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Landlord liability on the web

July 2012 - Intellectual Property. Legal Developments by Wanhuida Peksung.

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In April this year, the Supreme People’s Court of China released the highly anticipated Top 10 IP Cases of 2011 alongside its Annual Report. Taobao Trademark Infringement Dispute is listed among the Top 10 cases.

In Taobao case, Korean fashion company E-land owns the trademark Tennie Weenie. E-land filed seven complaints to Taobao.com regarding distribution of fake clothing by an online shop owned by Du Guofa. The court found that Taobao failed to take sufficient measures to stop infringement. In its decision, the court stated that taobao.com should bear civil liability, including compensa­tion of Rmb10,000 ($1,580) for joint infringement with Du.

The case has attracted much attention since the Court released its judgment. This is the first time a Chinese court has held a commercial platform provider like Taobao liable for online trans­actions of infringing products. Before the case, multiple attempts from international brands to pursue legal liability of commercial platform providers (CPP) ended in failure, including Puma v Taobao in 2006 at Guangzhou Intermediate Court.

E-land v Taobao creates a series of standards to increase the accountability of commercial platform providers. While CPPs have no general responsibility to monitor or control online IP infringement, they are liable remove content quickly upon receiving complaints from trademark owners with evidence. Otherwise, they are not exempt from joint liability. CPPs can ask individual online shop owners to remove infringing goods. However, if the goods are not removed, CPPs must take suffi­cient measures to stop infringement.

Listing the case as one of the Top 10 represents a new trend in applying greater responsibility to CPPs. It underlines that providers have to take action as soon as a trademark owners complain and if necessary close online shops run by repeat infringers. Providers have the technical capabilities to shut down online shops and monitor repeat infringers. Failure to comply may result in joint legal liability between the CPP and shop owner.

The SPC chose this case from almost 10,000 court decisions issued by various levels of courts in 2011. They are conveying a strong signal to commercial platform providers over their liability during the complaint and settlement procedures. The case also encourages brand owners to protect their marks by negotiating with providers or taking legal action when providers fail.

Contributor: Charles Feng, Wan Hui Da Law Firm and Intellectual Property Agency


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