With over 700 million users, China has the world's largest population of netizens. This is a significant indicator of the role of the internet in modern Chinese society. The stratospheric growth of e-commerce platforms, with Alibaba in particular nipping at the heels of its western competitors (its infamous 11.11 Singles Day online sales bonanza dwarfs Black Friday and Cyber Monday), is evidence that the Chinese consumer marketplace is moving online. Coupled with this is China's embrace of a digital economy with consumers voraciously using online payment platforms on smartphones and other devices to purchase everything from apples to apartments. Furthermore, the internet in China has been styled as the entertainment superhighway, with content providers such as iQiyi and Youku Tudou streaming foreign and home-grown content to millions of smartphones and computer screens in China on a daily basis and acting as gatekeepers to Chinese audiences as foreign content-creators opt for licensing agreements with Chinese companies rather than face an uphill battle to bring their movies and TV shows to China directly.
With the internet's increasingly significant role, any enterprise, local or foreign, cannot fail to have an effective online presence in China. However, with the many advantages that the internet brings as a dynamic and rapidly growing platform for businesses to market their products, promote their brands and directly provide services to consumers, it also, naturally, raises questions and challenges about protecting IP rights online. This article will look at three areas of online-related IP: domain names, cybersquatting and online copyright infringement, and the steps that right owners can take in relation to these areas to protect and enforce their rights online in the People's Republic of China (PRC).
Domain names are often the most important aspect of a business's online IP. They typically consist of, or contain, a company's trade name (and trade mark) and act as the gateway for online consumers to find a company and its products and services online. For foreign companies who have already registered their dot-com (or other local variant) domain names at home, there is nothing to worry about. Provided a website's content/operations adhere to PRC regulations (and there are definitely notable exceptions), their website will be accessible in China. However, if a company wishes to create a China-specific website, particularly one with a top-level .cn domain name, the process is regulated by the China Internet Network Information Centre (CNNIC) through their 2012 Implementing Rules of Domain Name Registration. These rules stipulate that applicants must apply through CNNIC accredited registrars (lists of local and international registrars can be found at http://www1.cnnic.cn/index.htm) who will ask the applicant to provide a registration form containing:
- the intended domain name (provided it is available);
- the applicant's relevant contact details, and those of its administrative contact, technical contact, billing contact and purveyor contact; and
- the term of domain name registration.
This will be submitted alongside a copy of a local business certificate and a copy of a passport or other official ID of the authorised contact person if the applicant is a company, or a copy of a passport, or other official ID for an individual applicant. Once the documents are verified and submitted, the domain name will be registered in a few business days, and there is no opposition period.
Registration restrictions and cybersquatting
Other than previously registered names, the restrictions on what can be registered as domain names in China are laid out in Article 27 of the China Internet Domain Name Regulations (2004), set by the Ministry of Industry and Internet Technology (MIIT). They are as follows:
- Those that are against the basic principles prescribed in the Constitution;
- Those that jeopardise national security, leak state secrets, intend to overturn the government, or disrupt state integrity;
- Those that harm national honour and national interests;
- Those that instigate hostility or discrimination between different nationalities, or disrupt the national solidarity;
- Those that violate the state religion policies or propagate cult and feudal superstition;
- Those that spread rumours, disturb public order or disrupt social stability;
- Those that spread pornography, obscenity, gambling, violence, homicide, terror or instigate crimes;
- Those that insult, defame others and infringe other people's legal rights and interests; or
- Other contents prohibited in laws, rules and administrative regulations.
While a necessary and important pre-emptive protective measure, the actual process of a Chinese domain name registration rarely presents challenges or obstacles to rights holders. Problems are more apt to arise when the desired domain name, or a similar domain name, has been registered by another party, unconnected to the right holder, without authorisation; given the fact that domain names are registered on a first-come, first-serve basis in China (Article 24 of the above-mentioned regulations), these situations will give rise to domain name disputes.
The actual process of a Chinese domain name registration rarely presents challenges or obstacles to rights holders. Problems are more apt to arise when the desired domain name, or a similar domain name, has been registered by another party
The aforementioned situation is generally described as cybersquatting, whereby the cybersquatter attempts to profit from using the first-to-file system in China to register domain names that are identical or confusingly similar (sometimes as subtle misspellings, known as typo-squatting) to the trade names, brand names, or product names of legitimate companies in bad faith and then offer to sell the names back to them at often exorbitant prices, or in some cases do so in an attempt to draw traffic to their own site to promote their own competing or counterfeit products and services, or to gain advertising revenue.
One of the most notable cases of cybersquatting in China was in fact the first foreign domain name dispute in China, involving the registration of www.ikea.com.cn in 2000 by Beijing CINET Information Co Ltd. While this dispute was settled by the court, which recognised even back then the clear association between domain names and trade marks or trade names for companies operating online and made their judgement based on unfair competition and trade mark infringement, China does have a dedicated formal mechanism for handling domain name disputes.
An aggrieved party to a .cn registration can file a domain name dispute within two years of the registration date with either of the CNNIC's accredited resolution institutions, namely the China International Economic and Trade Arbitration Commission (CIETAC), or Hong Kong International Arbitration Centre (HKIAC), which together make up the China arms of the Asian Domain Name Dispute Resolution Centre (ADNDRC). These two bodies employ the CNNIC Domain Name Dispute Resolution Policy when examining domain name registrations, and the key criteria is set out in Article 8 as follows:
- The disputed domain name is identical to or confusingly similar to the complainant's name or mark in which the complainant has civil rights or interests.
The civil rights or interests in such cases refer to registered Chinese trade marks, or trade marks designated through the Madrid System. However, as with trade mark disputes in China, if a complainant does not have a registered trade mark in China, it may be possible to submit evidence of the related mark's prior use and high reputation in China, as well as evidence of the domain name holder's bad faith (see below).
- The disputed domain name holder has no right or legitimate interest in respect of the domain name or major part of the domain name.
If the domain name holder can prove they have legitimate rights to the disputed name, this will often be fatal to the complainant's case. This highlights the importance of taking a holistic approach to rights registration in China. Proactive and pre-emptive trade mark registration and domain name registration should be undertaken as a combined process where one begets the other.
- The disputed domain name holder has registered or has been using the domain name in bad faith.
The criteria for proving the registrant's bad faith is outlined in Article 9:
- The purpose for registering or acquiring the domain name is to sell, rent or otherwise transfer the domain name registration to the complainant who is the owner of the name or mark or to a competitor of that complainant, and to obtain unjustified benefits.
- The disputed domain name holder, on many occasions, registers domain names in order to prevent owners of the names or marks from reflecting the names or the marks in corresponding domain names.
- The disputed domain name holder has registered or acquired the domain name for the purpose of damaging the complainant's reputation, disrupting the complainant's normal business or creating confusion with the complainant's name or mark so as to mislead the public.
- Other circumstances which may prove the bad faith.
The ease at which the above criteria can be satisfied will obviously vary on a case-to-case basis, but the actual website content (i.e. any indication that can be found on the website itself that the domain name is for sale, or the website sells counterfeit products or publishes false advertisements) and the domain name holder's registration history are the best starting points when determining whether a domain name is being cybersquatted.
If the resolution body deems that the registration was made in bad faith, the successful complainant can expect the disputed domain name to be cancelled or transferred to them. Alternatively, the claimant and domain name holder can seek to reach a settlement themselves. For domain names that have been registered for over two years, a right holder must seek remedy through filing a civil lawsuit based on trade mark infringement or unfair competition activities. Given how lengthy and costly such a lawsuit can be, a prudent enterprise which has its sights set on targeting the Chinese market online would do well to place registration as its priority.
Online copyright infringement
As mentioned in the introduction, with the rapid increase of online entertainment platforms, particularly streaming services, in China, the days of bootleg DVDs being sold on the streets are gone. However, as more and more content such as music, TV shows, movies, video games and books are being delivered over the internet, piracy has also moved online, resulting in significant losses for content owners and distributors.
Proactive and pre-emptive trade mark registration and domain name registration should be undertaken as a combined process
Copyright law, in China and elsewhere, is designed to protect the right to reproduce and distribute works, two things which the internet has made it much easier to do. However, there are steps that can be taken to protect and enforce copyrights online in China.
As a member of the Berne Convention, the PRC has established a copyright registration system. The owner of a work or interested parties can apply to record their copyright before the Copyright Protection Centre of China (CPCC). This is a useful first step that right holders can take to ensure their online copyright is protected. However, in cases where infringement has already occurred, there are several possible enforcement routes.
The right holder may wish to contact the infringer directly by sending a cease and desist letter, particularly if the infringer is identified as an individual or small operation, and demand that the copyrighted material be removed under threat of further legal action. Alternatively, right holders may seek assistance from administrative bodies as a cost and time efficient method of enforcing their rights. Specifically, they may file a complaint with the National Copyright Administration of China (NCA) to remove unauthorised copyrighted material online through a takedown action, which, if accepted, compels an internet service provider to disable links or access to alleged infringing works or products hosted on their network.
Alternatively, right holders can also seek judicial remedies such as permanent injunctions and compensation through civil litigation, but it is worth noting that if the profits of the infringer or losses of the right holder cannot be proven, statutory damages are capped at RMB 500,000 (about $79,000). In more severe cases of infringement, right holders can report the case to the Public Security Bureau for public prosecution, which can result in both fines and imprisonment for the infringers.
In conclusion, the internet will undoubtedly continue to play an important role in China and will present countless opportunities for local and foreign enterprises to enter the Chinese market. Those seeking to reap the benefits of doing so will need to develop a strong online IP strategy to avoid the pitfalls of online infringement.
|Mr Davies is a consultant in the legal department at Kangxin Partners and manages client communications and liaisons with the department’s international clients. He also assists with evidence discovery and oversees training in the areas of communications and international client relations. |
Mr Davies graduated with a law degree from the University of Bristol in the UK and has been living in China for over four years.
Mr Davies is a consultant in the legal department at Kangxin Partners where he oversees client communications and liaises with the department’s international clients on IP enforcement issues in China. He also assists with evidence discovery, infringement investigations and oversees training in the areas of communications and international client relations.
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