Application Dilemma of Notice-and-Takedown in Patent Practice

Meteor Tang, China IP,[Patent]

 

The Notice-and-Takedown rule originated from the US Digital Millennium Copyright Act of 1998 (DMCA), and was borrowed for incorporation into China's Rules for Protection of Information Network Dissemination Right.

Notice-and-Takedown refers that a right holder may, when infringing content is uploaded onto information storage spaces, send a notice to the information service provider (ISP), search engine service provider, or link service provider, notifying relevant infringing activities with preliminary evidence; the service provider, upon notice, could evade liabilities by entering into a safe harborif it timely removes the alleged infringing contents or disconnects the links under the condition that all other exempt terms are met, including absence of evidence of prior ISP knowledge of the infringing activities.

With the rapid development of e-commerce platforms, more patent infringement cases emerged with e-commerce platforms as defendants. To cope with the situation, the Patent Law Revision Draft (Approval Version) added Article 63 introducing into the patent practice the Notice-and-Takedown rule which was originally applicable in copyright law. Will this rule blend into the patent practice If not, what adjustment should be made? These have been the focal point of discussion within the patent circle, and views are different.

 

Application dilemma likely to cause imbalance of interests

Follow the trend the intrinsic value Reinventing the rule clarification of three parties' duties and rights Wan Zhiqian, associate professor of college of humanity and law at Huazhong Agricultural University, previously pointed out during the 2019 annual meeting of China Intellectual Property Society that lawmakers thought that Notice-and-Takedown rule could provide balance of patent owners, clients and ISPs' interest, but in reality the balance of operation of the rule is always broken by some activities, such as patentee's abuse of the notice, misfiled notices, and improper notices, etc., leading to imbalance of interest by insufficient judicial crackdown on Internet patent infringement, or excessive enforcement by ISPs.

Wang Qian, professor of East China University of Political Science and Law indicated a similar perspective in an article, where he pointed out that in Copyright Law, the Notice-and-Takedown rule is applicable only in situations where the services of information storage, search or linkage are used by others for providing works in the form of information, which is justified as the ISP is capable of preliminarily verify the infringement alleged in the notice; whereas patent infringement relates only to offer for sale or sale of patented products rather than providing information, it would be impossible to transplant the Notice-and-Takedown rule. Since an ISP lacks the ability to determine a product's technical features, thus could not conduct preliminary infringement verification of the product on sale as indicated by the notice. In the absence of a Counter-Notice Restoration provision, a patent law version of Notice-and-Takedown rule could work unfair result to legitimate sellers, and make the preliminary injunction system meaningless.

 

Follow the trend: the intrinsic value

The revision of the Patent Law is a major step to cope with the development of the times. Faced with the rapid development of the Internet and the frequent patent infringement associated therewith, the law must respond. The Notice-and-Takedown rule, though faced with various dilemmas in reality, is an effective way of handling Internet patent infringement, and its application is an inevitable trend.

An ISP, as Internet platform's controller, has the advantage in resources, technology and rulemaking, able to exercise supervision of the immense Internet information at relatively low cost, and control of Internet patent infringement activities more effectively. Therefore, if Notice-and-Takedown rule is designed to provide an opportunity for parties to an infringement dispute to solve the problem among themselves, it could relieve the judicial burden and increase judicial efficiency.

From the legal perspective, as indicated by current judicial interpretations, administrative documents and court decisions, Notice-and-Takedown rule has been widely adopted in the patent infringement practices, and experience has been accumulated in the judiciary practices. For this reason, it is necessary that the revision of Patent Law follow this track, by drawing relevant experience to formulate a Notice-and-Takedown rule more consonant with various parties' interests. For instance, the Tort Liability Law and E-Commerce Law of China both accommodate the Notice-and-Takedown rule for application in patent cases, maintaining the consistence and coordination for law-making, while providing guidance for administering, enforcing and complying with the law. It should be necessary that revision of the Patent Law analogize the above two statutes in making the systematic reform in line with patent features.

From the public policy standpoint, the primary purpose of the Patent Law is to encourage inventors to engage in creative endeavor and technological innovation by offering protection of the exclusive right to patentee for the invention. When applying the Notice-and-Takedown rule in patent practice, it must be taken into consideration whether the rule is commensurate with the purpose of encouraging creative innovation. Also to be taken into consideration are the developmental needs of the Internet industry by avoiding unnecessary duties of approval and notice on patent infringement to hamper Internet business development. Moreover, general public's needs should be put into consideration, such as collective interest, environmental protection and energy conservation, rather than focusing on a particular party's interest alone as in patentee, client or an ISP.

 

Reinventing the rule: clarification of three parties' duties and rights

As experts point out, Patent Law Revision Draft (Approval Version) requests patentees to produce effective legal documents when making the so-called notice", will effectively vitiate the Notice-and-Takedown rule as private remedy, and practically is no longer the Notice-and-Takedown rule. Overall, this requirement is over-correction, and reinvention of the the Notice-and-Takedown rule is necessary.

Taking into consideration the economic, legal and public policy factors, in combination with characteristics of patent infringement, the layout of the Notice-and-Takedown rule for China's patent regime should center around the rights and obligations of patentees, Internet users and ISPs, by following the pattern of notice-takedown counter-notice termination". Meanwhile, a coordination mechanism ought to be established among enforcement agencies, ISPs and patentees (parties of interest) to create a healthy atmosphere of respecting IP by following closely the complaint and the result therefor, and standardizing IP protection in Internet environment.

 

Wan Zhiqian suggests to reinvent the Notice-and-Takedown rule by making reference to the E-Commerce Law, in conjunction with unique characteristics of Internet patent infringement, to focus on rights and obligations of notifiers, counternotifiers and ISPs.

 

1.Rights and obligations of notifiers

Notifiers encompass patentees and other parties of interest such as patent licensees. Notifiers have the right to send a notice to ISPs, asking for necessary measures to stop infringement. If the other party engages in infringement, notifiers may send an infringement notice to ISPs and demand Internet users to be liable for infringement, and may hold ISPs jointly liable for the aggravated damages by failing to take necessary steps to prevent infringement. Meanwhile, notifiers are correspondingly responsible for one, serving valid notice, by which a person with ordinary legal knowledge should recognize prima facie infringement, and standards should be raised compared to that of copyright and trademark law; two, taking the consequences for erroneous or bad faith notice with liability for enhanced damages resulting from bad faith notices.

 

2.Rights and obligations of counter-notifiers

Counter-notifiers should include internet users, licensors, investors, and other parties of interest who may have incurred injuries because of taking necessary steps. When a user or a party of interest, upon receiving infringement notice through ISP's transfer or by public notice, counter-notifiers may file declarations of non-infringement with the ISP. The counter-notice of should include prima facie evidence of non-infringement. If it is simply a non-infringement declaration without evidence, it constitutes no valid counter-notice. Once patent infringement is established, Internet users should be liable to the patentee or party of interest.

 

3.Rights and obligations of ISPs

ISPs should be defined as Internet operators who, by publishing patent product information, advertisement and by providing trading platforms, assist clients in executing sales or offer for sales of patented products.If the notice from patentee or party of interest is invalid, ISPs may refrain from taking necessary steps to stop infringement. If a patentee or party of interest fails to file a complaint or a lawsuit within reasonable time upon receipt of the counter-notice, ISPs may terminate all actions it takes.

Yet ISPs must also bear the responsibility of taking necessary steps which include neutral steps such as suspending the websites, apart from deletion, disabling, disconnecting of the links. In practice, ISPs must first take necessary steps in light of the nature and the specific situation of the infringement, and the technical conditions. Failing to do so, the ISPs should bear joint liability for the enhanced portion of the damages. It has to, moreover, be responsible for transferring the notice and counternotice. Upon receiving a patent infringement notice from patentee or party of interest, ISPs have to transfer the notice to Internet users, and it should transfer the counter-notice of non-infringement from the users back to the patentee or party of interest, notifying them to file a complaint with relevant authorities or a lawsuit in court. A third obligation of ISPs is to verify if the notifier's notice constitutes prima facie evidence for infringement on the one hand, which could in actual practice be entrusted to an IP enforcement center for assistance. On the other hand, ought to have known should be determined as a subjective state for ISPs to be aware of their responsibilities. Specifically, the general empirical rules should be followed to assume ISPs' responsibility from basic facts. And lastly, the obligation for public notice, viz., timely publication of receipt of the notice, counter-notice, and the result.

Every case is different in judicial practice. The above suggestions merely supply an abstract guidance. For a complete solution of the Notice-and-Takedown dilemma and a comprehensive rule to balance all interests, it has to be a legislative function for modification and perfection.

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