Online accountability

June 18, 2010 | BY

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Two sub-clauses in the new PRC Tort Liability Law determine for the first time the responsibility of network service providers regarding online infringement matters. But implementation and how the courts interpret unclear aspects of the clauses await testing

On December 26 2009, the Standing Committee of the PRC People's Congress promulgated the PRC Tort Liability Law (中华人民共和国侵权责任法) , which will become effective on July 1 2010. Sub-clauses 2 and 3 of Article 36 of the Tort Liability Law (the Clauses) require network service providers to take necessary measures to prevent the expansion of the infringement committed by network service users in any of the following two circumstances: (i) where it receives a notice of infringement from the party who claims that his rights have been infringed (Sub-clause 2); and (ii) where it knows that the infringement has taken place by using its network services (Sub-clause 3).

This is the first time that a congress legislation provides for specific rules regarding the liability of network service providers. Legal practitioners and the internet industry are closely observing how the Clause is to be implemented and how it will influence the industry.


1. Distinction of the Clauses from Previous Laws

Before the promulgation of the Clauses, principal law in this area was the Information Networks Distribution Right Protection Regulation (INDR Regulation), an administrative regulation which mirrors the “Notice and Take Down” rule under the US Digital Millennium Copyright Act and requires certain internet service providers to remove copyright infringing information, or disconnect hyperlinks to the copyright infringing information, immediately upon their receipt of notice of infringement provided together with preliminary supporting evidence. The Clauses expand the application of the “Notice and Take Down” rule in the following aspects:

Firstly, under the Clauses, the scope of application of the “Notice and Take Down” rule is expanded from copyright infringement to all types of infringement of civil rights, including trademark infringement, patent infringement, defamation, and infringement of privacy,. One of the key drivers behind the ability to enact the Clauses is that legislators believe that some Internet applications (for example., a cyber manhunt) have threatened individual privacy. According to the Clauses, any person or entity whose civil rights have been infringed by a network user may notify the relevant network service provider to take necessary measures to stop further infringement.

Secondly, under the Clauses, the “Notice and Take Down” rule is expanded from being applicable to only internet space providers and internet search engine service providers to being applicable to all types of networks service providers, which, at least in theory, would include mobile network operators and network access service providers. This expansion reflects the increasing convergence between the Internet and other telecom networks, and the expanding influence of mobile networks.

Thirdly, even if no notice is received, network service providers may be found liable if the aggrieved party can prove that the network service providers knew the infringement had taken place, but failed to take necessary measures. As interpreted by Professor Wang Limin, a civil law professor who participated in the drafting of the PRC Tort Law, under normal circumstances, network service providers will not be held liable until and unless it receives notice from the aggrieved party because networks service providers manage huge volumes of information every day and they are not particularly able to monitor the legality of every piece of information distributed through their networks. However, in exceptional cases where network service providers know an infringement has been committed over their network, they are obliged to take “necessary measures” to mitigate any adverse impact of the infringement.


2. Interpretations of Three Key Terms in the Clauses

The Clauses are high-level guidance and specific roles on the implementation of the Clauses will require the enactment of further implementation rules. It is expected that a judicial interpretation on the Clause will in due course be issued, once the courts have tried some initial cases in which the Clauses are cited.


i. What are the requirements for the notice to be served by the aggrieved party?

The Clauses require network service providers to take necessary measures upon receipt of a notice served by the aggrieved party. Although the Clauses do not clearly specify the requirements for the notice, the notice must at least specify a minimum level of evidence to substantiate the claim in order to trigger the obligation of the network service providers to take any necessary measures, otherwise a potential abuse of the “Notice and Take Down” rule could occur.

Taking the INDR Regulation as a relevant reference point, a notice served under the INDR Regulation must include the following information: (i) the contact information of the infringed party; (ii) details of the infringing information and its URL; and (iii) preliminary evidence of the alleged infringement. A judicial interpretation on internet copyright disputes further provides that preliminary evidence of the infringement must include the evidence of ownership of the copyright and the evidence in connection with how the relevant information infringes its copyright. In the recent Warner vs. Sogou case, the courts held that Sogou should have had the capacity to identify the infringing songs using the information provided by the copyright owners, even though not all the URLs of the infringing copies were provided. It appears that the courts may have discretion in determining whether a notice served by the aggrieved party is sufficient or not.

Although, in theory, the aforementioned rules only apply to internet copyright infringement cases, there is no reason why the principle embedded in the rules would not be adopted for the Clauses.


ii. How can network service providers select the “necessary measures” to implement?

The Clauses require network service providers to take necessary measures to prevent the expansion of the infringement. Some measures, such as the removal of the infringing information has only a minor effect on the public, but the disconnection of services to a public forum may have a more significant impact. It is not clear from the wording of the Clauses whether network service providers are required to take the specific remedial measures requested by the infringed party, or whether they have the discretion to select the appropriate measures.

Professor Yang Lixin, another professor who participated in the drafting of the Tort Liability Law said that the aggrieved party may propose the measures to be taken but network service providers should use their independent judgement to determine what the proper measures are under the circumstances. Lixin also said that the word “necessary” used in the Clauses means that, on one side, the measures must be sufficient to prevent further infringement and, on the other side, they may not exceed the scope necessary to prevent further infringement. In other words, network service providers must opt for the measures which have minimum impact on the public or other bona fide users to the extent that infringing activities may not take advantage of their network services.


iii. Are network service providers' liabilities conditioned on their actual knowledge of the infringement?

According to the Clauses, if a network service provider “knows” that an infringing activity conducted has been carried out by the use of its service, the network service provider must take necessary measures to stop the infringement. It is not clear whether the term “knows” refers to only actual knowledge or includes constructive knowledge.

In the second draft of the Tort Liability Law, the Clauses adopted the word “clearly knows” (明知). However, the phrase “clearly knows” was changed to the word “knows” (知道) in the third draft and the final version. In laymen's Chinese, the word “knows” and the word “actually knows” are interchangeable. They both refer to actual knowledge except the latter emphasises that the knowledge is clear and without doubt. These two words are also used in other legislation without clear distinctions being made. The concept of constructive knowledge is referred by the word “should know” (应知). It is not clear why the legislators changed the term “clearly knows” to “knows”.

Some comments made on the second draft indicate the concerns raised by a number of legislators that it would be very difficult to prove actual and clear knowledge of infringement. These concerns may have led to the change to the terms used in the Clauses. However, most of the legislators, including Lixin and Limin insisted that the term “knows” used in the final version of the Clause refers to actual knowledge because, in their view, network service providers are not able to censor every piece of information uploaded by their users. Arguably, the change of the term from “clearly knows” to “knows” indicates that the knowledge of infringement does not need to be clear and without doubt, and that the knowledge of high probability of infringement is sufficient to trigger the obligation of network service providers to take “necessary measures”.


3. Concerns about the Clauses

Brand owners, and music and book publishers are highly supportive of the Clauses. Brand owners now may rely on the Clauses to apply the Notice and Take Down rule to trademark infringement. They no longer have to find and sue individual distributors of counterfeit commodities, but rather they may serve notices on the relevant network service providers in order to block the online distribution of counterfeiting commodities. Music and book publishers, which already enjoy the Notice and Take Down rule under the INDR Regulation, are studying the Clauses to assess the possibility of proving that network service providers, especially search engine providers, have actual knowledge of the unauthorised online distribution of pirated music and literary works. This wold provide them with grounds to sue the network service providers for secondary infringement without having to serve notices to them.

Networks operators have expressed concerns over the Clauses. They are worried that the Clauses may be misused to interfere with their legitimate business operations. Network service providers desire the promulgation of practical rules and guidelines on how to determine whether a piece of information is infringing or not. Without such practical rules, the network service providers would be in a dilemma when receiving a notice: they may be held liable for secondary infringement if they fail to take the necessary measures to restrict the distribution of the information which is alleged to be infringing; and they may also be held liable for breach of contract with the website operator if the information turns out not to be infringing. They will need to carefully look at the terms on which they agree to provide network services, and carve out and limit the liability for taking down content upon receipt of a notice.


Yang Xun, Freshfields Bruckhaus Deringer, Hong Kong

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