Article 57.6 of the Trademark Law provides that "Any of the following acts shall be an infringement of the exclusive right to use a registered trademark ...(6) to intentionally provide a person with convenience ... or facilitate such person's infringement of the trademarkofanotherperson".

The Internet, with its "online platform market places", constitutes a type of "convenience" provided to vendors offering for sale their products online.

However, the liability of an internet access service provider shall only be found if the provision of such convenience is intentional.

Indeed, Article 36 of the China Tort Law provides that an Internet service provider shall only bear the joint and several liability with a service user who commits acts of infringement on the platform if the service provider (1) is clearly aware of such infringement (because it has received notification of it) and (2) does not take reasonable measures to end the infringing activity. This is commonly called the "safe harbor principle", which means that, in principle, an Internet service provider is not responsible for the transactions taking place on its network unless, once informed, it tolerates them. It is said that the Internet service provider must remain neutral, in the sense that, once a notification is received, it may not take side in favor of the user and refuse to take action.

Some networks, in order to attract customers on their platforms, publish rules and offer guaranties aiming to reassure the customers that the products offered for sale on the online boutiques are authentic.

For example, Beijing JD San Bai Liu Shi Du E-Commerce Co., Ltd. (hereafter referred as JD) adopts this commercial strategy. JD published rules explaining how it verifies the legal status of candidates who wish to open a "flagship store" on the platform. According to such rules, if a vendor wants to use the name "Flagship Store of (brand name)", (1) such brand name must be a registered trademark or an applied mark; (2) the vendor's company or the legal representative of the vendor's company must be the registrant of the trademark; (3) if the vendor is only an authorized dealer, it cannot use the word "official" in its name.

Case Brief:

Discovery Communications, LLC (hereafter referred as DCL) is one of the world's leading media and entertainment companies (operator of the famous Discovery Channel). DCL is the registrant of the trademarks "DISCOVERY" and "探索 " (Chinese transliteration of DISCOVERY) in class 41, covering TV program production services. Based on the global impact of the Discovery Channel, DCL launched its own outdoors brand "DISCOVERY EXPEDITION", and registered the trademark in China for bags and clothes in classes 18 and 25.

After launching the brand "DISCOVERY EXPEDITION" into the Chinese market, DCL found that a company named Zhongshan Discovery Outdoors Products Co., Ltd. (hereafter referred as Zhongshan Discovery) was using the  trademarks "DISCOVERY  ACTIVE",  " ",  " ", "探索" (Discovery) and "探索户外 " (Chinese transliteration of "Discovery Outdoors") on outdoors products. Moreover, Zhongshan Discovery also opened an online store with the name "DISCOVERY 探索户外官方旗舰店 "  ("Official Flagship Store of Discovery Outdoors") on the online mall operated by JD.

In July 2015, DCL sent a cease and desist letter to JD requesting cessation of the infringement and closing of the store, but JD did not positively respond. So, DCL filed a lawsuit against Zhongshan Discovery and JD before the Beijing Intellectual Property Court based on the infringement of its trademarks.

In its claim, DCL drew the attention of the court to the rules published by JD regarding the opening of "Flagship Store" and claimed that, by publishing such rules, JD was assuming a duty of care and was indirectly guaranteeing that all products sold on its platform by such flagship stores, were genuine products.

JD argued that it had verified that the trademarks " 探索户外" and "DISCOVERY ACTIVE" had been applied by Zhongshan Discovery, and therefore that it had fulfilled its examination duty. JD also argued that, after the DCL filed the suit, it had taken the reasonable measure to cease the infringement by closing the store, and therefore should not bear the joint and several liability with Zhongshan Discovery.

The Beijing IP court agreed that, strictly speaking, under Article 36 of the Tort Law, JD did take measures after being officially informed of the infringement committed on its platform by Zhongshan Discovery.

However, the Court affirmed the joint and several liability of JD. The court considered that the precaution in the "flagship rules" that a store can be named as flagship with a mark that is only applied, yet not registered, cannot constitute a valid defense. The court indicated, on the one hand, that only a registered trademark confers the exclusive right and the filling of a trademark application does not guarantee the approval of such application; on the other hand, given the high reputation of DCL's trademarks, JD should have assumed a higher level of examination duty.

Therefore, the court found that the act of JD constituted the contributory infringement, as defined in article 9 of the Tort Law (assisting a person in committing a tort) and JD was to bear the joint and several liability for the infringement committed by Zhongshan Discovery on JD's Mall.

On July 20, 2017, the court rendered the judgement of 1st instance, which ordered Zhongshan Discovery to pay the damage of RMB 3 million, of which JD shall take the joint and several liability for RMB 100,000.

Wanhuida  represented DCL in the civil proceeding.

Comments:

In this case, the court reached the conclusion that if JD publishes such "flagship naming rules", it is to guarantee to the consumer that the products sold in JD mall are all genuine products. The aim is to draw in more consumers. Therefore, by publishing these rules, JD gives an endorsement of its vendors which results in the loss of strict neutral position of JD.

Therefore, the Safe Harbor Principle indirectly defined by Article 36 of the Tort Law shall not apply. After all, one cannot say "I guarantee the sellers in my mall sell genuine products" but reverse the position to "I don't know they were selling infringing products" when being caught.