E-Commerce Platforms Up, Trademark Holders Down!

The First China E-Commerce Law lightens the burden of E-commerce platforms when dealing with IPR infringements, while making it more expensive and burdensome for the holders of IP Rights!

The long awaited E-commerce Law of the PRC has been finally approved, entering into force on August 31, 2018. This is the first Law that expressly regulates the relation between IPR owners and e-commerce platforms. The Law seems to favor e-commerce platforms by shifting the whole burden to the right holders to prove infringement in case of disputed takedown notices. Compared to the established business practices, the Law appears to be more e-commerce than IP friendly.

1. An overview of the relevant provisions

Instead of providing strict rules regarding the protection of IP rights online, the new Law has simply codified the current practices on takedown notices. This will leave it to the e-commerce platforms to continue self-regulate the procedures for the takedown of IPR infringing content. In particular, the Law has neither introduced any measure or standards to lighten the burden of proof of infringement of the right holders when filing takedown notices, nor has provided a procedure of effective cross examination of the defenses filed by the alleged infringer in case of disputed takedowns. The platform retains the discretion to examine and interpret the evidence and is free from the burden of having to make a final decision in case of a disputed takedown notice. This is particularly critical in those cases in which the alleged infringer denies liability, shifting the whole burden on the right holders to overcome such refusals by filing judicial or administrative lawsuits!! As we shall see below, this will give counterfeiters a good tactical advantage and will likely increase the number of disputed takedown notices in the future.

Also, the Law does not provide any strict obligation and standards imposing on the platforms the creation of preventive IPR protection systems. Article 45 of the Law only provides a generic obligation for a platform to take appropriate protection measures if the former knows or should have known that a user has infringed others IP rights. Aside from failing to define the standard of “knowledge”, the provision refers to cases where the infringement has already taken place. No specific obligation to prevent postings of obviously infringing content has been introduced, thus freeing the platforms from the obligation and burden of having to take preventive measures. If any such measures are or will be in place, this will be the result of lobbying and self-regulation, and not a consequence of this new law.

As we mentioned above, the Law acknowledges that the IPR holders have a right to request the removal or the block of infringing content by filing a notice with the platform, which must be supported by prima facie evidence of infringement. This is nothing new. It has been the common practice of e-commerce to allow so called takedown notices supported by evidence of infringement.

Like in the consolidated business practice, the Law allows the alleged infringer to defend itself by filing a response to the notice supported by evidence. However, and unlike the text of the 3rd and last draft, the final text of the Law has added to the safe harbor rule of e-commerce platforms, a 15 days time limit for the IPR owner to file a litigation or complaint (maybe with the IP office) or drop the case. If a lawsuit/complaint is filed, the take down measures already taken by the e-commerce platform will remain in place, with the e-commerce platform’s measures becoming a de facto “preliminary injunction”. If not, the measures will be revoked. In practice, an unlike the previous drafts, the platform is taking no further responsibility in deciding who is right or wrong and the law helps her out of trouble by forcing the right holder to escalate the dispute to the judicial level. Continue reading “E-Commerce Platforms Up, Trademark Holders Down!” »

Lafite succeeds in cancelling ‘Lafeite’ used on hotel services

A Chinese hotel named Beijing Lafeite Castle Hotel Co., Ltd. (Lafeite Hotel) in 2007 filed for the registration of the mark “拉斐特” (pronounced as “Lafeite” in Mandarin) for use on restaurant and hotel related services under Class 43, which the China Trademark Office (CTMO) approved for registration in 2015.

Château Lafite Rothschild (Rothschild), the producer of the globally famous wine brand “LAFITE” (“拉菲” in Chinese, pronounced as “Lafei” in Mandarin), filed for the cancellation of the disputed mark before the Trademark Review and Adjudication Board (TRAB) claiming that, as its prior registered trademarks “LAFITE” and “拉菲” (“Lafei”) designated for use on wine products have attained well-known status, the disputed mark “拉斐特” (“Lafeite”), which is similar to the mark “拉菲” (“Lafei”), may damage Rothschild’s interests.

[Note: according to Article 13 of the Trademark Law, well-known trademarks that are registered in China are entitled to cross-class protection to the extent that no mark that is a copy, imitation or translation of said well-known mark may be registered for use in whatever class of goods, if doing so may mislead the public or otherwise damage the interest of the registrant of the well-known mark.]

The TRAB however handed an unfavorable decision holding that the evidence adduced is insufficient to prove that Rothschild’s trademarks “LAFITE” and “拉菲” (“Lafei”) had attained well-known status in China prior to the registration of the trademark; meanwhile, since the restaurant services under Class 43 and the wine products are dissimilar, the disputed mark, as applied for use on restaurant related services, is unlikely to damage Rothschild’s interests. Continue reading “Lafite succeeds in cancelling ‘Lafeite’ used on hotel services” »