Chinese Government Crack Down Piracy of Online Shopping

Days ago, 9 ministries including Ministry of Commerce and Ministry of Industry and Information Technology jointly issued a notice demanding for further cracking down of counterfeiting and piracy behavior in online-shopping, meanwhile requesting related departments of Zhejiang and Shanghai to urge Taobao, Eachnet and Paipai to start their self-inspection campaigns, and to punish them severely, even to stop services for their internet accessing and domain name analyzing, if they fail to meet government’s requirements..

“Safe harbor” no longer safe

The “Notice Regarding Further Promotion of Campaign against Intelligence Property Right Infringement and Manufacturing and Selling of Counterfeit and Shoddy Goods in Online-shopping Sector” was marked Urgent. It not only requested serious investigation of government departments but also clarified responsibilities of online-shopping platforms for the first time.

“It indicates that e-commerce has grown to a relatively mature stage. State and government start to regulate the online-shopping platform so as to make e-commerce keep growing healthily in a long and optimum run.” Chen Bo with Shanghai All Bright Law Offices told IT Times. On 25th April, the lawsuit of Taobao trademark infringement he acted for Shanghai-based Yinian Ornament Trading won at last in Shanghai No. 1 Intermediate People’s Court claiming for a joint compensation of 10,000 yuan from infringer and Taobao.

The judgment of last resort believes that since Taobao knew the fact that others were using its service to conduct trademark infringement, yet failed to take any necessary measures, which indulged the infringement, it should be liable for joint compensation. Chen Bo said it was the first time that Taobao has lost in a lawsuit of trademark infringement in China.

Administrative department’s clarification of responsibilities of online-shopping platforms in infringement cases seems to say that the “Safe Harbor Principle” for Internet is not safe anymore.

C2C platforms’ fight with in infringement has little success

For a long time, C2C platforms such as Taobao and Paipai have been questioned of counterfeiting and infringement. Although Taobao launches campaigns against piracy every year, they have been resulted in little effect.

“In the peak time, there are more than 20 thousand sellers selling products in name of Yinian on Taobao,” disclosed Chen Bo. A Yinian’s relevant person told journalist that the company’s sales mode is quite clear—either self-operated store or exclusive counter without any agents, let alone franchised online shop. Since 2006, Yinian has kept complaining to Taobao about the online sellers’ piracy of its garments. “They complained on every work day. In a peak week, the complained links of pirated garments were up to 10 to 20 thousand.” He said helplessly. Yinian has relatively fixed judging standards toward counterfeits that is lower price than allowed minimum, style difference or “Authorized” marked, etc. However, Taobao didn’t agree with these standards, and “they only agreed to delete links after instead of shielding them through key words and prices before hand.” Up till now, there have been over 10 lawsuits about infringement of Taobao sellers and Taobao, which cost a lot but not all got satisfied results. In the judgment of a similar case took by People’s Court of Yangpu District few days ago did not admit Taobao’s joint liability, and the aftermath of which is that by 27th April, journalist still could get more than 30,000 searching results with trademarks of ELAND and TEENIE WEENIE, which are brands under Yinian.

Shanghai Benesse Trading is a distributor of Qiaohu series products. They also suffered from piracy. “We have never issued any online-selling credentials.”Miss Yang in charge of cracking down online piracy introduced, since the end of 2008, they began to communicate with Taobao requesting for deletion of pirated links. With some times of coordinating, Benesse now have to regularly send the pirated product links they find to Taobao to delete them. “In this way, we could control the piracy to a certain controllable amount. But it is impossible to put it to an end. It may be deleted today but will come out again tomorrow.”

Taobaos cannot help?

Troubles for Yinian and Benesse are in fact also troubles for online-shopping platforms. Don’t they want to fight with piracy? Of course they do. Miss Yang told journalist that after communicating with Taobao, the amount of pirated Qiaohu has decreased dramatically, and their links were deleted immediately. The situation is much better than before. Taobao has also announced several times to spend a hundred millions of RMB to fight with piracy. However, “it’s indeed a difficulty for Taobao to check every C2C sellers that could be counted in thousands or even in millions.” Wang Yu, Secretary Chief of Shanghai E-commerce Association, expressed.

The Notice has clearly requested online-shopping platforms to establish a 24hour inspection system, also to regulate the market entry certification system for business operators as well as commodities, and to establish trademark and patent inquiry system so as to screen information of intelligence property infringement and manufacturing and selling counterfeit and shoddy goods and to perfect the security mechanism of information releasing, ID authenticating and dispute processing. All these measures call for an enlargement of platform human and material resources. Even then, “there may be some effect on trademark infringement, but the quality is still hard to control.”Wang Yu said.

Five days after the issuance of the Notice, Jack Ma of Taobao can’t help to question, “Is the campaign against Taobao or counterfeit or online-shopping? If it really aims at fighting with counterfeit, we can provide all detailed data to track down the source of counterfeit. Yet we are not Procuratorate or Ministry of Public Security.”

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