12 of the Advertisement Law stipulated advertisement shall not dispraise the goods and services of the other business operators. This is also applicable to the advertisement under computer and information network environment. Meanwhile, Article 14 of the Anti-Unfair Competition Law stipulated a business operator shall not fabricate or spread false information to injure his competitors’ commercial credit or the reputation of his competitors’ commodities. As a business operator, if he fabricates or spreads false information to injure his competitors’ commercial credit or product reputation through network, such act would constitute infringing act prescribed in this law. 

 

For example, in October 2013, the Administration of Industry and Commerce in Beijing issued the first ticket which is against false publicity through Weibo by a seller. In this case, Beijing Fangwanyuan Company made a comparison of his own cell phone and other cell phones and announced that his cell phone won. The Administration of Industry and Commerce in Beijing determined the company dispraised or even slandered other business operators’ goods on purpose and damaged other’s commercial reputation, which constituted unfair competition. Meanwhile, the announcement that his cell phone won was exaggerated and constituted false publicity, which was misleading for the consumers. The Administration of Industry and Commerce imposed Fangwanyuan Company a fine ticket of 150,000 yuan on the grounds of false publicity and infringing other’s commercial reputation.   

 

II. Countermeasures 

 

As for the above infringing acts, basically the right owner may take the legal means introduced in the preceding chapter as a reference, briefly as the following chart. 

 

Compared with the circumstance of selling the infringing goods introduced in the preceding chapter, the infringement circumstances introduced in this chapter usually do not involve physical objects, but only the infringing information on the network. Thus, it is advisable to pay attention to the following points when taking the above mentioned countermeasures.

 

(1) This type of infringement usually does not involve physical objects, and a part of the infringers are relatively not serious in malignance due to their negligence and unawareness of the law. As for this type of infringement, usually, the chance of successfully solving it by using warning and negotiation is much higher than the measures introduced in the preceding chapter. Thus, warning and negotiation can be taken as the first option to solve this type of infringement. 

 

(2) The biggest difficulty in solving this type of infringement is the application of law. It is easy to understand that the selling of the infringing goods constitutes infringement. However, when the goods sold are not infringing goods, it is likely to be disputable whether the use of the right owner’s trademark is reasonable use or improper use. In judicial practice, usually it would be considered as reasonable use if the use of the trademark is to explain the actual source of the goods. On the contrary, if the use of the trademark is likely to cause confusion and misunderstanding, it would constitute infringement. But the judgment also depends on the specific situation. In light of the difficulty of this type of infringement in legal analysis, it is necessary to have a lawyer involved. 

 

(3) Since physical objects are not involved in the infringement, usually the administrative investigation is not recommended. As for the relatively serious infringing act, usually lawsuit could bring a better result. Since lawsuit is likely to attract social attention, the right owner may use lawsuit to reduce the possibility of confusion and misunderstanding about the goods, so as to eliminate the bad influence caused due to the improper use of the trademark by the infringer. 

 

(4) In practice, the above infringing act usually exists together with the selling of the infringing goods. For example, in the selling of the infringing goods, the seller uses the pictures from the right owner’s official website, pretends to be the flagship store of the right owner, uses the trademark as the product name in publicity, etc. Under such circumstance, the right owner may choose to enforce one or more rights, or choose to enforce the right which is most easily to be ascertained. 

 

Chapter V Strategies for Enterprise and Points for Attention

 

As above mentioned, there are various forms of network infringement. And the famous brands are always the ones that the infringers are likely to imitate. Under the network environment, according to our experience in handling online infringement, we would like to provide the following advice for your reference on how to protect the intellectual property of the enterprises. 

 

1. Obtain right as soon as possible
 

The obtaining of right is the precondition for the enforcement of right. It is widely known that intellectual property is a territorial right. However, the Internet may cross the territory very easily. When the right owner only has right in his local country but not in China, it is hard to cope with the infringing act of disseminating on the Internet in China. 

Considering the great influence of the Internet to the economic globalization, when the right owner establishes its IP strategy, it is advisable to protect the right in more jurisdictions. Particularly, since China is an enormous market and has a great potential, it is important to obtain right in China. Likewise, it is also very important for the Chinese enterprises to take IP into first consideration when entering the international market. 

 

2. Set up counter measures and long term strategy

 

With the popularity of Internet, particularly mobile Internet, and due to the convenience of online shopping, we may say that people’s life is inseparable from the Internet. The network media have replaced paper media to become a major channel for people to obtain information. And online shopping is gradually replacing purchasing in the physical shops. It is fairly possible that the infringing goods reach the consumers through an online channel. 

 

One infringing act and one piece of infringing goods may not cause great harm to an enterprise. But the accumulation of such acts and good may affect the consumers gradually. The consumers may be confused and make wrong identifications, to say the least. They may even lose confidence in the brand, the product and the enterprise. Therefore, the right owner should take actions immediately when it finds infringement on the network, so as to control it in the bud. This requires the enterprise to set up reaction system and long term strategy. 

 

For example, for the infringing goods which are sold well in the e-commerce platform, the right owner needs to set up a monitoring and reacting mechanism for the long run, instead of an overnight thing. Search should be performed periodically online. Complaints should be filed with corresponding entity immediately if an infringing link is found. In this way, the infringing goods sold online would become less and less. 

 

We have handled a case in which an infringer continued selling the infringing goods after the complaint was made by the right owner. The seller said that he considered stopping selling but found that others were still selling the goods. He thought that the right owner had stopped fighting for his right, so he risked selling again because of his inventory. This tells that continuous complaints is useful not only in decreasing the circulation of infringing goods, but also in showing the right owner’s attitude of protecting his right, which may push the infringer to stop his infringing act. 

 

3. Points for attention 

 

(1) The choosing of right

 

One infringing act may infringe a number of rights at the same time. Under such circumstance, the right owner needs to focus on the one that he is mostly confident in the claim. For example, the infringing goods infringe copyright, registered trademark right, and also involve unfair competition. If the right owner decides to solve the dispute through administrative way, the right owner needs to consider which right has the best chance to win the case. And the competent authorities may be different for different rights. For example, if the right owner decides to claim copyright, he needs to submit request with the Copyright Office. If trademark right or unfair competition claim is chosen, he needs to submit request with the Administration of Industry and Commerce. In practice, the investigation by the Administration of Industry and Commerce is usually more common and faster than that by the Copyright Office. Thus, if the chances of winning are equal, we recommend seeking relief from the Administration of Industry and Commerce. Moreover, the scope of cases received by the Administration of Industry and Commerce is broader. The right owner may claim trademark infringement, unfair competition, product quality issue, etc. in one request. 

 

(2) The importance of evidence collection and timing to enforce right

 

A sufficient investigation and collection of evidence should be performed before enforcing right. We have encountered a web page infringement case. The right owner directly sent a C&D Letter to the infringer without conducting either further investigation on the infringing act or notarization to the infringing web page. The infringer deleted the infringing web page upon receiving the C&D Letter, but refused to provide the source of the infringing goods. Since the infringing web page has been deleted, the right owner had no way to take further legal action against the infringer. If the right owner had conducted notarization in advance, the owner may put pressure on the infringer or seek liability based on the notarized infringement evidence, under the circumstance that the infringer is not cooperative. 

 

The implementation of the countermeasures against the infringement is a dynamic process. After taking the first measure, the next measure may change from original plan according to the degree of cooperation of the infringer and the development of the situation. Thus, it is necessary to ensure the safety of the evidence before enforcing right. This is because the infringer may immediately hide the infringing evidence after being warned or contacted, and it would be very difficult to collect evidence afterwards. 

 

(3) In-depth investigation based on the clue of the online infringing act

 

The measures such as deleting the links selling the infringing goods and closing the infringing website are aimed to prevent the infringing goods from being circulated to the consumers at the end. To eliminate infringement from the source, it is necessary to find out the wholesaler, supplier, manufacturer, etc. which are involved in manufacturing or selling the infringing goods. The right owner could use the information already obtained as the starting point for the investigation. Of course, finding out the manufacturer is not guaranteed. But the in-depth investigation could reveal relevant information of the circulation of the infringing good in domestic market, and the right owner may set up a strategic countermeasure against the infringing goods based on this information. 

 

(4) Shoot arrow at the target

 

There is a saying in China that “do not kill a goose using a knife for an ox”, which means that do not take too much effort and cost to solve a small problem. The right owner needs to design the best solution based on his budget and the expected result. 

 

If the right owner only wants the shutdown of an illegal website which uses his domain name preemptively registered, and do not seek other liabilities due to limited budget, then we suggest solving the dispute through domain name arbitration. It saves time, money and effort, and the right owner is very likely to succeed. Of course, a precondition is that the dispute is still within the arbitration time limit. 

 

If the location of the inventory is known, it is not necessary to send a C&D Letter to the infringer. Instead, go directly to the Administration of Industry and Commerce for relief and clear out the warehouse of the infringing goods, which has the effect of warning other infringers as well. 

 

(5) Choose an IP firm

In light of the professionalism of intellectual property, enterprises usually entrust a professional IP firm to give advice and enforce right on behalf of them when they protect their IP rights in China. The IP firm becomes a key element in the success of fighting infringement. For example, the notarization of web pages and purchase seem easy. But if one step goes wrong or one web page is missed, such flaw is very likely to be utilized by the other party in challenging the effectiveness or sufficiency of the evidence in the following lawsuit. Therefore, we suggest enterprises select a highly experienced IP firm as a partner in its voyage of enforcing IP right in China. 

 

At present, IP infringement is flooded on the Internet. It is not easy to clean the internet IP environment and it takes time, which is similar to clearing smog in Beijing, as we know it. Our firm is very much willing and honored to contribute to cleaning IP environment and help the right owners to protect their IP right.