Doctor Si, Xiao：Thoughts on Chinese Safe Harbor Rules

Thoughts on Chinese Safe Harbor Rules

——Shared by Doctor Si, Xiao at Stanford Law School, 2014

腾讯公司副总法律顾问，互联网与社会研究院秘书长司晓博士，应美国版权法权威Paul Goldstein教授的邀请在斯坦福大学法学院版权法的课堂上和同学们做了关于中国版权法避风港规则的分享，以下为后期整理的演讲实录。

Hi, everyone, my name is Jason. Thanks for Professor Goldstein to invite me here to talk a little bit about the safe harbor rules in China.

Before I get started, I want to do a quick survey here. Please raise your hand if you heard about Tencent before. Yes, I work for Tencent, not ten dollar or ten pounds, just ten cent . In terms of market value, we are number two in Chinese internet industry and number 4 globally. If you look at the top 10 Internet companies of the world, four of them, Alibaba, Tencent, Baidu, Jingdong from China, actually make up 40% of the total market value of the top 10 .The others 6 companies including Google, Facebook, and Amazon are all US based companies.

We are an internet company that focuses on developing better “connections”. By saying connections we mean the connections between people, the connection between people and devices, and also the connection between people and service. If the slogan of KFC is “we do Chicken right” you can try to translate it into Chinese if you speak Chinese, it is hard to do that, right. I’m so happy that it is a joke that you can reach only if you are Chinese speaker, everytime you guys laughing at the class, we don't know what’s going on there, then our slogan should be “we do communication right”.

And another quick survey, please raise your hand if you are a WeChat user, and now please do if you use WhatsApp. Ok, a little disappointing we have very few users here. I’ll spend the next 30 minutes to do a promotion here, because I think we are much much better than WhatsApp. Ok, I am just kidding, don’t worry, that’s not what professor Goldstein ask me to do.

Let’s go back to the topic today, I’ll spend the next ten minutes to talk a little bit about the safe harbor rule in China. You know, this topic is so complicated that I am not sure I can make it in ten minutes even in Chinese, I’ll try my best.

Just like DMCA highlights protection for internet service providers against liability for copyright infringement under certain conditions, China did exactly the same thing by issuing the Regulations for the Protection of the “Right of Communication Through the Information Network ”(“RPRCIN”) in 2006. The Regulation was amended again in 2013, nothing changed but the amount of the statutory damages goes up. Before the legislation came out, the legislator chose three of the top law schools in China to provide them with an academic proposed draft of the final regulation. As a second year graduate student at Zhongnan University of Economics and Law, I was lucky to participate as an assistant researcher in the research group that delivered such draft to the legislator.

Thanks to Prof. Goldstein we already have a very good knowledge of the US safe harbor rules so I don’t need to talk too much about that. The Chinese Regulation provides a safe harbor for ISPs with respect to any monetary liability related to potential violations of copyrights for posted or linked materials. Conditions to apply safe harbor rules in China is similar to DMCA regarding each of the 4 types of ISP. I can do a comparison of these four articles, but it will be very time consuming.

Let’s take the safe harbor for information storage for example, the safe harbor will applies if ISP meets the requirements below:

1.    has clearly indicated that it is only providing memory space (such as the information storage ISP in US,) for the content and makes publicly available its name, contact person, and web address;

2.    has not altered the content (US Copyright Act 512a: ISP does not select the material during the transmission)

3.    does not know, and has no justifiable reason to know, that the posted content infringes the rights of another (US Copyright Act 512c: ISP does not have actual knowledge, or in the absence of actual knowledge ISP is not aware of facts or circumstances of the infringing acts);

4.    does not obtain any economic benefit from the posting of the infringing content; and (US Copyright Act 512c: does not receive a financial benefit directly attributable to the infringing activity)

5.    promptly removes the infringing content upon receiving a notice from the content owner, in accordance with the provisions Regulations(US Copyright Act 512c: upon knowledge or awareness ISP acts expeditiously to remove or disable access).

Notably, Article 23 of the Regulations echoes the notion that any party having actual or constructive knowledge that any linked content infringes the rights of another will not enjoy the Safe Harbor and will be liable for any compensatory damages.

While the US rules talked about generally no liability for taking down if the ISP acted in good faith, and the requirement for counter notification, the Chinese law share similar notion by saying that whoever sends the wrong notice shall be liable for the damages caused by the false notice, and the ISP is immune from contractual liability of deleting the information of the users.

It is also interesting that Article 36 of Tort Liability Law (issued in 2009) in China provides new provision on third party liability of ISP. Article 36 stated that “Those who think their right has been infringed can send notice to ISP to take down the content or remove the links, or block certain access to the link or content”. If the ISP does not take it down immediately, then will be jointly liable with the infringer for the damages caused after the notice. If the ISP takes down alleged infringing links, then it will be shielded from liability.  This sort of notice and take down procedure stated in the Chinese Tort Law has actually extend the safe harbor rules from copyright to all civil rights, including trademark, patent and even the right of publicity(moral rights).

Now you can see the Chinese rules basically repeated the US mechanism. There are benefits of being a follower. But there are also problems. Since China is a civil law country, tort liability generally can only be established with a finding of fault (except for some special highly risk infringement such as the infringement caused by civil aviation and civil nuclear infrastructure), it means that ISP is only liable when it is at fault, which I think is not the case in US law. US Copyright infringement is not fault based as far as I know.

Traditionally before the Chinese legal system imported safe harbor, if you want to sue ISP for indirect infringement, you will actually sue the ISP and the user together for joint liability, but I in the US it is all about contributory infringement and vicarious liability when you want to hold someone liable for other’s behavior. So we actually imported a system based on the theory of indirect infringement while we do not have a theory of indirect infringement in our traditional civil law system.

For the reason stated above, the safe harbor rules in China is really controversial , and people are arguing whether it is really a safe harbor or something could still give rise to ISP’s liability. Which I think it’s quite clear, as the DMCA house report said, safe harbor is a procedure designed to protect the ISP. In China there is a clear trend that right of notice and takedown procedure is seriously abused. Companies like Baidu, and E-commerce platform Alibaba got tons of false notice about the infringement of reputation and trademark.

In my PHD dissertation, I have an independent chapter to describe this issue, pointing out the abuse of notice and takedown procedure. The dissertation is about the Application of Indirect Infringement Rules in ISP’s IPR Infringement.

I was in PLI conference for liability for intermediary business last week, and learned that in US ISPs are also secondarily liable for some of the trademark infringement; courts borrow principles of indirect trademark infringement from tort law.

However in China, the legal system is missing certain pieces. There is only one article in our tort law but amazingly it wishes to cover all civil rights, so it is hard to implement. Baidu get thousands of notice which alleged reputation infringement in a month. Alibaba on average has more than ten thousands items alleged to infringe certain patent rights. You know, It could be easy to recognize a copyright infringement if the author made it clear he never authorize anyone to distribute his work on the internet, or pornography, you know, is easy to find out, but it is definitely not the case when you need to decide whether someone’s reputation or patent right is infringed.

Counter notice in Copyright seldom happen in China, but it is not the case in trademark , because larger sum of money is involved when it comes to trademark issues for the business. In terms of trademark, particularly in e-commerce area, e-store owners have the incentive to send false notice to beat their competitors, which apparently leads to abuse of the notice takedown rule. Even the Trademark owner may have the incentive to send false notice to e-store owners, although they know for sure the goods they complaining are made by them but not counterfeits. They do that generally because they want to maintain the price of their goods, or to maintain their price policy within certain areas, it is very obvious that they don’t have the right to do that.

Despite the complicated situation we are also making progress. The Supreme Court in China issues judicial interpretation, which is binding as law. Recently we have the judicial interpretation focusing on how court shall deal with cases that involve civil rights infringement on internet. The judicial interpretation gives more detailed information such as what elements an effective notice shall include, and how the court will determine whether an ISP has knowledge of an ongoing infringing activity on its platform. Beijing Higher court also has issued a district court guideline on secondary liability for ISP in trademark infringement cases, though it is not binding. In the future we will have the same thing for patent, which I think will balance the IP protection and the development of the industry.

If you have any further questions, please send me an email, and you are welcome to find me on WeChat. That’s all, thanks.