Author: Lili WAN   
Co-author: Sai CHEN
Chinese Attorney-at-Law

 
In the information age, with the rapid development of the Internet, mobile Internet, big data and other technologies, products can be promoted to the whole world without leaving your house; foreign companies can also open stores on China's major e-commerce platforms, leveraging precision marketing on customers and intelligent recommendation to achieve “things to people.”

However, the mushrooming of infringing goods has become a major new problem for companies. In this article, the author, based on the law firm’s years of experience, gives some suggestions on how to win the war against infringing goods on e-commerce platforms. Hopefully it could be helpful.

I. On-line Complaint

Generally, the e-commerce platforms treat the information about infringing goods on the platform in accordance with the safe harbor principle, i.e. notice + deletion, where the right holder discovers the information about infringing goods on the platform, sends a notice to the platform, specifying the information about and the reasons for infringement, and then the platform takes appropriate measures, such as deletion and disconnection of links, upon receipt of the notice.

The E-Commerce Law, which has come into force since 2019, regulates business activities of selling goods or providing services through the Internet. Article 41 of the law clearly stipulates that e-commerce platform operators shall establish rules for the protection of intellectual property right (IPR) strengthen cooperation with IPR holders and protect IPR in accordance with the law.

At present, major domestic e-commerce platforms such as Alibaba, Jingdong and Pinduoduo have established IPR protection platforms to receive infringement complaints from IPR holders. Online complaints have the advantages of low cost, simplicity, convenience and high processing efficiency, and are the primary choice for both large enterprises and SMEs to enforce their rights.

The 2021 Annual Report on Intellectual Property Protection released by Alibaba on March 31 shows that by the end of last year, Alibaba's IP protection platform protected a total of over 640,000 items of various IPRs, including trademark rights, copyright rights and patent rights, and more than 580,000 brand rights holders enrolled in the platform, with the value hitting a new record high[1]. Companies can conduct regular network searches and make online complaints on their own, or entrust professional investigation companies to handle, depending on its actual circumstances.

II. Sending lawyer's letter

In some cases, making a complaint online is not possible, or the desired goal cannot be achieved by filing online complaint only. For example, even if a link to an infringing product is deleted, the seller may create a new link to the infringing product after a period of time, or the reason for the complaint may not be recognized by the platform or the merchant may submit a response for the complaint and the link to the infringing product may remain.

In this case, companies can consider sending a lawyer's letter directly to the store through a law firm. Because the lawyer's letter has a certain degree of deterrence, sending one can be less expensive, take less time, and produce better results; thus, sending a lawyer's letter is also one of the most frequently used means for companies to enforce rights.

In recent years, the author has acted as an agent for a Japanese lubricating oil brand to crack down online counterfeiting and enforce rights. To file online complaint, the product needs to be purchased and then make the authenticity appraisal before filing. As such, online complaints become extremely expensive and inefficient. Therefore, the legal means of sending a lawyer's letter was adopted. Most sellers who cannot provide authentic source certificates will take the initiative to delete product links after receiving the lawyer's letter, which has had a good effect in purifying the online sales market.

III. Administrative investigation

The first two means can have a certain effect on online sales, but it is difficult to precisely fight against offline sales and manufacturing. Additionally, there are those "diehards" who will not stop selling infringing products despite repeated online complaints or lawyer's letters. In this scenario, harsh legal actions are required to crack down on the “source”.

Through the online complaint and lawyer's letter in the first stage, if the manufacturer can be identified, an onsite investigation can be conducted on the manufacturer to get a clear picture of the scale of the manufacturer, the location of the production plant, the production status of the infringing goods, the stock status, etc. Once manufacturing behavior and infringing products in stock is affirmed, it is advised to apply for administrative investigation before the relevant local administrative authorities. With the help of administrative authorities, the manufacturer can be forced to stop the sale and infringing products can be destroyed, and at the same time, the evidence of infringement can be preserved, which is conducive to the right enforcement in the future.

Ⅳ. Civil litigation

For the merchants who have been infringing for a long time, have a wide sales range, have huge sales volume and earn a high profit, or who implement infringement again after administrative investigation, the most severe legal means, i.e. civil infringement litigation, can be considered.

Although civil litigation is costly and time-consuming, it is the most forceful way to crack down infringements and damages can be claimed. In order to achieve better results, a thorough litigation plan needs to be made in advance, including the selection of the target, venue of the lawsuit, the preservation of infringing goods and infringing acts, and the preservation of evidence related to sales volume and other data.

The author's law firm filed an online complaint and sent a lawyer's letter to a Chinese company on behalf of a Japanese client who discovered that a face slimming device sold on an e-commerce platform infringed their design patent in 2017. Even so, the company continued the infringement. After preserving relevant evidence, the Japanese client entrusted our firm to file an infringement lawsuit before court in 2019. Finally, in 2021, the court supported our claims in full and awarded punitive damages of up to CNY 3 million and reasonable expenses of CNY 200,000. Ultimately, the company applied for cancellation of the company, and our client achieved their goal of eliminating the infringing goods in the Chinese market.

Ⅴ. Closing

In brief, to win the war against the infringing goods on e-commerce platforms, usually it is necessary to adopt a basket of legal measures jointly. Once the infringing goods are found, the company should immediately analyze the status of the infringement and take the best countermeasures in line with the company's policy, so that the infringing goods is nowhere to escape.

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