How companies can fight back against online defamation

• protect the legal rights of reputation and property rights of individual citizens;

• clarify the application of PRC criminal laws in relation to criminal offences via the internet;

• link online conduct to current crimes under the PRC Criminal Law;

• protect social public order;

• place limits on the free speech of individual citizens while protecting the same; and

• promote the healthy growth of the internet.

These claims have been met with cynicism. The international press has seen the issuance of the new Interpretation as part of the Chinese Communist Party's campaign to crush dissent and intimidate internet users. Similarly, much Chinese commentary has been negative. To a certain extent they are correct: some local enforcers have cited the new rules as a legal basis to lock up dissidents or even the odd teenager being rude about a local bigwig.

However, this article concludes that the purpose of this Interpretation was not only to regulate or reduce online criticism of the Chinese government or the Party. The Chinese government does frequently introduce measures that have those aims, but this Interpretation is also aimed at less political activities which are common in China like online blackmail, defamation and related offences.

The Interpretation took more than a year to draft due to the various consultations and re-drafts that have become common now for legislative drafting of even something as brief as this. It follows these principles:

• Principle of legality: the Interpretation is a detailed interpretation within the current Criminal Law legal framework. It further clarifies and elaborates certain concepts under the current Criminal Law like defaming through fabrication;
• Principle of systematic interpretation: the Interpretation was issued specifically to regulate crimes connected with the internet;
• Principle of reflecting sensible and appropriate judicial practice into legislation: the Interpretation is a summary and reflection of recent judicial practice; and
• Principal of public education: the Interpretation is intended to educate the general public while cracking down on law breakers.

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Specific crimes

The Interpretation clarifies four crimes that already exist in the current Criminal Law and explains how the Law applies when certain types of behaviour envisaged by that Law take place on the internet. Are they still crimes per se? How does one prove them? Does there need to be a specified victim? All these issues, and more, are discussed.

Crime of defaming through fabrication (Article 246 of PRC Criminal Law)

Articles 1 to 4 of the Interpretation explain the modes of conduct, incrimination thresholds and the conditions for direct prosecution by the public security authorities and the Procuratorates in suspected cases of defaming through fabrication under Article 246 of the Criminal Law.

Article 246 provides that “individuals who defame another through fabrication to a flagrant extent shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, public surveillance or deprivation of political rights. The crime shall be handled only upon complaint by a victim, except where serious harm is done to public order or to the interests of the State.”

Modes of conduct

The following three conducts can be interpreted as defaming through fabrication:

• Fabricate and disseminate: individuals who fabricate information which defames the reputation of other individuals and (i) disseminate the same on the internet, or (ii) organise or instruct other people to disseminate the same on the internet; or

• Distort and disseminate: individuals who distort original information of other individuals so that it defames the reputation of such other individuals and (i) disseminate the same on the Internet, or (ii) organise or instruct other people to disseminate the same on the internet; or

• Disseminate with clear knowledge that certain information is fabricated: individuals who, with clear knowledge that certain information is fabricated and defames the reputation of other individuals, disseminate the same on the internet to a flagrant extent.

Incrimination threshold

The following four cases can be interpreted as to a flagrant extent:

• The same piece of fabricated information is reviewed, clicked on up to 5,000 times or more, or be forwarded up to 500 times or more; or

• The conduct results in mental disorders, self-mutilation, suicide of the individual victim or his/her close relatives or other comparable serious consequences; or

• The crime is convicted within two years after the individual criminal took administrative penalties because of defaming other individuals; or

• Other serious circumstances.

Prosecution

The following seven cases can be interpreted as serious harm is done to public order or to the interests of the State and thus PRC public security authority and PRC Procuratorates can prosecute directly without any complaint by a victim:

(a) mass incidents are triggered; or

(b) social public disorders are triggered; or

(c) ethnic and religious conflicts are triggered; or

(d) defamation of a variety of people, resulting in adverse social impacts; or

(e) defamation damages the image of PRC and seriously endangers national interests; or

(f) defamation results in adverse international implications; or

(g) other circumstances where serious harm is done to public order or to the interests of the State.

In practice, this clause is likely to be used by the Party to charge political dissidents.

Cumulative calculations

The times of clicking on, reviewing and forwarding of defamation information are to be computed cumulatively within one year. The individual offender is to be punished in accordance with the above if the cumulative result meets the incrimination threshold under Article 2 of the Interpretation.

Crime of provocative and disturbing behaviour (Article 293 of PRC Criminal Law)

Article 5 of the Interpretation provides that the following two cases can be interpreted to fall within the crime of provocative and disturbing behaviour under Article 293 of PRC Criminal Law and thus be punished accordingly:

• Individuals who insult or threaten another individual to a flagrant extent and damage social public order; or
• Individuals who, creating disturbances in a public place and thus cause serious disorder in such public place, (i) fabricate false information; or (ii) with clear knowledge that certain information is fabricated and false, disseminate the same on the Internet or organise or instruct other people to disseminate the same on the internet.

The first circumstance addressed under Article 5 of the Interpretation is issued mainly against individual offenders who hurl insults at and threaten another specific individual or representative or employee from an entity while the second circumstance is issued mainly against individual offenders who fabricate and disseminate false information without aiming at any specific individual or entity. In any event, the social public order must be damaged for either case.

Crime of extortion by blackmail (Article 274 of the Criminal Law)

Article 6 of the Interpretation provides that individuals who, by publishing, deleting or otherwise dealing with online information, threaten or extort publicly-owned or privately-owned money or property by blackmail in a relatively large amount or repeatedly can be interpreted as falling within the crime of extortion by blackmail under Article 274 of the PRC Criminal Law and thus be punished accordingly.

Article 6 of the Interpretation is mainly aimed at individual offenders with two modes of conduct:

• Publication: individual offenders who threaten others that they will publish on the Internet negative information about others; or
• Deletion: individual offenders who first published on the internet negative information of other individuals and offer to such other individuals the deletion of the negative information.

The above also seems to apply to the cases where entities are victims.

In any event, the individual offender must have the intention of illegally taking the publicly-owned or privately-owned money or property into his/her own possession and the victims must provide the offender with money or property due to fear or pressure caused by the threats and blackmail.

In addition, two points are crucial with respect to determination of the crime. First, the offender must actively threaten and contact the victim. If an individual demands money or other compensation from a third party in the name of “advertising fee” or “service fee” in response to a request from that third party to delete information, this individual is not guilty of the crime. Secondly, the wording in the Interpretation is “information on the Internet” rather than “false information on the Internet”, which means an offender could be convicted as long as other conditions under the crime of extortion by blackmail are satisfied even if the information is true.

Crime of illegal operation of businesses (Article 225 of the Criminal Law)

Article 7 of the Interpretation further explains and elaborates the modes of conduct, incrimination threshold and the conditions for heavier punishment of the crime of illegal operation of businesses under Article 225 of the Criminal Law.

Article 225 provides that “individuals who, in violation of State regulations, commits certain illegal acts in business operation and thus disrupts market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and shall also, or shall only, be fined not less than once but not more than five times the amount of illegal gains; if the circumstances are especially serious, shall be sentenced to fixed-term imprisonment of not less than five years and shall also be fined not less than once but not more than five times the amount of illegal gains or be sentenced to confiscation of property.”

Article 231 further provides that “Where an entity commits such crime, the entity shall be fined, and the persons who are directly in charge and the other persons who are directly responsible for the crime shall be punished in accordance with Article 225.”

Attention should be paid to the difference between the provision of information publication services and the provision of information deletion services.

The individual or entity offender must have clear knowledge that certain information is false in cases of provision of publication services. However, this requirement is not imposed on provision of deletion services, which means that helping delete true information on the Internet with compensation could also be a crime.

Modes of conduct

Individuals or entities which, for the purpose of profits and with compensation, if meeting the below incrimination threshold and disturbing market order, via the Internet, (i) provide information deletion services; or (ii) with clear knowledge that certain information is false, provide information publication services, are to be interpreted as falling within the crime of illegal operation of businesses and thus shall be punished accordingly.

Incrimination threshold

The below value threshold is to be deemed to satisfy “the circumstances are serious” and thus the offender is to be deemed as having committed a crime:

(a) for individuals, the total value involved in illegal operation to be Rmb50,000 or more, or illegal profits to be Rmb20,000 or more; or

(b) for entities, the total value involved in illegal operation to be Rmb100,000 or more, or illegal profits to be Rmb50,000 or more.

Condition for heavier punishment

If the value reaches five times or more in relation to the values described above, “the circumstances are especially serious” is deemed to be satisfied and heavier criminal penalties are to be imposed.

Other matters

Joint offender (Article 8 of the Interpretation): Individuals or entities (as the case may be) are to be considered as joint offenders if such individuals or entities provide funds, places, technology support or support of any other kind with clear knowledge that the individuals or entities (as the case may be) being supported are conducting crimes mentioned under section 1.1, 1.2, 1.3 and 1.4.

Crime determination (Article 9 of the Interpretation): Individuals or entities (as the case may be) commit any of the crimes under section 1.1, 1.2, 1.3 and 1.4, which also constitute crimes under Article 221 (crime of impairing commercial reputation or commodity reputation), Article 278 (crime of instigating the masses to use violence to resist the enforcement of laws), Article 291 (crime of fabricating and intentionally disseminate false and terrifying information) or other crimes under the PRC Criminal Law, are to be convicted of the crime carrying the heavier punishment.

Aiding foreign investors

This regulation could thus serve as one of the few cases where criminal law could actually help foreign investors in China. They do not need to get anyone locked up – the added threat of criminal liability is likely to deter the more unruly element of China's blogosphere, who previously have seen libellous attacks on international companies as a risk-free way of letting off steam. Indeed some have cynically used foreign companies as scapegoats for domestic problems, knowing that criticising state owned enterprises will get them into much more serious trouble. There is no need for foreign companies to tolerate this.

We see potential for corporations to fight back against adverse online coverage (defamation, blackmail) by directly using or indirectly making reference to the Interpretation. The quantified and detailed incrimination thresholds will serve as tests as to whether the interest of a corporation has been jeopardised. Companies need to learn to be less passive in protecting their legal interests in China: this new rule may provide them with ammunition.

Nicolas Groffman and Ji Chen, DLA Piper, Shanghai